Global Oil Market Faces Supply Glut and Demand Weakness

Sharp Price Correction in 2025

The global crude oil market experienced a significant price correction in 2025, with WTI crude prices declining by 20.68% year-to-date. As of December 22, 2025, WTI crude for February 2026 delivery was trading at $57.16 per barrel on the New York Mercantile Exchange. This price movement reflects fundamental changes in both supply and demand dynamics.

Supply Surge from Multiple Sources

The International Energy Agency (IEA) reported that the global oil market is currently facing a supply surplus of 4 million barrels per day. This oversupply is attributed to increased production from both OPEC+ and non-OPEC producers, particularly the United States, Guyana, and Brazil. These countries have collectively ramped up their oil production, contributing to the global surplus.

Demand Weakness in Key Markets

The supply glut is compounded by weakening demand, particularly from China. The world's second-largest economy is undergoing a rapid transition to electric vehicles (EVs), which has led to a decrease in oil consumption. This transition is a significant factor in the current demand weakness, putting further downward pressure on global oil prices.

Market Expert Analysis

Wahyu Tribowo Laksono, a commodity expert and founder of Traderindo.com, attributed the sharp decline in WTI prices to the global supply surplus. He emphasized that the combined effect of increased production and weakening demand has created a challenging environment for oil prices.

Implications for the Energy Market

The current market dynamics suggest that oil prices will likely remain under pressure in the near term. The supply surplus and transition to cleaner energy in major consuming countries are expected to continue influencing market trends. Stakeholders in the energy sector will need to monitor these developments closely to navigate the changing landscape.