Oil Market Report - December 2025

December 2025 trading in the crude oil futures unfolded as a dense interaction between macroeconomic reassessment, oil-balance pessimism and episodic geopolitical news shocks, producing large intra-month price swings but only negligible net changes by month end.

EXECUTIVE SUMMARY

December 2025 trading in the crude oil futures unfolded as a dense interaction between macroeconomic reassessment, oil-balance pessimism and episodic geopolitical news shocks, producing large intra-month price swings but only negligible net changes by month end. Brent crude entered December at $62.38 per barrel and ultimately settled at $62.24 per barrel on December 24, implying a modest month-to-date decline of $0.14 per barrel, or -0.2%. WTI displayed a closely aligned profile, ending December at $58.35 per barrel versus a November 28 settlement of $58.55 per barrel, a loss of $0.20 per barrel, or -0.3%. While both benchmarks finished the month only marginally below their respective end-November reference levels, the path taken was highly volatile: an early-month rally supported by supply-risk narratives and OPEC+ inertia gave way to a sharp mid-month capitulation driven by surplus expectations, before a late rebound emerged on renewed geopolitical headlines, positioning effects and year-end liquidity constraints. Measured on a time-weighted basis, December represented a materially weaker pricing environment than November, as evidenced by lower monthly averages and by peak-to-trough declines. On a monthly-average basis, Brent traded at $61.69 per barrel in December versus $63.50 per barrel in November, a decline of $1.81 or -2.9%. WTI averaged $57.93 per barrel compared with $59.47 per barrel in November, down $1.54 or -2.6%. From a volatility standpoint, Brent traded within a $5.37 per barrel range between its intramonth high of $64.09 per barrel and its intramonth low of $58.72 per barrel, equivalent to 8.6% of the November-end price. WTI’s range was slightly wider in relative terms, spanning $5.52 per barrel between a high of $60.50 and a low of $54.98, corresponding to 9.4% of its end-November level.

Looking into January 2026, the combined fundamental and technical configuration for Brent and WTI points to a market that remains range-bound with a downside skew, albeit with heightened sensitivity to headline risk. Fundamentally, the dominant anchor continues to be the perception of a well-supplied market: non-OPEC production growth, comfortable OECD inventories and only moderate demand expansion—particularly in the absence of a clear re-acceleration in Chinese consumption—suggest limited scope for a sustained rally, while OPEC+’s current policy stance appears oriented toward managing volatility rather than engineering a material tightening. At the same time, the accumulation of geopolitical risk factors, including stricter enforcement of sanctions on Russian flows, persistent fragility in Nigerian output and uncertainty around Venezuelan exports, is likely to reintroduce episodic risk premia, especially in a seasonally low-liquidity January environment. Technically, both benchmarks enter the new month having recovered sharply from mid-December lows but having failed to break above early-December resistance, leaving Brent capped in the $63–64 per barrel area and WTI in the $59.5–60.5 range; initial support is visible near $60 for Brent and $56 for WTI, with a more critical downside threshold at the December troughs around $58.5 and $55 respectively. Momentum indicators implied by the late-December rebound suggest stabilization rather than trend reversal, meaning that unless January brings a clear fundamental catalyst—such as an unexpected OPEC+ policy shift or a demonstrable tightening in physical balances—price action is likely to oscillate within these ranges, with rallies sold into resistance and dips finding conditional support, reinforcing a sideways-to-soft bias rather than a directional move.

The International Energy Agency estimated global oil supply to cut in November by 610 kbd from October and by a whopping 1.5 mbd from September’s all-time high. OPEC+ accounted for 80% of the decline over the two-month period, reflecting significant unplanned outages in Kuwait and Kazakhstan, while output from sanctions-hit Russia and Venezuela contracted sharply. Russia’s total oil exports fell by roughly 400 kbd in November to 6.9 mbd, as buyers assessed the implications and risks associated with more stringent sanctions. As a result, Urals prices plunged by $8.2 per barrel to $43.52 per barrel, dragging export revenues to their lowest since Russia’s invasion of Ukraine in February 2022. By contrast, Iran’s oil loadings have continued apace at around 1.9 mbd in recent months, but with Chinese independent refiners pausing buying amid exhausted import quotas, Iranian oil on water surged by 40 mb since August. For non-OPEC+ countries, the United States, Brazil and biofuels were the main contributors to the decline. Despite this abrupt halt in global oil supply in November, the IEA reduced its estimates of production growth only moderately. Thus, global oil supply growth assessments have been cut by 100 kbd to 3.0 mbd for 2025 and by 20 kbd for 2026 to 2.4 mbd, to 106.2 mbd and 108.6 mbd, respectively.

