Tariff salvos hit demand outlook

The return of Donald Trump to the White House emerged as a key source of volatility. From the early days of the year, Trump threatened a broad range of countries — including China, Canada, Mexico and even close U.S. allies in the European Union — with new trade tariffs. The approach quickly darkened the outlook for global oil demand. Trump also maintained pressure on OPEC to boost output to keep prices low.

By early February, the trade war between the world’s two largest economies entered a new phase as Washington imposed tariffs and Beijing retaliated. Oil prices slid from around $80 a barrel to near $62, a level not seen since 2021. The drop was so sharp that some media outlets reported that roughly one-fifth of oil’s market value had been wiped out in the opening weeks of 2025. Hopes for renewed trade talks later eased concerns, but the calm proved fragile and tariff risks continued to weigh on the market.

A war that failed to shake oil

On March 15, the United States launched its first Middle East military operation of Trump’s second term, striking positions of Yemen’s Houthi movement. The action briefly raised geopolitical risk, heightening concerns over shipping security in the Red Sea and the Bab el-Mandeb Strait. Prices rose modestly at first, but Trump’s sudden announcement of a ceasefire — without clear gains on the ground — quickly defused market anxiety. The episode underscored that traders react less to isolated clashes than to their duration and scope.

OPEC+ presses ahead as surplus fears grow

On March 4, eight OPEC+ members agreed to begin a gradual rollback of 2.2 million barrels per day in output cuts, starting with an increase of 138,000 bpd in April. The plan had been delayed several times because of market conditions, but it later accelerated, ultimately adding more than 2.5 million bpd to supply. The move coincided with repeated warnings from analysts about a looming supply surplus, reinforcing downward pressure on prices.

Twelve-day war and Hormuz fears

On June 13, reports of nighttime explosions in Tehran and Israeli strikes against Iran jolted the oil market. Prices jumped about 12% to $74 a barrel as fighting intensified and the United States became directly involved. Speculation mounted that Iran could consider closing the Strait of Hormuz, a chokepoint through which about 20% of global oil consumption flows. Some analysts warned prices could soar to $200 or even $300 a barrel if the strait were shut.

Instead, the conflict ended after 12 days through mediation by Qatar and the United States. With prices briefly topping $77, a ceasefire restored relative calm, and by the end of June oil was trading near $66.

Energy infrastructure under fire in Ukraine war

Mutual attacks by Russia and Ukraine on each other’s energy infrastructure added another layer of geopolitical risk. Strikes on refineries, fuel depots and production and transit facilities periodically heightened supply concerns, particularly in Eastern Europe and the Black Sea region, and even extended to the Caspian Sea. While the attacks did not lead to a direct loss of global supply, they increased uncertainty and kept a geopolitical risk premium in prices.

Red Sea tensions resurface

On Sept. 1, Yemen’s Houthis said they struck a tanker linked to Israel, the Scarlet Ray, with a ballistic missile in the Red Sea. The attack raised concerns over shipping routes through the Red Sea and Bab el-Mandeb, but the market reaction was muted. Brent and U.S. crude posted only modest, short-lived gains as alternative supply routes remained open and no sustained disruption followed.

Shock in Doha fades quickly

On Sept. 9, news broke of an Israeli strike in Doha, briefly pulling a Gulf Cooperation Council country directly into the regional conflict. Before details emerged, traders weighed worst-case scenarios, including threats to Persian Gulf export routes. Brent jumped about 3% to near $67. Hours later, as it became clear the attack was limited, a failed assassination attempt and energy flows were unaffected, prices retreated. The episode highlighted how even brief headlines can jolt oil markets in West Asia.

A fragile Gaza ceasefire

After months of war in Gaza, an early October ceasefire announcement eased regional tensions. Prices, which had climbed toward $70, fell to about $65 and opened the door to a move toward $60. While the truce revived hopes of lower geopolitical risk, traders remained cautious given the region’s history and the risk of renewed fighting.

Sanctions and peace talks pull in opposite directions

In the second half of 2025, tougher U.S. sanctions on Russia intensified pressure on one of the world’s top oil exporters. On Oct. 22, Washington sanctioned major Russian firms Lukoil and Rosneft, tightening restrictions on exports and market access and adding volatility to prices. At the same time, growing optimism over potential Russia-Ukraine peace talks fostered expectations of easing tensions. The opposing forces left prices swinging between sharp drops and periods of relative stability.

Iraq’s Kurdistan fields under attack

Repeated drone and missile attacks on oil and gas fields in Iraq’s Kurdistan region added to market unease. Strikes in mid-July temporarily halted production at key fields such as Tawke and Peshkabir. Another attack in late November hit the Kormor gas field near Sulaymaniyah. While the disruptions were temporary, they underscored the vulnerability of regional energy infrastructure and prompted brief price spikes.

Venezuela tensions fail to move markets

In the final weeks of 2025, tensions between the United States and Venezuela escalated as U.S. forces seized several Venezuelan tankers and ramped up pressure on Caracas. Venezuela, which holds the world’s largest oil reserves and exports nearly 1 million bpd, might normally have been a bullish factor. This time, however, fears of oversupply and hopes for Russia-Ukraine peace talks largely offset the impact, muting the market response. Venezuela nonetheless remained a key uncertainty heading into 2026.

Oil in 2025: crises meet surplus

The oil market in 2025 was shaped by overlapping geopolitical shocks, regional conflicts and sanctions, alongside OPEC+ production increases and growing supply surpluses. Together, they pushed prices down nearly 20% and fueled sharp volatility. While ceasefires and diplomatic efforts periodically eased concerns, persistent uncertainty and oversupply kept the market stuck between competing forces of supply and demand.

The year served as a reminder that oil prices reflect not only global politics and economics but also the fundamentals of production and consumption. As 2026 approaches, the search for a durable balance between supply and demand remains fraught with challenges and uncertainty.