Average monthly crude oil prices dropped to below $65 per barrel in May 2025, one of the lowest since April 2021. Following an 8.1% increase in January 2025, WTI prices declined for three consecutive months from February to April, reflecting a 6.8% monthly decrease, around 9% year-to-date fall, and more than 25% year-over-year drop.
This sharp decline was driven by a combination of geopolitical tensions, including Israel’s reported preparations to strike Iranian nuclear sites and fresh sanctions on Russian oil, oversupply, and weakening global demand. A major factor was the escalating US-China trade dispute, with China imposing a 10% tariff on American crude, dampening demand from the world’s largest oil importer.
At the same time, OPEC+ raised production for the first time since 2022, adding to supply pressures. The group is expected to add 411,000 barrels per day in July. Market sentiment was further weighed down by reports suggesting OPEC+ may unwind the remainder of its 2.2 million bpd voluntary cuts by October.
Economic data signalled slower growth in both the US and China, with rising US unemployment claims and forecasts that China’s oil imports may soon peak. A strengthening US dollar made oil more expensive globally, while a large crude inventory build in the US and surging domestic storage demand added to the bearish outlook.
