Crude – The black gold declines by around 14 percent in 2025 YTD

Bengaluru, June 06, 2025 – Since the start of 2025 till date, Crude Oil prices declined by around 14 percent on the MCX, while NYMEX WTI oil prices have fallen by around 13 percent in the same time frame. Crude oil is the benchmark of global growth and the fall in the oil prices in the recent months is an indicator that global growth might slowdown in the months ahead.

The tardiness in oil prices is on account of the US President Donald Trump’s tariff wreck since the start of the year 2025. Moreover, the escalation of geo-political tensions between Russia-Ukraine although they are sitting on the negotiation table discussing peace, combined with the tariff situation between US-China have created an uncertain situation disturbing global growth dynamics. China on the other hand has imposed tighter controls on rare earth exports which could disrupt the car production in those countries who import these rare earth commodities leading to escalation of tensions in the global world.

The tariff wreck, the US-China tensions, the Russia-Ukraine situation has led to a slowdown in the global growth and going by the Organisation for Economic Co-operation and Developments latest forecast, US GDP growth is set to slow and dip to 1.6% in 2025 and 1.5% in 2026 from 2.8% in 2024. Global growth is also projected to slow to 2.9% in 2025, down from 3.3% in 2024. The OECD said that the weakened economic prospects will be felt around the world.

On the Supply side, OPEC (Organization for Petroleum Exporting Countries) have raised their oil production in April 2025, when the group began a series of accelerated increases mainly spurred by Saudi Arabia, according to Bloomberg Survey. The survey showed that the 12 members of the OPEC boosted its oil production by 2,00,000 barrels per day in which Saudi Arabia accounted for half of the increase. This strategy to increase oil output is primarily done by Saudi Arabia to punish rogue members and recoup the lost market share. This increased supply, and the geo-political disturbance is not an ideal environment for oil prices rally and if the supply side eases further in the months ahead, the year 2025 will be an era of subdued oil prices.

OECD oil inventories are considered to be the global benchmark and the days of forward consumption as of 1Q2025 stands at around 88 days which signals that the oil inventories can comfortably satisfy a quarter of the year consumption even if there are disturbances in the global supply and demand dynamics.

Outlook

Looking at the comfortable inventory, slowdown in the global growth as well as in the US on account of tariff policies, the escalation of geo-political tension are all headwinds for oil prices to rally in 2025. We see NYMEX oil prices forming base at around $58/barrel mark while the higher side can see rally towards$70/bbl if there are any major disturbances to supply side.

On the MCX, the base for oil prices can be seen at around Rs.4800/bbl while the higher side rally can extend towards Rs.6200/bbl mark by the end of 202

–By Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One