What's Affecting Oil Prices This Week? (March 17, 2025)

The price of Brent crude ended the week at $70.62 after closing the previous week at $70.45. The price of WTI ended the week at $67.19 after closing the previous week at $67.05. The price of DME Oman crude ended the week at $71.61.

At the beginning of last week, we expressed the view that the price of Brent crude would get support from the Trump administration voicing intentions to place more sanctions on Russia, Iran and Venezuela, and from geopolitical risks, but with limited upside and that the price of Brent crude would not break through $72. During the week, the price of Brent crude did go up but never got higher than $70.95.

For the upcoming week, we think the price of Brent crude will move higher—but again will struggle to break through $72. We are expecting that support will come from the market reacting to President Trump ordering a large-scale assault on Houthi targets in Yemen and the associated risks. One risk is that the Houthis could counter by attacking Israel with ballistic missiles. Another risk is that the Houthis could successfully attack U.S. Navy assets. We are also expecting that the market will react positively to China releasing its “Special Action Plan to Boost Consumption,” which is an effort to reduce reliance on exports, which are under threat from tariffs across the globe.

The impact of the positive news will be muted by other factors, including the following.

IEA is currently forecasted that global supply will increase by around 1.5 MMbbl/d (and even more if OPEC+ unwinds its production cuts further beyond April). IEA is expecting that almost all the growth will come from non-OPEC supply. Currently, we are forecasting that non-OPEC supply will increase by less than 1 MMbbl/d in 2025. Embedded in this forecast is that crude production in the U.S. will see only nominal gains in 2025. While President Trump is pushing for more production, it has been our viewpoint that U.S. shale oil producers will remain focused on maximizing shareholder value—and so far, we do not see any justification to alter this viewpoint. We are also expecting that OPEC will not increase supply in any material way in 2025. Even with members of OPEC+ reiterating that they will start unwinding their supply cuts in 2025, we expect that the unwinding will be done at a slow pace with an eye on oil prices and not getting ahead of demand.

The IEA recently reduced its demand growth forecast for 2025 from 1.10 MMbbl/d to 1.03 MMbbl/d because of concerns about China’s demand. (Note: Based on our detailed analysis of oil demand with respect to each demand segment at the country level and with consideration of the shifts in the vehicle fleet and the role of alternative fuels, we are currently forecasting that oil demand growth will be 1.30 MMbbl/d in 2025.) China is scheduled to release economic data early in the week, and positive results could alleviate some of the concerns—especially in light of China’s ongoing efforts to improve its economy—including the aforementioned “Special Action Plan to Boost Consumption”—and its central bank moving forward with more accommodating monetary policies.

With concerns about the impact of tariffs, the market is sensitive to any negative economic news. The most recent economic news from the U.S. continues to be somewhat mixed. Last week, there was good news about inflation with the Consumer Price Index (CPI), increasing by only 0.2% in February and 2.8% on a year-on-year basis. The monthly increase was the smallest since last October. Even better news came from the latest reading for the Producer Price Index (PPI), which is a leading indicator for inflation. For February, the PPI was unchanged from the previous month, and the core PPI (excluding food and energy) decreased by 0.1%. In contrast to the inflation data, however, consumer sentiment from the University of Michigan Survey of Consumers for March fell to 57.9, a 10.5% decrease from the previous month—and 27.1% below the reading of the previous year. Consumers are concerned about the stock market and inflation with the one-year inflation outlook increasing to 4.9%, which is the highest reading since November 2022—and the five-year outlook increasing to 3.9%, which is the highest since February 1993.

For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our Short-term Outlook.

About the Author: John E. Paise, president of Stratas Advisors, is responsible for managing the research and consulting business worldwide. Prior to joining Stratas Advisors, Paisie was a partner with PFC Energy, a strategic consultancy based in Washington, D.C., where he led a global practice focused on helping clients (including IOCs, NOC, independent oil companies and governments) to understand the future market environment and competitive landscape, set an appropriate strategic direction and implement strategic initiatives. He worked more than eight years with IBM Consulting (formerly PriceWaterhouseCoopers, PwC Consulting) as an associate partner in the strategic change practice focused on the energy sector while residing in Houston, Singapore, Beijing and London.