War, Tariffs, OPEC+: Oil Tumbles in 2025
Oil prices weakened on Wednesday and closed 2025 sharply lower, nearing 20%. Negative sentiment was fueled by rising expectations of oversupply, amid a year marked by war, higher tariffs, additional OPEC+ production, and a series of sanctions against Russia, Iran, and Venezuela.
Year-to-date, Brent fell by around 19%—its worst annual decline since 2020—and this marked the third consecutive year in the red, its longest losing streak on record. WTI also recorded a decline of nearly 20% throughout 2025. In the final trading session of the year, Brent closed at $60.85 per barrel (down 48 cents, or 0.8%), while WTI ended at $57.42 per barrel (down 53 cents, or 0.9%).
In terms of inventory data, the EIA noted that US crude oil stocks declined last week, but refined product stocks actually surged. Crude oil inventories fell by 1.9 million barrels to 422.9 million barrels in the week ending December 26—more than the Reuters survey forecast for a decrease of 867,000 barrels. Conversely, gasoline stocks rose by 5.8 million barrels to 234.3 million barrels (above expectations of +1.9 million barrels), and distillate stocks, including diesel and heating oil, rose by 5 million barrels to 123.7 million barrels (exceeding projections of +2.2 million barrels). The EIA also reported that US oil production briefly hit a record in October.
Energy markets initially started 2025 on a stronger note, after tightened sanctions on Russia at the end of President Joe Biden's term disrupted supplies to key buyers like China and India. Geopolitical pressures also increased when a Ukrainian drone attack damaged Russian infrastructure and disrupted Kazakhstan's oil exports. In June, a 12-day Iran-Israel conflict sparked concerns about shipping disruptions through the Strait of Hormuz—a key global oil route—which briefly boosted prices.
However, the rally was short-lived. Prices began to ease as OPEC+ accelerated supply increases and concerns arose that US tariffs could depress global economic growth and fuel demand. OPEC+ then halted production increases for the first quarter of 2026, having released around 2.9 million barrels per day to the market since April. The next meeting is scheduled for January 4.
Looking ahead, most analysts believe the market is still at risk of a surplus in 2026. Estimates of the oversupply vary, ranging from 3.84 million barrels per day according to the International Energy Agency to around 2 million barrels per day according to Goldman Sachs.
Source: Newsmaker.id
