Oil prices fell on Friday due to concerns about weaker demand growth in 2025, particularly in China, the world’s largest crude importer.
As a result, global oil benchmarks were set to end the week nearly 3% lower.
Brent crude futures dropped by 33 cents, or 0.45%, to $72.55 a barrel, while U.S. West Texas Intermediate crude futures decreased by 32 cents, or 0.46%, to $69.06 per barrel.
Sinopec, China’s state-owned refiner, stated in its annual energy outlook on Thursday that China’s crude imports could peak as early as 2025, with oil consumption expected to reach its peak by 2027.
“Benchmark crude prices are in a prolonged consolidation phase as the market heads towards the year-end weighed by uncertainty in oil demand growth,” said Emril Jamil, senior research specialist at LSEG.
OPEC+ would need to maintain supply discipline to boost oil prices and alleviate market concerns, especially amid ongoing revisions to the global demand growth outlook.
The dollar’s rise to a two-year high added pressure on oil prices, following the Federal Reserve’s indication that it would take a cautious approach to cutting interest rates in 2025.
A stronger dollar makes oil more expensive for holders of other currencies, and the potential for slower rate cuts could slow economic growth, reducing oil demand.
JPMorgan forecasts that the oil market will shift from balance in 2024 to a surplus of 1.2 million barrels per day (bpd) in 2025. The bank anticipates a 1.8 million bpd increase in non-OPEC+ supply in 2025, while OPEC output is expected to remain at current levels.
G7 countries are exploring options to tighten the price cap on Russian oil, including the possibility of an outright ban or reducing the price threshold, according to a Bloomberg report on Thursday.
Russia has managed to bypass the $60 per barrel cap imposed in 2022 by using its “shadow fleet” of ships, which the EU and Britain have recently targeted with additional sanctions.
