Before it’s too late, order your espresso. It will be more expensive in 2025, and anyone trading – or observing – energy and commodity markets into the new year will need caffeine to survive. First, a bit of honesty — 2025 looks awfully foggy. The supply-and-demand balance of key commodities can swing from hugely oversupplied to massively in deficit, depending on unpredictable politics.
My crystal ball is about as good as anyone else’s about what Donald Trump, Xi Jinping, Vladimir Putin, Benjamin Netanyahu and several others will do. More than ever, predicting commodity prices in the new year is about forecasting political choices. This could be the fifth consecutive season when coffee consumption surpasses production, which is unprecedented.Still, we can anticipate a few themes – and few bits of commodity trivia I will be watching through the new year:Having delayed a production increase by already six months, it’s unlikely that the group will be able to hike output in 2025 unless Trump comes to the rescue. Global oil demand growth in the new year is likely to reach around one million barrels a day, lower than the expected output growth from non-OPEC+ countries. The squeeze is the result of several years of high oil prices that have encouraged OPEC+’s rivals to invest in new output capacity. Trump could alter the equation if he tightly enforces current US oil sanctions on Iran and Venezuela. For nearly four years, the Biden administration turned a blind eye on rising oil exports from both countries. If the incoming US president hits Tehran and Caracas, Saudi Arabia can use the opportunity to hike production. Otherwise, I don’t see much space for extra Saudi crude. But Trump can create trouble for OPEC+, too, via two policies. One is his threat of a trade war, not only with Canada and Mexico, but also with the European Union and China, that could derail economic growth. The second is loosening regulations for American drillin