Page 11 - Policy Economic Report_Feb'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Commodity Markets

After falling by about 3% in 2024, commodity prices are forecast to decline further by 6% in 2025 and 2%
in 2026, which would bring prices to their lowest level since 2020. Nevertheless, most commodity prices
remain well above pre-pandemic levels, supporting economic activity in many commodity exporters. Key
highlights include:

• The price of Brent crude oil averaged $80/bbl in 2024, about 3 percent lower than a year earlier
but 40 percent above the 2015-19 average. This annual price decline reflected an ample global oil
supply given modest consumption growth, which offset the impact of escalating geopolitical
tensions.

• U.S. natural gas prices are projected to increase steeply in 2025-26 as new liquefied natural gas
(LNG) terminals enhance export capacity, increasing competition for domestic supply.

• European gas prices are forecast to rise by 11 percent in 2025, reflecting strong global LNG
demand and reduced supplies, before falling 8 percent in 2026 as more LNG supply comes online.
Upside risks include conflict-related developments that curtail gas exports from the Middle East
and uncertainty around LNG supplies from the Russian Federation to Europe, particularly given
recent declines in the amount of LNG shipped to the European Union. On the downside, weaker-
than-expected demand growth in fast-growing markets in East Asia and Pacific (EAP) and South
Asia (SAR) could lead to lower prices.

2. Global Investment in the Energy Transition Exceeded $2 Trillion for the First Time in 2024-
Bloomberg

Investment in the low-carbon energy transition worldwide grew 11% to hit a record $2.1 trillion in 2024,
according to Energy Transition Investment Trends 2025, an annual report released by research provider
Bloomberg NEF (BNEF). Growth was driven by electrified transport, renewable energy, and power grids,
which all reached new highs last year, along with energy storage investment. While overall investment in
energy transition technologies set a record, the pace of growth was slower than the previous three years,
when investment jumped by 24-29% annually.

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