By Benadeta Mwaura - Reporter
Kenya, 31 December 2025 - The global oil market in 2025 unfolded as a year of sharp contrasts, beginning with anticipation and price optimism, only to slide into steep losses driven by oversupply and sluggish demand.
A market once sensitive to geopolitical shocks grew increasingly indifferent, shaking off regional conflicts and sanctions as barrels in storage outpaced barrels in daily combustion.
Brent and WTI crude dropped almost 18% over the year, cementing their lowest performance since the pandemic-scarred trading of 2020.
By December, Brent traded between $60–$63 per barrel while WTI sat lower at roughly $55–$59, sending a clear message that supply had outrun sentiment.
At the heart of the downturn was a production surge. OPEC+ collectively added nearly 2.9 million barrels per day from April, before later pausing output increases as prices softened.
The United States kept its shale rigs pumping, reinforcing a steady stream of non-OPEC barrels that flooded global markets.
Demand forecasts, initially projected at close to 900,000 bpd growth, were later revised toward 600,000 as Europe slowed economically and China’s post-reopening recovery faded.
Even geopolitical tension, wars, maritime disruptions, sanctions only delivered short-lived price spikes that faded as quickly as they appeared.
Russia remained a major wildcard.
Under pressure from Western restrictions, Moscow moved crude at discounts reaching $20–$30 below Brent, boosting flows into Asia but thinning margins and deepening the global glut.
Analysts argued that cheap Urals crude alone was enough to mute bullish momentum. By late-year, traders warned of the possibility of oil slipping into the $40s if inventories continued rising. Investment banks trimmed price outlooks accordingly.
The Middle East entered 2025 navigating a complex energy landscape shaped by geopolitical tensions, OPEC+ production strategies, shifting global demand, and the accelerating transition toward renewable energy.
While the region remained the world’s largest oil supplier, accounting for nearly half of global proven reserves, production and exports fluctuated throughout the year due to policy decisions, conflicts, and market pressures.
Production in major producers such as Saudi Arabia, Iraq, and the UAE was largely influenced by OPEC+ output regulation, aimed at stabilizing prices amid concerns of oversupply and global economic uncertainty.
Several voluntary production cuts implemented in late 2024 carried into early 2025, keeping output moderate until mid-year when rising Asian demand triggered gradual increases.
Iran’s production remained constrained by ongoing U.S. sanctions, although covert exports continued, mainly to China, often through re-routed or blended shipments.
Meanwhile, Iraq faced occasional disruptions due to internal political tensions and disputes involving the Kurdistan region over Kirkuk fields.
Trade dynamics were equally affected by global shipping challenges, including periodic disruptions in the Red Sea and Strait of Hormuz, which raised insurance premiums and forced some tankers to reroute via longer paths around the Cape of Good Hope.
The conflict in Gaza and heightened tensions in the Gulf also led to precautionary naval escort arrangements for crude carriers, slightly slowing transit times and elevating transport costs.
However, Asia maintained its position as the region’s strongest customer base, led by China, India, Japan, and South Korea.
Export trends shifted as Middle Eastern states sought to secure long-term buyers and hedge against price volatility.
Saudi Arabia and the UAE increasingly invested in refineries abroad, especially in China and India, ensuring demand lock-in and downstream profit participation rather than relying solely on crude sales.
Qatar and Oman expanded their LNG and petrochemical portfolios, reflecting a broader regional move toward energy diversification beyond oil, even as crude exports remained vital.
Overall, 2025 underscored the Middle East’s enduring dominance in global oil supply while highlighting growing vulnerabilities to geopolitics, maritime security risks, and evolving energy markets.
The region adapted through strategic partnerships, long-term sales contracts, and increasing investment in refining and petrochemical infrastructure, signaling a future where petroleum remains central, but not the only pillar of the Gulf energy economy.
Africa plays a dual role in the global oil system, as both a producer and a consumer, meaning the source of oil varies widely by country.
Major producers such as Nigeria, Angola, Libya, Algeria and Egypt rely largely on domestic crude for exports and local refinery needs.
However, a large share of African states remain net importers, sourcing oil externally depending on geography, pricing and refinery compatibility.
East African economies such as Kenya, Tanzania, Rwanda, Uganda (before commercial extraction), Ethiopia and Zambia import most of their petroleum from the Middle East, particularly Saudi Arabia, the UAE and Kuwait.
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Kenya’s 2025 import data reflected continued reliance on Gulf suppliers due to competitive pricing and shorter shipping routes through the Indian Ocean. Powerhouses like Nigeria and Angola exported crude to Europe and Asia, yet ironically imported refined petroleum products including petrol and diesel due to limited domestic refining capacity, a contrast that kept pump prices sensitive to global refining margins.
