Sunday, 1 February 2026
Global oil markets experienced their sharpest annual price decline in five years in 2025, shaped by persistent oversupply, slowing demand growth and recurring geopolitical disruptions, according to a report by Kamco Invest .
Crude prices fell for the third consecutive year. Brent crude declined by 17.7% year on year to close 2025 at USD 61.3 per barrel, while the OPEC reference basket fell by 18.2% to USD 61.0 per barrel. Prices started the year near USD 76 per barrel, peaked above USD 83 early on, and then trended downward, briefly recovering mid-year before slipping below USD 60 per barrel in December. The year ended with the market in contango, indicating expectations of continued oversupply into 2026 .
The report notes that geopolitical tensions remained a major source of short-term volatility throughout the year. Conflicts in Ukraine and the Middle East, sanctions on Russia, Iran and Venezuela, disruptions linked to shipping routes, and trade tensions triggered temporary price spikes, but these were insufficient to offset structural market imbalances. Toward the end of 2025, escalating tensions involving Venezuela and renewed sanctions contributed to brief price rebounds .
On the demand side, global oil demand growth was repeatedly revised downward during the year. Initial forecasts of around 1 million barrels per day (mb/d) were cut to approximately 0.7 mb/d by mid-year, the weakest growth since 2009, before being revised slightly higher to around 830,000 barrels per day by year-end. China’s role shifted notably, with demand growth slowing as fuel consumption plateaued amid rapid adoption of electric vehicles, expansion of LNG-powered transport and increased use of high-speed rail. Demand for petrochemical feedstocks, however, remained relatively strong .
Supply developments added further downward pressure on prices. World oil supply increased by about 2.0 mb/d in 2025, driven by higher output from both OPEC and non-OPEC producers. OPEC crude production averaged 27.6 mb/d, up from 26.6 mb/d in 2024, while non-OPEC supply also expanded. The gradual unwinding of OPEC+ production cuts from April 2025 resulted in a cumulative increase of around 2.9 mb/d by year-end, before further hikes were paused due to falling prices .
The United States remained a key contributor to global oversupply. US crude oil production reached a record average of 13.6 mb/d in 2025, reflecting continued growth in shale output. Shale production alone averaged around 10.4 mb/d, also a record level, reinforcing the supply-driven nature of the market imbalance .
Looking ahead, the report highlights a cautious outlook for prices. Consensus forecasts compiled by Bloomberg indicate Brent crude prices averaging close to USD 60 per barrel through 2026, with most projections clustered in the USD 55-65 range. While demand is expected to continue growing modestly in 2026 and 2027, supply growth—particularly outside OPEC-suggests that market rebalancing may remain gradual rather than immediate .
