The World Bank has forecasted that the price of crude oil will average $64 per barrel in 2025, a significant decrease from the estimated $80.7 per barrel recorded in 2024. According to the Bretton Woods institution’s April 2025 Commodity Markets Outlook, the price of crude oil is expected to further drop to an average of $60 per barrel later in 2025.
Factors Contributing to Price Drop
Several factors have contributed to the decline in oil prices, including:
- Escalating Concerns about Global Economic Growth: Oil prices fell sharply in early April 2025 to below $63 per barrel, the lowest level since April 2021, amid growing concerns about global economic growth.
- US Trade Tariffs: The announcement of large trade tariffs by the United States on April 2, 2025, led to a $12 per barrel decrease in the course of four trading days, marking the 11th-worst four-trading-day price performance since 1990.
Impact on Petroleum Products
If the foreign exchange remains stable, the price of petroleum products is expected to remain flat at the pumps. This could bring relief to consumers who have been affected by the recent fluctuations in oil prices.
Global Oil Demand
Despite the decline in oil prices, global oil demand has shown resilience, increasing by 1.2 million barrels per day (mb/d) or 1.2% in the first quarter of 2025. Key trends in global oil demand include:
- China’s Oil Demand: China’s oil demand edged up by 0.2 mb/d (1.4%) in the first quarter of 2025, driven by a modest recovery in economic activity.
- Advanced Economies: Demand in advanced economies also picked up by 0.4 mb/d (0.9%) in the first quarter of 2025.
- Regional Variations: Oil consumption growth slowed in China, Europe, and Central Asia, while accelerating in East Asia and the Pacific (excluding China), the Middle East and North Africa, and South Asia. However, consumption fell in Sub-Saharan Africa.
Electric Vehicles Impact
The growth of electric vehicles (EVs) has contributed to the deceleration of China’s oil demand, with over 40% of new cars purchased in China in 2024 estimated to be EVs. This has resulted in an oil demand reduction of about 0.45 mb/d.
