The steep 28% drop in oil prices from a year ago, coupled with President Donald Trump’s commitment to lower U.S. energy prices, will benefit the economy, economists believe.
On Thursday alone, oil prices retreated nearly 3% on fears of a deepening U.S.-China trade war.
Even amid the stock and bond market volatility and geopolitical uncertainty, Daan Struyven, head of oil research at Goldman Sachs, said Tuesday, “At this point we think that lower oil prices are still a net positive for U.S. GDP.”
Brent oil is trading currently around $64 per barrel, Struyven noted — and he sees it going down further.
“By year end, we are at $62 per barrel, but by the end of next year, 2026, we're at $55 per barrel,” Struyven predicted.
The big drop in U.S. benchmark crude oil, from $89 a barrel in April 2024 to $63.54 Thursday, did not go unnoticed by the president, who posted on Truth Social: “Oil prices are down, interest rates are down. We have everything down at levels that nobody ever thought possible.”
Experts generally agree that the decline in oil prices and borrowing costs will likely offer some near-term improvements for U.S. consumers, including more downward pressure on inflation and lower gas prices.
In fact, the Consumer Price Index for March came in at 2.4% Thursday, lower than the 2.6% analysts were predicting and down from 2.8% in March.
Lower oil prices will also boost the U.S. economy by reducing costs for businesses and consumers, leading to increased spending and investment, potentially stimulating economic growth, according to the Brookings Institution.
However, Ashley Kelty, an analyst at Panmure Liberum, pointed oil that the trade war between the U.S. and China brings great uncertainty to oil prices and oil demand growth.
Lower Gas Prices
Trump also boasted on Truth Social Monday of low borrowing costs and predicted the price of a gallon of gasoline would fall to $2.50. The current national average price of a gallon gas is $3.25, according to AAA.
Analysts agree that gas prices are likely to come down, although no one is predicting $2.50-a-gallon gas.
“Motorists can expect gas prices to begin falling nearly coast-to-coast, with oil now at its lowest level since the early days of the pandemic in 2021,” Patrick de Haan, the head of petroleum analysis at GasBuddy, told ABC News.
“President Trump believes that an affordable and reliable domestic energy supply is vital to America’s national security, economic prosperity, and foreign policy,” the White House said in an energy economic policy statement Tuesday.
Trump Energy Policy
Trump is on a mission to expand oil drilling, increase domestic energy production, and ensure U.S. energy dominance.
As the president said in State of the Union address on March 4: “We have more liquid gold under our feet than any nation on earth, by far, and now I have fully authorized the most talented team ever assembled to go and get it.
“It’s called Drill, Baby, Drill,” Trump said.
Already, the Trump administration has implemented several policies, including executive orders declaring a national energy emergency, asking the Department of Justice to challenge state climate laws.
Regulatory rollbacks by the Trump administration are aimed at modernizing and streamlining U.S. energy governance.
Trump is also working to open Federal land and waters for drilling, reversing previous restrictions set by the Biden administration.
The administration asserts these policies will lead to job creation in the energy sector, including coal, and energy independence from foreign oil, thereby enhancing national energy security.
Most importantly, the Trump administration says boosting supply will lead to reduced costs for consumers and businesses.