Will lower oil help the economy?

BCG

Research

16 Pages

BCG’s Macroeconomics & Energy groups answer the following questions:

  • What is a plausible path for oil prices and how low could prices go?
  • How deflationary is lower oil and can that offset the inflationary impact from tariffs?
  • How big a role does oil truly play in the economy’s output, consumers’ wallets, and interest rates?
  • Who are the winners and losers from lower oil, both by geography and sector?

Key Takeaways

Oil prices have significantly declined: A 24% drop from 2024 averages, influenced by OPEC+ production hikes and a stronger U.S. dollar.
Regional impacts differ: The U.S. may see limited benefits due to tariff pressures, while the Eurozone could experience positive effects from lower oil prices.
Future oil price scenarios vary: Short-term prices could fall to $30–$40 per barrel in a global downturn; medium-term prices may stabilize around $50–$70, depending on economic and supply factors.
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