Fitch changes global oil sector outlook to deteriorating; predicts average oil price of $65 for 2025

Fitch Ratings has changed its 2025 outlook for the global oil and gas sector to deteriorating from neutral.

This is due to reduced global oil demand growth on weaker economic prospects following US tariff announcements, quicker-than-expected unwinding of OPEC+ voluntary production cuts, and increasing non-OPEC+ output.

“The implications for individual issuers’ ratings are likely to be limited despite this sector outlook revision, unless we significantly reduce our medium-term and mid-cycle oil price assumptions compared with those in our existing set”, it said in a report.

The UK-based firm also lowered its oil price assumption for 2025 to US$65 per barrel from US$70 per barrel in April, while maintaining medium-term and mid-cycle price assumptions.

Fitch-rated issuers have entered this period of market volatility with strong balance sheets, following a period of high oil prices and strong capital discipline.

Fitch reduced global growth forecasts for 2025 by 0.4 percentage points in April’s special update to the quarterly Global Economic Outlook (GEO) and reduced growth for China and the US by 0.5 percentage points against the March GEO projections.

“There has been some tariff de-escalation; however, uncertainty over where tariff rates will settle and the impact of those tariffs already implemented will remain key factors in our macroeconomic forecasts, leading to lower-than-previously expected oil consumption increases, it said.

“We now assume global oil demand will grow by about 800,000 barrels per day (bpd) this year, compared with our previous expectations of slightly over 1 million bpd. The market will remain oversupplied in 2025 due to faster supply growth”, it added.