The global oil market in 2024 was characterized by a mix of volatility and resilience, with prices and demand dynamics shifting in response to geopolitical events, policy decisions, and economic trends. Brent crude, the international benchmark, averaged $84.67 per barrel in 2024, while West Texas Intermediate (WTI) hovered slightly lower, averaging $78.34 per barrel. Despite these relatively stable averages, prices saw significant fluctuations throughout the year.
Geopolitical events, including ongoing tensions in Eastern Europe and production adjustments by OPEC+, played a pivotal role in shaping the market. Early in the year, oil prices surged as OPEC+ announced production cuts of 1.66 million barrels per day (bpd), aiming to stabilize prices amid economic uncertainty. However, by the third quarter, concerns over slowing global economic growth led to a drop in prices, with Brent briefly falling below $80 per barrel.
Global oil demand in 2024 grew by approximately 2.2 million bpd, reaching a record 103.2 million bpd, according to the International Energy Agency (IEA). This growth was largely driven by a recovery in air travel and robust industrial activity in Asia, particularly in China and India. OPEC noted that Asian markets accounted for over 60 percent of the incremental demand, highlighting their pivotal role in the global energy landscape.
Conversely, demand in advanced economies, particularly in Europe and North America, remained subdued. IEA highlights factors such as the accelerated adoption of electric vehicles and increased investments in renewable energy contributed to a slower growth trajectory in these regions.
Brent and WTI prices continued to reflect their respective market dynamics. Brent’s premium over WTI persisted, driven by stronger European and Asian demand for Brent-linked grades. On the other hand, WTI prices were influenced by high inventory levels in the U.S. and constrained export capacity.
Going forward, the global crude oil market in 2025 faces a mix of uncertainties and opportunities. The IEA in its latest monthly report projects global oil demand to grow by 1.7 million bpd, reaching 104.9 million bpd. This growth is expected to be fueled by emerging markets, particularly in Asia, while demand in developed economies is likely to plateau.
OPEC remains optimistic, emphasizing that investments in upstream capacity will be critical to meeting future demand. However, it also cautioned about the potential risks of underinvestment, which could lead to supply shortages and price volatility.
Factors that will influence global crude in 2025 include the continued tensions in key oil-producing regions that could disrupt supply chains, pushing prices higher. Conversely, a resolution of conflicts could stabilize the market. The global economic recovery, particularly in emerging markets, will play a pivotal role in shaping oil demand. The growing emphasis on sustainability and decarbonization, especially in Europe and North America, could curb demand for crude oil in the long term. However, Trump’s plans to expedite drilling and the US’s exit from the Paris Club are likely to do the opposite till other countries fill the void.
Overall, OPEC+’s production decisions will remain a key driver of market stability. Analysts are divided on whether OPEC+ will opt for further cuts or increase production to maintain market share as of now.