Geopolitics and US Demand Drive Energy Prices: What to Expect from Gasoline and Crude Oil Forecasts

Turbulence in Iran is reshaping the global energy markets landscape. With over 3 million barrels per day produced by the country, any worsening of the situation poses a concrete threat to global supply. Ongoing protests have pushed February WTI contracts up by 3.10%, while RBOB gasoline gained 2.00%, both reaching their highest levels of the month. Price forecasts for gasoline remain a focal point for analysts, as crack spreads hit a three-week high, encouraging refiners to ramp up their activity.

Supporting Factors: Robust US Economy and Geopolitical Tensions

The US economy continues to surprise positively. In December, the unemployment rate fell to 4.4%, beating estimates, while the University of Michigan’s consumer confidence for January reached 54.0, surpassing expectations once again. These solid data are fueling expectations of stronger energy demand, providing support to crude oil prices just as geopolitical concerns intensify.

President Trump’s warning to Iranian leadership regarding protester safety, combined with Tehran’s threats of severe sanctions, further amplify market uncertainty. In this context, the annual rebalancing of major commodity indices acts as an additional catalyst: Citigroup estimates that the BCOM and S&P GSCI indices will attract $2.2 billion into oil futures in the following week.

Bearish Pressures: Morgan Stanley Revises Downward Forecasts

Not all signals are bullish. Saudi Arabia has cut the price of its Arab Light for the third consecutive month for February deliveries, signaling concerns over weaker energy demand. Even more significantly, Morgan Stanley has revised its projections downward, lowering the expected crude oil price for Q1 to $57.50 per barrel ( from previous $60), and to $55 per barrel for Q2, forecasting a broader global surplus that could materialize by mid-year.

Gasoline price forecasts are also under downward pressure. With the IEA revising the global surplus forecast for 2026 to a record 3.815 million barrels per day, the supply-demand dynamic is shifting toward a structural excess.

Supply Dynamics: OPEC+, Russia, and China in Motion

OPEC+ has confirmed it will maintain the production pause until the first quarter of 2026. After increasing by 137,000 barrels per day in December, the group remains cautious. OPEC is gradually reintegrating the 2.2 million barrels per day cut implemented at the start of 2024, with 1.2 million still to be recovered. In December, OPEC production reached 29.03 million barrels per day, up 40,000 barrels.

Meanwhile, Ukrainian attacks are impacting Russian production capacity. Drones and missiles targeted at least 28 refineries over the past four months, while six tankers have been hit in the Baltic Sea since late November. New US and EU sanctions on Russian oil infrastructure have further restricted Moscow’s exports.

China, on the other hand, is behaving as an aggressive importer: December oil imports are expected to rise 10% month-over-month, reaching a record 12.2 million barrels per day. Simultaneously, the volume of crude stored on stationary tankers decreased by 3.4% weekly to 119.35 million barrels as of January 2.

US Supply Remains Solid Despite Risks

EIA has raised its US crude oil production estimate for 2025 to 13.59 million barrels per day. The production for the week ending January 2 declined by 0.1% to 13.811 million barrels per day, remaining close to the November record. Baker Hughes reported an increase in active rigs in the US, rising by three to 412 in the week ending January 2, the highest level in 4 years and 3 months.

US inventories as of January 2 show a mixed picture: crude oil is 4.1% below the five-year seasonal average, gasoline is 1.6% above, and distillates are 3.1% below. These inventory levels will continue to influence gasoline price forecasts in the coming months as refiners adjust their activity based on profit margins.

Conclusion: Between Geopolitical Risks and Structural Abundance

The energy market is in a transitional phase. Immediate concerns related to Iran and supply disruption risks are supporting prices in the short term, while medium-term fundamentals—expected surplus, weak demand growth, and resilient US supply—press downward. Price forecasts for gasoline and crude oil in the upcoming quarters reflect this tension, with a volatility range likely to remain broad as long as geopolitical situations stay uncertain.