In 2025, international crude oil surged at the beginning of the year and then fluctuated downwards throughout the year. The central market has significantly shifted downwards compared to the previous two years. According to data from SunSirs, Brent crude oil fell by 17.56% in 2025. The core logic behind this is the combined effect of oversupply and weak demand in the global market under the influence of US tariff policies and increased OEPC production, as well as a short-term rebound caused by geopolitical disturbances.

At the beginning of the year, the US Treasury Department imposed a new round of sanctions on Russia, and the market expected a tightening of oil supply. Coupled with the extremely cold weather in Europe and America driving fuel demand, the Brent crude oil price rose to its highest point of $82.63 per barrel for the year on January 15th, boosted by favorable supply and demand. Subsequently, the US tariff policy surfaced, the expected Gaza ceasefire agreement was reached, and OPEC entered a production increase cycle in April, leading to a shift in supply and demand structure. On April 9th, Brent crude oil fell below the $60 mark.

In late June, geopolitical conflicts resurfaced as Israel launched airstrikes on Iran, causing a rise in the geopolitical risk premium of crude oil. Brent crude oil experienced a significant rebound again, with Brent oil prices rising to $78.85 on June 20th, the second highest point of the year.

In the second half of the year, the market experienced a downward trend due to supply pressure caused by OPEC's increased production, as well as the impact of US tariff policies and weakened seasonal demand. The temporary rebound caused by geopolitical conflicts has not reversed the overall downward trend.

Supply side analysis:

OPEC production policy boosts oil price decline

Since 2025, OPEC+ has continuously increased production multiple times, with a significantly faster pace than market expectations. On the one hand, there have been multiple urging from US President Trump to cooperate with US demands to lower oil prices and lower inflation levels. On the other hand, internal conflicts within OPEC+ have intensified, and member states, such as Kazakhstan, Nigeria, Iraq, and the United Arab Emirates, are eager to increase production capacity based on their own interests and economic needs. At the same time, Trump's tariff policy has also slowed down the global economy, and OPEC+ has gradually increased production to compete for market share in crude oil. With significant production increases, oil prices continue to decline.

In April 2025, the first phase of OPEC+ production increase: 2.2 million barrels per day. The recovery plan for voluntary production reduction is as follows: 1. Increase production by 137,000 barrels per day in April; 2. From May to July, the production increased by 410,000 barrels per day per month for three consecutive months, with a monthly increase equivalent to the total planned three months; 3. Accelerate to a monthly increase of 550,000 barrels per day from August to September, with a monthly increase comparable to the original plan for a total of four months.

In October 2025, OPEC+ will increase production in the second phase: 1.65 million barrels per day. The recovery plan for joint production reduction will be announced on September 7th, with an increase of 137,000 barrels per day in October. On October 5th, it will be decided to continue increasing production by 137,000 barrels per day in November, and on November 2nd, it will be decided to continue increasing production by 137,000 barrels per day in December. Suspend the production increase plan in the first quarter of 2026.

The OPEC report shows that OPEC's daily crude oil production in November was 43.06 million barrels, an increase of 43,000 barrels from October. Among them, OPEC's crude oil production in November decreased by 0.1 million barrels per day to 28.48 million barrels per day; Saudi Arabia's crude oil production increased by 54,000 barrels per day in November to 10.053 million barrels per day; Russia's daily crude oil production slightly increased to 9.367 million barrels in November. The report predicts that the average demand for OPEC+ crude oil in 2026 will be 43 million barrels per day, and it is expected that OPEC+'s demand for crude oil in the first quarter will be 42.6 million barrels per day.

Russian oil exports are blocked

Since 2025, countries such as Europe and the United States have continuously imposed sanctions on Russian oil exports, resulting in obstacles to Russian oil exports; But due to the rapid expansion of the Shadow Fleet, the decline in Russian oil is not significant. Institutions predict that Russia's oil exports will be approximately 4.8 million barrels per day by 2025, a 4.5% increase from last year's forecast. Although the actual export volume decreased in the first half of the year, it still maintained its position as the world's second largest exporter throughout the year. Under the impact of sanctions, there has been a shift in export direction, with Europe's share decreasing from 51% to 11% and the proportion of exports to Asia increasing to 81%.

Supply forecast for 2026:

It is expected that the year-on-year growth rate of non OPEC+ production will remain at a high level in 2026, and the increment will decline compared to 2025. Due to investment and cost constraints, the increase in shale oil production in the United States will encounter bottlenecks, and it is expected that there will be some room for a decline in production in 2026. The pace of OPEC+ production increase may slow down or temporarily stagnate due to the slowdown in demand growth and low oil prices. In addition, although Russia has its own shadow fleet to evade sanctions, there is still a certain risk of production decline. The broader goal of OPEC+in the future is to initiate a reassessment process of the production capacity of all member countries, monitor the market in real-time, and adjust production policies in a timely manner.

Analysis and Prediction of Demand Side: The Impact of China US Trade Friction on Crude Oil Prices

The US tariff policy and trade friction between China and the US in 2025 have led to a decline in global GDP growth. Due to the uncertainty of Trump's policies, tariff policies generally affect the process of global economic recession, which will weaken oil demand to a certain extent. However, at the same time, the US economy is still showing some resilience, and it is expected that crude oil demand will slow down in 2026 but the growth rate will decline compared to 2025. European demand may experience a certain degree of decline, and crude oil growth in Asia will continue to rebound. From the perspective of major institutions, IEA, EIA, and OPEC have repeatedly lowered the growth rate of crude oil demand in 2025, and it is expected that the growth rate of demand in 2026 may continue to decline. In the case of poor demand expectations, the negative effects of oversupply and the disappearance of geopolitical risk premiums have intensified market bearish sentiment.

Oil Price Outlook for 2026

In 2026, the fundamentals of crude oil supply and demand tend to be loose, and the pressure of oversupply will not decrease. Even if OPEC suspends production in the first quarter, there will still be pressure on oil prices from oversupply in the first half of the year.

In terms of supply, non OPEC+ production will continue to grow year-on-year in 2026, and OPEC+ will be the main driving force for production increase. Against the backdrop of cost pressure from "low oil prices" and insufficient investment willingness of oil companies, US crude oil production may decline. Overall, production is still slowly increasing.

In terms of demand, the demand for crude oil in the United States is expected to continue to grow slightly, but the growth rate will decline compared to 2025, and the growth rate of crude oil in the Asian region will continue to rebound. As the starting year of China's 15th Five Year Plan, 2026 will continue to steadily promote economic development, with a slight rebound in the growth rate of China's crude oil demand. The demand growth rate in India and Southeast Asia will also rebound.

Overall, there is a high probability that the oil price center will shift downwards in 2026, but the space is relatively limited, and the average price of Brent crude oil may remain at the level of $55-65.

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