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In 2024, global oil prices declined by approximately 3%, marking a second consecutive year of losses. The downturn witnessed in prices can be ascribed to the slowdown in post-pandemic demand recovery, challenges in China’s economy, and increased crude production from the United States and other non-OPEC producers. A reduced demand outlook in China led both OPEC and the International Energy Agency (IEA) to lower their oil demand growth projections for 2024 and 2025. The IEA anticipates a surplus in the oil market as 2025 begins, despite OPEC and its allies postponing planned production increases until April 2025 to address falling prices.

U.S. crude oil production reached a record high of 13.46 million barrels per day (bpd) in October, boosted by robust domestic demand. According to the U.S. Energy Information Administration (EIA), output is expected to increase further to 13.52 million bpd in 2025.

The Federal Reserve's anticipated interest rate adjustments in 2025 are a focal point for energy investors, as lower rates typically promote economic growth and higher energy demand. Analysts are also evaluating potential shifts in U.S. foreign policy under President-elect Donald Trump. His proposed strategies, including possible sanctions and a ceasefire in the Russia-Ukraine conflict, could significantly impact global oil supply dynamics. Tighter restrictions on Iranian oil exports and increased geopolitical tensions could lead to supply constraints, according to market observers.

China’s manufacturing activity continued to grow in December, albeit at a slower pace, suggesting that government stimulus measures are supporting its economy. Additionally, rising demand in India and recent improvements in Chinese industrial performance may help stabilize oil markets.

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The U.S. military conducted strikes on Houthi targets in Yemen following continued attacks on commercial shipping in the Red Sea by the Iran-aligned group. These incidents, tied to broader regional conflicts, have raised concerns about the security of global oil supply routes.