Oil prices showed a modest rebound on May 1, 2025, after steep losses in the previous sessions triggered by concerns over rising supply and weakening global demand. Brent crude futures edged up 16 cents (0.3%) to $61.22 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 6 cents (0.1%) to settle at $58.27. Both benchmarks had plunged to their lowest levels in about four years just a day earlier.
The recent price slide reflects growing expectations that OPEC+-the alliance of major oil producers including Saudi Arabia and Russia-will accelerate its planned production increases. Saudi Arabia has signaled to allies and industry experts that it is unwilling to extend output cuts to support prices and is prepared to endure a prolonged period of lower oil prices. Sources indicate that OPEC+ members are likely to propose another production hike in June, marking a second consecutive monthly increase.
Adding to the bearish sentiment, the U.S. economy contracted in the first quarter for the first time in three years, partly due to a surge in imports as businesses rushed to avoid higher tariff costs. This economic slowdown, compounded by ongoing trade tensions between the U.S. and China, has raised fears of a global recession, further clouding oil demand prospects.
Reflecting these dynamics, major energy agencies have revised down their oil demand and price forecasts for 2025. The International Energy Agency (IEA) cut its global oil demand growth forecast by 300,000 barrels per day to 730,000 bpd, the slowest pace in five years, citing tariff-driven economic uncertainty and trade disputes. The U.S. Energy Information Administration (EIA) projects Brent crude will average $68 per barrel in 2025 and fall to $61 in 2026, with inventories expected to build as OPEC+ unwinds cuts and non-OPEC production grows. Despite the recent price weakness, U.S. crude inventories unexpectedly declined by 2.7 million barrels last week, driven by strong export demand and refinery activity, providing some short-term support to prices. However, analysts warn that the broader trend remains bearish given ample supply and subdued demand growth.
In summary, oil markets are navigating a complex environment marked by rising supply from OPEC+ and non-OPEC producers, slowing global demand amid trade tensions, and economic uncertainties. While prices have paused their steep decline, the outlook for 2025 remains subdued, with Brent crude expected to average in the low $60s per barrel and continued volatility ahead.