Oil prices are projected to decrease in 2025 as global supply is expected to surpass demand, according to a recent report from S&P Global Commodity Insights and the International Energy Agency (IEA). The latest online forum on energy hosted by S&P Global Commodity Insights discussed various disruptions in oil markets that have led to operational risks for producers.
These disruptions include the Ever Given ship grounding in 2021, the Texas deep freeze of 2021, and Russia’s invasion of Ukraine. In response, many countries have implemented production cuts to limit supply and maintain prices. However, informal estimates suggest that about 5 million barrels per day of oil are currently being held back from the market.
The IEA reports that global crude benchmark Brent settled at $77 a barrel last year, but has decreased to around $70-$73 a barrel in recent months. The agency projects that demand growth will increase by 1.1 million barrels a day in 2025, while supply is expected to grow by 1.9 million barrels a day.
OPEC+ production cuts have been extended due to concerns about the market’s ability to handle additional supply. However, with U.S. record output and growth in countries like Guyana, downward price pressure continues. The growth of battery electric vehicles worldwide, particularly in Asia, is also contributing to lower demand for diesel fuel.
In Europe, diesel demand has been declining, with consumers shifting towards gasoline and alternative fuels due to government policies and low-emission zones. Even Chinese diesel demand has turned downward, as trucking-intensive construction activity stalled and consumers opted for electric cars. As a result, OPEC+ is extending its production cuts to maintain prices.
The IEA predicts that gains in the petrochemical feedstocks sector will be dominant, while uptake of transport fuels remains constrained by behavioral and technological changes.
Source: https://finance.yahoo.com/news/oil-2025-increasingly-looking-buyer-120000887.html