How Low Can Oil Prices Fall After Renewed Downward Pressure?
Since Donald Trump became President of the US, Crude Oil prices have fallen 3.70% retracing back from the 27-week high. Analysts still believe the price of oil per barrel will fall under the Trump presidency, as per previous statements. President Trump himself previously stated he wants oil priced closer to $45 per barrel. However, how long can oil prices fall and how quickly?
What’s Driving Oil Prices Lower?

Investors are closely watching the next steps of U.S. President Donald Trump’s administration. Yesterday, Trump announced plans to impose a 10% tariff on all Chinese exports, scaling back from the 100% tariff he promised during his campaign. This news has reassured investors, but experts caution that this move could be just the beginning. Over time, the U.S. may increase pressure on its top economic rival, potentially slowing the Chinese economy and reducing its energy demand.
China is currently the largest importer of Crude Oil followed by the US, India and Japan. Therefore, a poorer economic outlook for China can pressure oil prices in 2025. The performance of the Chinese economy will also depend on the 10% tariffs and if these will indeed rise over time.
The US President is also attempting to create an imbalance between supply and demand in order to pressure prices lower. On the President's first day he launched significant changes to the US’s energy policy, reversing restrictions on coastal oil field development imposed by the former President. Trump also advocated for boosting oil production at existing fields and declared a national energy emergency, aiming to attract investment in the mining sector and bolster the US oil reserves. If Trump is successfully able to considerably increase supply, the price of Crude Oil is likely to come under pressure. Only if demand equally improves will supply-demand imbalances be avoided.
Meanwhile, a sharp drop in oil prices is being mitigated by poor weather conditions along the Gulf Coast, which could disrupt production in key high oil-producing countries. Although, this is not likely to continue in the medium to long term. The Middle East and high-producing countries in recent years have aimed to keep oil prices between $70-$80 per barrel. Therefore, traders will also monitor if these countries will look to structure countermeasures to reduce the downward pressure. For example, by reducing production levels.
How Low can Crude Oil Prices Fall?
The average price of oil over the past 5 years is $70 per barrel, $5 (-5.60%) lower than the current price. However, the average price of this period takes into consideration the oil crisis from 2022 where prices rose above $100. More realistic support levels can be seen at $62 per barrel. The price has found support at this level in 2021, 2023 and 2024.

Some economists, such as Tom Kloza, suggest that Crude Oil could potentially drop to $40 per barrel. This would occur if OPEC nations decide to reverse previous production cuts. However, most economists believe it's more realistic to expect Crude oil prices to drop between $54 to $62 per barrel in the medium to long term. Other organizations, such as the US Energy Information Administration believe oil will only drop to $74 per barrel in 2025 and $66 per barrel. According to the EIA, their predictions, which are higher than most, are due to strong economic activity.
In terms of indications and technical analysis, most point towards a downward trend. The price of Crude Oil is currently trading below most trendlines and the Volume-Weighted Average Price. In addition to this, Oscillators such as the RSI and MACD also indicate sellers are controlling the price movement. However, Crude Oil Traders should note this outlook may change if the price gains bullish momentum above $76.38.
Key Takeaways:
* President Trump aims to bring Crude Oil prices back down closer to $40 per barrel.
* Trump is driving a supply-demand imbalance to lower prices, starting with reversing oil field restrictions.
* Economist Tom Kloza suggests Crude Oil could drop to $40 per barrel if OPEC reverses previous production cuts.
* Most economists believe oil prices will fall to between $54 to $62.
* The average price of Crude Oil over the past 5 years is $70 per barrel.
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Michalis Efthymiou
HFMarkets
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