Oil prices have recorded their largest annual decline since 2020, ending 2025 sharply lower amid a global supply glut and weak demand growth. Brent crude futures fell about 18–19% over the year, while U.S. West Texas Intermediate (WTI) crude dropped nearly 20%, marking the steepest yearly losses in five years. Average 2025 prices for both benchmarks were the lowest since 2020, with Brent settling around $60.85 a barrel and WTI near $57.42 at the end of the year.
The downturn reflects a persistent oversupply in global oil markets as production outpaced consumption throughout the year. Major producers including OPEC+ and non-OPEC countries such as the United States, Brazil, and others maintained or raised output even as demand growth slowed, keeping inventories elevated. Analysts attribute the price slump to this surplus, which is expected to persist into 2026, continuing to weigh on crude.
Geopolitical tensions and trade disruptions contributed to early-year price volatility, but their impact was not enough to offset the broader supply pressures. Despite conflicts in regions like the Middle East and sanctions on countries such as Russia, Iran, and Venezuela, global markets remained oversupplied, edging down prices further.
The oil price slide has wider implications for energy markets and economies. Lower crude costs have eased inflationary pressures in many countries, but energy-exporting nations and oil companies face reduced revenues and tighter budgets. Some producers have been forced to consider production cuts or fiscal adjustments in response to the prolonged slump.
Looking ahead, market watchers are focused on the upcoming OPEC+ meetings and production strategies for 2026. Some analysts predict that sustained lower prices could eventually prompt supply cuts, but with demand growth still weak, any recovery may be gradual and capped.
In addition to oil’s decline, other commodities have shown contrasting performance: precious metals like gold and silver posted significant annual gains in 2025, highlighting divergent trends across commodities markets.
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