Crude Oil Costs Down In 2025 Due To Oversupply

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I don’t know if this was coordinated in any means with the Venezuela drama, but it surely’s an attention-grabbing piece to return out from the US Power Data Administration (EIA) at the moment. The company simply printed the next report: “Crude oil costs fell in 2025 amid oversupply.”

The most well-liked assumption concerning Donald Trump having the USA take over Venezuela is that it’s about oil. Venezuela has roughly 17% or 18% of the world’s crude oil reserves, greater than Saudi Arabia, and Donald Trump needs that oil.

One of many complicated issues about this, although, is what’s within the headline — the world is in a interval of oil oversupply. Extra pointedly, with China’s auto market quickly electrifying, Europe’s auto market electrifying, and now even many different auto markets around the globe electrifying, oversupply could also be the secret for a very long time. Nonetheless, occupied with it extra, Donald Trump most likely doesn’t know any of this. Even when he has been advised a few of these issues (however I don’t know who in his orbit truly would), he most definitely wouldn’t imagine them.

However let’s get again to the brand new EIA report.

“Crude oil costs typically declined in 2025 with provides within the world crude oil market exceeding demand. Crude oil stock builds in China muted among the worth decline. Occasions corresponding to Israel’s June 13 strikes on Iran and assaults between Russia and Ukraine concentrating on oil infrastructure periodically supported costs.” Humorous how that works….

“On a month-to-month common foundation, the worth of Brent crude oil declined from a excessive of $79 per barrel (b) in January to a low of $63/b in December, which was the bottom month-to-month common worth since early 2021. The annual common worth was $69/b, the bottom since 2020, even when adjusting for inflation.” Wow. We’re getting again to COVID-19 lockdown numbers!

We simply don’t want as a lot oil as many anticipated, even with China filling up its reserves.

“Within the first half of the 12 months, crude oil costs declined in response to slowing financial exercise, which might have an effect on world oil demand. Costs decreased within the first quarter (1Q25) with a contraction in U.S. GDP, and costs fell practically $15/b additional in April amid expectations that escalating tariffs amongst massive economies may proceed to gradual financial progress.” If we give it some thought, we aren’t even in an financial recession or melancholy (but). What if that does hit? After all, the financial system isn’t nice, and maybe worse than many are admitting. The tariffs are making the price of residing greater. And what’s truly going to show that round?

“Within the second half of the 12 months, OPEC+ bulletins that elevated crude oil manufacturing targets for the group elevated the prospect of an oversupplied market. In our most up-to-date Brief-Time period Power Outlook, we estimate that world manufacturing of crude oil and liquid fuels outpaced consumption all through 2025, with implied inventory builds of greater than 2.5 million barrels per day within the ultimate two quarters of the 12 months. These inventory builds had been the biggest recorded since 2000, other than in 2020.” Wow — the biggest inventory builds since 2000!?

The oil market is wanting darkish. So, actually, why go take over one other nation for extra oil? What sense does that make?

2026 could possibly be an attention-grabbing 12 months for the oil trade.