Oil prices continued to fall on Wednesday and could average around $60 per barrel next year, and potentially fall to nearer $50, according to Citi.
Brent front-month futures fell 1.3% at $72.81 a barrel in late afternoon in London, while West Texas Intermediate is down 1.3% at $69.41.
Analysts at Citi say Brent could average around $60 per barrel in 2025 if OPEC+ doesn't commit to extending current output cuts indefinitely, amid expected reduced demand.
Were Brent prices to fall into the $60s, financial markets could drive even lower, possibly to $50 per barrel, they add.
After waning from $90 a year ago, despite tensions in the Middle East and Ukraine, the Citi team say that the market now recognises geopolitics does not necessarily lead to reduced production or transit issues.
In a separate note, Goldman Sachs has also highlighted that AI is increasingly used by energy firms and could reduce oil prices over the next decade.
AI may cut shale production costs by 30%, lowering prices by $5/barrel, and increase oil reserves by 8-20%, analysts say, seeing 30% of the costs of a new shale well potentially reduced by AI, and also potentially increase the ultimately recoverable resource base.
Though AI may modestly boost oil demand by 0.7 million barrels a day, this pales compared to negative demand impacts from electric vehicles (EVs) and falling natural gas prices, however, the analysts said.
Overall, AI is expected to be a net negative for oil prices in the long term, the Goldman team opined, "likely [to] be a modest net negative to oil prices in the medium-to-long term".