Oil Market Update – May 2025

In May 2025, the global oil market faced renewed downward pressure as supply growth continued to outpace slowing demand. The average Brent crude oil price for the month was approximately 64.45 US dollars per barrel, a decline from 68.13 dollars in April. West Texas Intermediate (WTI) followed a similar trend, averaging between 61 to 62 dollars per barrel throughout the month.

The start of May saw Brent prices near 63.90 dollars, dipping slightly due to expectations of increased output from OPEC+ producers. Mid-month, oil prices experienced a modest rally as sentiment improved following progress in trade talks between the United States, China, and the United Kingdom. Brent rose to around 65.40 dollars per barrel, while WTI approached 62.50 dollars. However, this upward movement was short-lived. By late May, prices retreated again as concerns over persistent oversupply and slowing global economic activity resurfaced.

Global oil supply during the month reached an estimated 104.6 million barrels per day, marking a year-on-year increase of about 1.6 million barrels. This growth came primarily from non-OPEC+ countries, with a slight boost from within OPEC+ as well. On the demand side, consumption growth slowed notably. The International Energy Agency (IEA) revised its demand forecast to 650,000 barrels per day for the remainder of 2025, down from nearly one million barrels per day in the first quarter. In response to the weaker price environment, US shale producers began cutting capital expenditures and reducing drilling activity.

The key market dynamics in May were influenced by supply signals from OPEC+, trade-related optimism, and continued builds in global oil inventories. While trade talks gave a temporary lift to market sentiment, the overarching concern around oversupply and weaker demand outlooks ultimately drove prices lower.

Looking ahead, the IEA expects global supply to continue expanding through the rest of 2025, while demand is likely to remain subdued. The US Energy Information Administration (EIA) projects an average Brent price of 66 dollars per barrel for 2025, easing to 59 dollars in 2026. Jadwa Investment forecasts Brent to average 67 dollars for the year, with prices expected to remain around the mid-60s range under current market conditions.

In summary, May 2025 marked a continuation of the bearish trend in oil markets, with fundamentals pointing toward further price consolidation unless demand growth recovers or production is restrained.