West African importers including Ghana and Senegal also leaned heavily on Europe for refined fuel products, while North African states such as Morocco depended largely on imports from Spain, Italy and occasionally U.S. Gulf Coast suppliers to meet internal consumption.
South Africa sourced its crude from the Middle East and West Africa, while supplementing shortages through spot market purchases from global traders like Vitol and Trafigura.
Across the Atlantic, the United States remained one of the world’s largest oil producers in 2025, thanks to robust shale fields in Texas, New Mexico, North Dakota and Colorado.
U.S. output averaged around 12–13 million barrels per day, keeping it competitive with Saudi Arabia and Russia. Yet despite its scale, America continues to import oil, primarily from Canada, which supplied roughly half of its crude imports through pipeline networks. Additional barrels came from Mexico, Brazil, Saudi Arabia, Iraq and Nigeria, each fulfilling different refinery grades and sulfur specifications needed in U.S. Gulf Coast plants.
The global price downturn and oversupply shifted trade flows significantly. With the Middle East regulating production through OPEC+ decisions and offering competitive long-term contracts, many African importers maintained or increased Gulf oil purchases, benefiting from softer pricing that lowered government import bills and slowed inflation in fuel-reliant economies. Cheaper crude helped stabilize pump prices in Nairobi, Dar es Salaam and Accra, even as currency volatility and taxes kept final consumer costs uneven across the continent.
However, supply chains were periodically disrupted by security risks in the Red Sea and Bab-el-Mandeb corridor, where tanker routes faced threats linked to Houthi-linked attacks and regional tensions.
Some vessels shifted to longer routes around the Cape of Good Hope, raising freight costs and delivery times, thereby slightly bumping retail prices in net-importing African states.
For the United States, lower global oil prices pressured shale profitability, leading some producers to scale back drilling toward Q3 of 2025. Import volumes from Canada remained stable, but purchases from OPEC states such as Saudi Arabia and Iraq fluctuated as refineries balanced economics between domestic shale and foreign heavy crude blends.
Export revenues from U.S. crude to Europe and Asia softened, though low domestic energy prices cushioned inflation and supported manufacturing sectors.
The Russia–Ukraine conflict remained one of the most influential geopolitical forces shaping global oil markets through 2025.
While Russia continued to produce large volumes of crude, roughly 10–11 million barrels per day, keeping it among the world’s top three producers, export flows were reshaped by sanctions, price caps and shifting trade partnerships.
Western sanctions restricted Moscow’s ability to export freely to Europe, once its largest energy customer, pushing Russia to redirect massive oil volumes eastward, particularly to China, India and Turkey, often at heavy discounts of $20–$30 per barrel below Brent.
These discounts kept Russian barrels flowing but significantly reduced government revenue, forcing the country to depend heavily on “shadow fleet” tankers, third-party traders and alternative payment arrangements to bypass banking restrictions.
Domestic production remained relatively stable although at times fluctuating, but export logistics became more difficult, with higher transport insurance costs, rerouting ships away from European waters, and increasing reliance on aging vessel fleets.
This pushed Russia to expand pipeline and port capacity along the Arctic and Far East, while simultaneously tightening cooperation with OPEC+ partners to manage output levels and stabilize prices.
European countries, having cut dependence on Russian oil by over 90% since 2022, shifted toward Middle Eastern suppliers (Saudi Arabia, Iraq, UAE), U.S. shale producers and West African countries like Nigeria and Angola. This realignment strengthened Gulf influence in global markets and increased competition for Asian customers.
The war also created long-term market uncertainty, each military escalation or sanction update triggered short-term price spikes, even in a generally oversupplied market.
However, by 2025 traders increasingly treated the conflict as a structural backdrop rather than a shock event, limiting volatility compared to earlier war years.
The year evolved in phases.
January to March offered moments of price support as supply negotiations and regional instability stirred markets.
But by mid-year, the bearish story was dominant: supply was plentiful, storage was building, and buyers were no longer scrambling.
From September to December painted a harsher picture; oversupply narratives overshadowed risk premiums, leaving producers with reduced earnings while consumers welcomed friendlier pump prices.
Global consequences varied.
Exporting states leaned toward fiscal caution, cutting budgets and exploring supply management strategies, while import-dependent nations enjoyed lower fuel costs and eased inflation.
2026 forecasts remain cautious, with Brent expected to average $55–$60 until inventories balance or new demand drivers emerge.
Yet, long-term energy transitions, refinery investments, and geopolitical disruptions still hold potential to inject volatility into what has become a surprisingly quiet oil market.
