Publications: Notes at the Margin

Looking Short Term: Prospects for Oil (March 24, 2025)

 

Across the world, economic growth trends are diverging. Europe seems to be moving into expansion mode. The Chinese economy is slowly sinking into a deflationary muddle as the government struggles to stimulate it. Recession or worse confronts the United States, where consumers are cutting purchases like their Chinese counterparts while the Trump administration imposes barrier after barrier to growth.

 

Oil producers will suffer the consequences. Global demand for crude and probably natural gas will drop from last year’s levels and by far more than projected. The impact on fossil fuel producers will be particularly significant because the world regions experiencing growth are focused on meeting emissions commitments made at the 2015 Paris Conference, and the nations seeking to boost fossil fuel use confront economic slowdowns.

 

This “bifurcated” view of the global economy differs sharply from projections issued by banks and other forecasters. Readers should not be surprised because, as we explain below, forecasters rarely predict critical turning points. Moreover, economic forecasters flock together like birds. The threat of unemployment leads most to stick to the average or consensus. This understandable concern for job security prevents many full-time forecasters from projecting dramatic changes.

 

Here, we lay out the case for a severe recession in the United States and a possible global economic slowdown in 2025 and 2026. The telltale bits of information accumulating day by day point to real difficulties ahead.

 

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