The oil market in April 2025 was marked by significant volatility and downward pressure on prices, driven by a combination of escalating trade tensions, increased supply expectations, and weaker demand forecasts.
The oil markets have seemingly tired of trying to anticipate the next move of US President Donald Trump, with ICE Brent settling within a relatively narrow bandwidth of $66.0-67.5 per barrel this week, OilPrice said. Such rangebound trading still represents a fall from a week ago, with hopes of potential US-China trade talks quashed by the Chinese Foreign Ministry denying that any bilateral negotiations were taking place.
Brent crude oil prices fell sharply, dropping by around $10 per barrel in March and early April, with futures trading at approximately $65 per barrel by mid-April after hitting a four-year low below $60 per barrel. This decline was triggered by U.S. tariffs announced on April 2, 2025, and OPEC+ decisions to accelerate production increases. By April 24, WTI oil was trading at $62.47 per barrel, reflecting a 12.13% decrease since the start of 2025.
Global oil demand growth for 2025 was revised downward by the International Energy Agency (IEA) to 730,000 barrels per day, a one-third cut from the previous estimate of 1 million b/d, due to trade tensions impacting economic growth, particularly in the U.S. and China. This growth rate is the lowest since 2020, excluding the pandemic period. The IEA also projected a further slowdown to 690,000 b/d in 2026, driven by economic fragility and increasing electric vehicle adoption.
Global oil supply rose to 103.6 million b/d in March 2025, up 910,000 b/d year-on-year, led by non-OPEC+ producers like the U.S., Canada, Brazil, and Guyana. OPEC+ announced plans to increase output by 411,000 b/d in May, though actual increases may be lower due to overproduction by some members. Non-OPEC+ supply is expected to grow by 1.4 million b/d in 2025, outpacing demand growth, contributing to a projected supply overhang.
Global oil inventories increased by 21.9 million barrels in February 2025 but remained near the bottom of the five-year range. The oil inventories were at their lowest since 2017, with physical demand up 1.5 million b/d year-on-year in April, contrasting with weak financial demand as speculative positions hit near-historic lows.
U.S. tariffs, including a 10% universal import tariff and higher rates on China, along with China’s retaliatory 34% tariffs, rattled markets. Sanctions on Russia, Iran, and Venezuela added short-term price volatility, though their impact on supply was limited. The U.S. exemption of energy from tariffs and OPEC+’s production strategy further shaped market dynamics.
Saudi Arabia gets serious about India. Indian Prime Minister Narendra Modi travelled to Saudi Arabia with an official visit and accompanied by Crown Prince Mohammed bin Salman signed a framework agreement to jointly establish two new refineries in India, presumably involving Saudi Aramco.
Kazakhstan shows its feisty side, OilPrice said. Currently wielding the worst compliance readings within OPEC+, Kazakh government officials struck back against criticism by stating that Kazakhstan will prioritize national interests over those of OPEC+ as it currently produces some 350,000 b/d above its quota.
Japan moves to subsidize fuel even more. Japan has announced a revamp of its fuel subsidy policy, providing fixed subsidies from May 22 onwards that seek to lower gasoline and diesel prices by ¥10 per litre ($0.26 per gallon), whilst prices of jet fuel and fuel oil would be cut by half that amount.
In summary, April 2025 saw oil markets grappling with bearish sentiment due to trade wars, supply growth outpacing demand, and low speculative interest, despite tight physical inventories and some geopolitical price support. The market outlook remains uncertain, with potential for further volatility as trade policies and OPEC+ decisions evolve.
The U.S. Energy Information Administration lowered its Brent price forecast to $68/bbl for 2025 and $61/bbl for 2026, citing growing global production and slower demand growth. Wood Mackenzie projected Brent at $73/bbl for 2025, down from $80/bbl in 2024, emphasizing the interplay of OPEC+ supply increases and tariff-driven demand risks.
/OilPrice, X, IEA, EIA/