Oil prices could rebound slightly this year, Deloitte forecasts, but risks loom
Faster-than-expected increased production by OPEC+ could affect prices, say experts
After several months of volatility in the market, a new forecast is predicting slightly stronger oil prices for the rest of 2025 — but some experts warn there are many factors that could change that outlook.
Deloitte Canada released its quarterly energy, oil and gas price forecast on Monday. Andrew Botterill, an energy partner with Deloitte who's based in Calgary, said the forecasts aim to help the sector better understand challenges and opportunities that may lie ahead.
"Obviously, we have some conflicts across the globe that could drive some volatility in our prices. But I think what we are expecting in the back half of this year is probably something a little bit better than what we saw in the first half," said Botterill.
"$70, $72 per barrel is what we're forecasting for the back of this year, with some optimism."
Deloitte is also projecting higher natural gas prices through 2025 onward, now that LNG Canada is officially online, sparking optimism that "the era of extremely low Canadian gas prices compared to Henry Hub, may finally end," said the report.
LNG Canada creates a competitive advantage for western Canada, Botterill said, which is good news for companies. But he warns once it comes time for Albertans to heat their homes, they could see prices rise above $3 per gigajoule in 2026, compared with the average cost of $1.71 in 2025.
OPEC+ ups production
While there is optimism in the industry, Botterill said there are some factors that could affect prices moving forward.
According to Deloitte's forecast, OPEC+, a group of oil-exporting nations, has moved forward with reversing its voluntary production cuts. The group also announced it will produce an additional 411,000 barrels per day in July.
"This marks the third consecutive month of significant increases since April 2025, suggesting that OPEC+ is likely seeking to gain greater market share from non-OPEC producers," said the report.
Bloomberg also reported that the group, which is guided by Saudi Arabia, is considering producing even more in August, which is much quicker than expected.
When looking at factors like U.S. tariffs and conflicts in the Middle East, Alberta Central Chief Economist Charles St-Arnaud said the risk of Saudi Arabia increasing its supply will likely have the biggest impact on oil prices for the rest of the year.
"I think we could probably go back to where we were just a couple of weeks ago when we reached $55 a barrel," said St-Arnaud.
Richard Masson said it's important to remember that the Alberta government's fiscal budget for this year is based on oil prices sitting at $68 a barrel.
Each $1 drop in that price results in a loss of $750 million for the province, said Masson, who's an executive fellow at the University of Calgary's School of Public Policy and former CEO of the Alberta Petroleum Marketing Commission.
But Masson said Albertans shouldn't be too concerned — for now.
"Alberta is in good shape to weather a storm. But … with volatility in prices and a bit lower prices, it means less activity, less oil drilling, gas drilling, less oilsands projects, those types of things that reduce economic activity," said Masson, who predicts oil prices will remain relatively weak.
"If it stays that way for a period of time, the Alberta government is going to have to think about ways to respond by squaring its fiscal house a little bit better than it is."
He said the province could do that by cutting public services or finding other ways to increase revenue.
On the bright side, St-Arnaud said the Trans Mountain Pipeline expansion has put Alberta in a stronger position. He credits Trans Mountain's expansion for narrowing the price differential between the Canadian price of oil — known as Western Canada Select — and the U.S. benchmark price, West Texas Intermediate. This could help offset some of the weaker prices, he said.
Cautious optimism
Despite the volatility and uncertainty ahead, Botterill said there's a newfound confidence in the sector.
"Our energy companies are feeling more optimistic than they have in the last decade, but they also recognize they're cautiously optimistic," said Botterill.
He said many see this time as an opportunity to send a message to the rest of the country — and the world — to invest in Canada and branch out so we aren't relying on the U.S. as a sole customer.
"I think there's more opportunity in the realization that maybe we're talking about a new kind of era in Canadian energy."