Global Crude Oil Prices Fell in 2025 as Oversupply Dominated the Market
- Tony Zelinski
- 4 minutes ago
- 2 min read
Crude oil markets spent much of 2025 under downward pressure, with global supply consistently outpacing demand and driving Brent prices to their lowest annual average since 2020. Despite geopolitical flare‑ups and intermittent supply risks, the overarching theme of the year was clear: oversupply ruled the market.
A Year Marked by Declining Prices
Brent crude began 2025 near $79 per barrel but slid steadily throughout the year, reaching $63/b in December — the lowest monthly average since early 2021. The full‑year average settled at $69/b, even after adjusting for inflation, underscoring the persistent softness in global fundamentals.
Several factors contributed to this decline:
Slowing economic activity, including a contraction in U.S. GDP during the first quarter
Escalating tariff tensions among major economies, which weighed on global growth expectations
OPEC+ production target increases in the second half of the year, adding barrels into an already saturated market
Record Stock Builds Reinforced the Downtrend
According to the EIA’s December Short‑Term Energy Outlook, global production of crude oil and liquid fuels exceeded consumption throughout 2025, resulting in implied stock builds of more than 2.5 million barrels per day in the final two quarters — the largest since 2000, excluding the pandemic year of 2020.
Typically, rising global inventories exert downward pressure on crude prices. However, one key factor softened the blow: China’s crude inventory builds, which effectively absorbed some of the excess supply and limited even steeper price declines.
Geopolitical Events Provided Only Temporary Support
While the broader trend was bearish, several geopolitical flashpoints briefly interrupted the slide:
Israel’s June 13 strikes on Iran
Attacks between Russia and Ukraine targeting oil infrastructure
These events created short‑lived price spikes but were ultimately overshadowed by the structural oversupply dominating the market.
Looking Ahead
The 2025 crude oil story is a reminder of how quickly market balance can shift — and how difficult it is for geopolitical risk to overcome persistent fundamental trends. With inventories elevated and economic uncertainty lingering, the market enters 2026 with a cautious tone.
Energy stakeholders will be watching closely for:
OPEC+ production strategy adjustments
Demand recovery signals tied to global economic performance
China’s ongoing inventory behavior
Potential supply disruptions in key producing regions
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