Tariffs are looming. But a lot of things are shaping oil prices this year.
Tariffs are looming. But a lot of things are shaping oil prices this year.
With tariffs on and off the table, and new reporting by Reuters indicating that President Donald Trump plans to crack down on Iranian oil exports, oil prices have been volatile recently.
Tariffs on Canadian crude would likely hit the Midwest especially hard — but there are a lot of other factors to consider that influence the ups and downs, and the impacts, of oil prices.
2025 was poised to be kind of chill when it came to the global balance of supply and demand for oil, said OPIS analyst Tom Kloza.
“This was supposed to be a year where it would be very, very close,” said Kloza. “In other words, supply and demand would be pretty much even, with maybe a little bit of extra supply.”
On the demand side, Joe DeLaura with Rabobank said the biggest consumers of crude — China, the U.S. and the European Union — have seen demand flattening out.
“The narrative that oil demand is growing for, like, the past 50 or 70 years is shifted, period,” said DeLaura.
At the same time, on the supply side, there’s plenty of new oil being produced. “You have Guyana, you have Brazil, you have Canada and you have the U.S.,” said DeLaura.
And don’t forget about the OPEC+ cartel. It’s trying to find room in the global market for the oil it’s been sidelining.
“That group has a plan that they endorsed again just yesterday, to begin putting more barrels back into the market on the back of successive rounds of production cuts the group has implemented going all the way back to 2022,” said Mark Finley at Rice University.
OPEC+ is trying to regain some market share. The question is, “Will the market allow them to do so,” Finley said, without weakening prices further? Because based on oil price forecasts, Tom Kloza said, this year could turn out well for consumers.
“You were likely to see the highest prices of the year in the first 100 days, and you’d see the lowest prices in the last 100 days.”
That’s right — the trend has been pointing to lower oil and gasoline costs, which Trump has said he wants. All he has to do is leave the market alone.
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