BofA forecasts Brent to fall to USD 50 in pessimistic tariff scenario
New U.S. tariffs and an unexpected production increase from OPEC+ could trigger what the Bank of America called a “negative commodity demand shock"
Investing
Monday, 7 April 2025
Bank of America warned that Brent crude oil could drop to USD 50 per barrel for several weeks in a pessimistic scenario. New U.S. tariffs and an unexpected production increase from OPEC+ could trigger what the bank called a “negative commodity demand shock.”
BofA said its average Brent forecast of USD 70/bbl for 2025 is now at risk. “If supply/demand balances weaken by more than 1 million b/d over the next few quarters, Brent could even fall to USD 50/bbl for several weeks,” analysts wrote.
The Trump administration's widespread tariff announcements—including new levies on imports from China, the EU, and other major economies—have delivered a double blow to global markets.
“Unexpected increases in taxes on U.S. imported goods are a negative supply shock similar to a rise in oil prices for U.S. consumers and businesses,” BofA noted.
“Tariffs also represent a negative demand shock for the rest of the world. With costs set to rise, quantities demanded will fall.”
The move comes as OPEC+ tripled its planned production hike for May, adding more pressure to an already weakened energy market.
BofA said commodities had outperformed stocks and bonds in the first quarter with an 8.9% gain in the Bloomberg Commodity Index (BCOM), but those returns have now been erased.
The bank warned that global GDP growth could be cut by at least 0.5 percentage points from the current 3.1% estimate, citing uncertainty and reduced demand stemming from the trade war.
Despite the gloomy outlook, BofA pointed to three potential supports for energy prices: a stagflationary macroeconomic environment, geopolitical disruptions (including Iran, Venezuela, and Russia), and the possibility of future “tariff relief.”
In other commodities, the bank said tightness in metals markets is easing, although macroeconomic fears could outweigh fundamentals. Copper may be next in line for a 25% tariff following a Section 232 investigation, while gold could benefit from risk-off flows.