Oil Prices Decline Amid Demand Concerns
Oil prices fell on Friday, continuing a week-long slide, with global benchmarks Brent crude and WTI down over 3%. Brent crude futures dropped to $72.12 a barrel, while WTI crude settled at $68.62. Concerns about future demand growth, especially in China, are pressuring prices as the year-end approaches.
China’s Oil Consumption Forecast Sparks Uncertainty
China’s state-owned refiner, Sinopec, predicted the country’s crude imports could peak by 2025, with overall oil consumption peaking by 2027. Weaker demand for gasoline and diesel in the world’s largest crude importer adds to uncertainty in the global oil market.
OPEC+ Adjusts Growth Projections
OPEC+ recently revised its global oil demand growth forecast for 2024, marking the fifth consecutive downward adjustment. Analysts suggest OPEC+ must maintain strict supply discipline to support prices and restore market confidence. Without intervention, the forecasted surplus in 2025 could further depress prices.
Non-OPEC+ Supply Expected to Surge in 2025
According to JPMorgan, non-OPEC+ countries are set to increase output by 1.8 million barrels per day in 2025, creating a surplus of 1.2 million bpd. Meanwhile, OPEC’s production levels are expected to remain steady, potentially exacerbating supply-demand imbalances.
Strengthening Dollar Adds Pressure
The U.S. dollar’s near two-year high is also weighing on oil prices. A stronger dollar makes oil more expensive for non-dollar buyers, while the Federal Reserve’s cautious stance on interest rate cuts for 2025 raises concerns about slower economic growth and weaker demand.
Trade Tensions and Geopolitical Moves
U.S. President-elect Donald Trump’s statement about potential tariffs on the European Union adds another layer of uncertainty. The U.S. aims to reduce its trade deficit with the EU by encouraging larger oil and gas deals. Meanwhile, G7 countries are exploring ways to tighten the price cap on Russian oil, which could affect supply dynamics.
Russia’s Shadow Fleet Faces New Sanctions
Russia has evaded the $60 per barrel price cap imposed in 2022 through a “shadow fleet” of ships. Recent sanctions by the EU and Britain aim to curb these practices, potentially tightening supply in the coming months.
Outlook for 2025 and Beyond
The oil market faces challenges heading into 2025, including demand uncertainties, geopolitical tensions, and supply imbalances. Analysts expect market conditions to stabilize as OPEC+ and non-OPEC+ producers adjust to evolving global dynamics.