Recap 2025: The Year in Crude Oil

OPEC fully unwinds 2.2 million b/d production cuts

Geopolitical tensions keep oil market jittery

Oversupply fears set the stage for weaker prices in 2026IMAGE: Crude oil storage tanks. Getty Images 

Brent crude is ending 2025 on a soft note, with ICE Brent futures down nearly 12% for the year. Persistent oversupply concerns, combined with geopolitical uncertainty, have kept the market under pressure.

Oil in the crossfire

Geopolitical conflicts have lifted Brent’s price sporadically this year.

In June, the Israel Defense Forces (IDF) struck major Iranian oil depots in Tehran, while the US conducted airstrikes on Iran’s nuclear sites.

Also in June, a US-brokered ceasefire deal between Israel and Iran came into effect. The Israeli government and Hamas leaders also reached a peace deal for the Gaza enclave in return for the release of all Israeli hostages held by the Iran-aligned militant group in October.

Meanwhile, Russia-Ukraine peace talks remain stalled, sustaining market caution over sanctions and energy flows. “Heightened tensions with Russia over the lack of progress on Ukraine peace explains the lack of momentum and conviction in the crude complex,” VANDA Insights’ founder Vandana Hari said.

In Venezuela, US sanctions tightened under President Donald Trump, culminating in the first seizure of a sanctioned oil cargo off its coast since 2019. Analysts say such moves underscore ongoing uncertainty in global supply.

Sanctions deepen for Moscow’s energy sector

In October, the US targeted Russia’s biggest oil producers – Rosneft and Lukoil – and their subsidiaries, following similar measures by the UK.

“There is plenty of uncertainty about Russian oil supply following US sanctions, but as we move through 2026, markets will get a clearer picture of the full impact,” two analysts from ING Bank said.

A shift in macro backdrop

The US Federal Reserve (Fed) cut its key interest rate thrice in 2025, most recently by 25 basis points (bps) to 3.50–3.75%, following a 25-bp cut in September and October.

Lower interest rates in the US can boost demand growth by making dollar-denominated commodities like oil more affordable for holders of other currencies.

Besides, the US' gross domestic product (GDP), a key indicator of demand growth and consumer spending activity, increased at an annualised rate of 4.3% in the third quarter of this year, raising expectations for demand growth.

From restraint to release

The Organization of the Petroleum Exporting Countries (OPEC) fully unwound the joint 2.2 million b/d cut in September, ahead of its schedule. Analysts warn that the ramp-up will push the global market into surplus in 2026.

“For 2026, we remain bearish towards energy markets, with the global oil market set to be in large surplus, following OPEC+ rapidly ramping up output as it shifts policy,” ING Bank’s analysts noted.

US tariffs return to the agenda

Trump unleashed the highly anticipated tariffs on all global trade partners this year, jarring global equity markets and heightening uncertainty in the commodities sector pushing oil prices lower.

The news escalated global trade war concerns, raising fears of economic uncertainties and demand growth slowdown.

Concerns that China’s oil demand may remain subdued into 2026 continue to loom large, acting as a headwind for Brent prices, analysts said.

Competing outlooks from top forecasters

Global oil prices are set to decline through 2026, as production hikes will keep the market in a surplus of around 2 million b/d, according to Goldman Sachs.

The US Energy Information Administration (EIA) expects Brent crude's price to average $55/bbl in the first quarter of 2026. Paris-based International Energy Agency (IEA) expects global oil demand to rise by about 860,000 b/d next year – about 90,000 b/d higher than its last month’s projection.

“We are heading into 2026 with a fairly bearish view on energy markets,” ING Bank analysts said.

In contrast, Saudi Arabia-led OPEC consortium expects global oil consumption in 2026 to grow by about 1.4 million b/d to average 106.52 million b/d. OPEC has also maintained demand forecast for its crude at 42.4 million b/d and 43.0 million b/d for 2025 and 2026, respectively.

Comments and predictions on Brent for 2026 will be relevant to watch on the last trading day of the year.

By Aparupa Mazumder

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