The U.S. Energy Information Administration, on the contrary, stated that global oil production reached a new all-time high of 108.7 mbd in November 2025, although the monthly gain in output was moderate, at 0.52 mbd versus October, which corresponds to a 0.5% MoM increase. Nevertheless, the supply continued to demonstrate healthy growth on an annual basis, as it exceeded November 2024 by 5.18 mbd, equal to 5.0% YoY. The year-on-year expansion has persisted for 14 consecutive months, but this growth rate turned out to be the weakest in three months. The month also stands out relative to longer-term norms: the world total was 8.7 mbd above the 5-year mean for November, implying an 8.7% overshoot versus the typical level for this point in the calendar. Taken together, that profile is consistent with supply remaining exceptionally high even as the marginal acceleration cools. The month’s incremental growth was heavily skewed to non-OPEC producers, whereas OPEC’s output was effectively flat relative to October. On the other hand, annual gains in global production were almost equally distributed between the cartel and non-OPEC group.

OPEC crude supply in November 2025 was effectively steady at 28.48 mbd, according to cartel’s own data, a level that translates into roughly 854.4 mb over the 30-day month. The net change versus October was marginal at +20 kbd, equivalent to a 0.1% MoM rise, much lower comparing to the agreed OPEC+ monthly adjustment for November of 137 kbd. That modest net gain, however, masks a meaningful redistribution under the surface: incremental barrels from the Gulf core were largely offset by operational or logistics-related softness in several non-core producers, consistent with contemporaneous industry surveys highlighting that outages prevented members from fully delivering the supply increases implied by headline OPEC+ targets. On a year-over-year basis, OPEC crude production was higher by 1.823 mbd, a 6.8% YoY rise. Albeit solid, this growth rate was the slowest annual pace of increase in three months, but it also extended a 12-month run of positive year-on-year comparisons. From a longer-run perspective, November output sat 1.24 mbd above the typical seasonal level implied by the five-year November mean, a 4.6% overshoot that is large enough to matter for balances in a market already debating 2026 surplus risk.

At its most recent meeting held on 30 November 2025, the eight OPEC+ countries running the additional voluntary adjustments reaffirmed their earlier decision to pause production increments in January, February, and March 2026 due to seasonality, as oil prices had been pressured by overt “glut talk” by late October and a softer forward structure with contango appearing as traders priced looser near-term fundamentals. In parallel, the broader OPEC+ Declaration of Cooperation framework reaffirmed the existing overall crude oil production level through 31 December 2026 and approved a new mechanism to assess each participant’s maximum sustainable production capacity, which is intended to serve as the technical reference for setting 2027 production baselines. Fundamentally, it matters because baseline disputes are one of the key channels through which “paper policy” can decouple from realized supply: a more rules-based capacity assessment should, over time, reduce quota-setting friction and clarify which countries can credibly add barrels without persistent overproduction or chronic underperformance. The next OPEC+ meeting is scheduled on 4 January 2026.

Non-OPEC oil supply in November 2025 remained on a firm footing despite increasingly idiosyncratic, country-specific swings. Total production on the month totaled 74.2 mbd, reaching a new all-time high. Output increased by 0.5 mbd versus October, equivalent to a 0.7% MoM gain. On an annual basis, volumes were 2.7 mbd higher, translating into a 3.8% YoY expansion. This year-on-year growth rate was simultaneously identified as the slowest pace of increase in 3 months, which is consistent with a still-positive but moderating yearly impulse. The yearly uptrend extended to 11 months, indicating that the annual comparison has remained constructive for nearly a full year. Relative to the five-year mean, November supply was 5.8 mbd higher, leaving the level 8.5% above its trailing benchmark and underscoring that the month remained well above the recent historical “normal” for this slice of global supply. Although November 2025 became a month in which the non-OPEC aggregate output continued to expand, the distribution of gains remained uneven. The Americas and CIS regions maintained elevated contributions relative to their five-year norms, while pockets of volatility—Brazil’s sequential dip amid offshore disruptions, Mexico’s sharp monthly rebound against a still-declining yearly baseline, and the pronounced intra-CIS re-weighting away from Russia toward Kazakhstan—did most of the work in shaping the month’s cross-sectional profile.

Total U.S. oil production averaged 24.216 m kbd in November, soaring to a new record high in history. From a monthly perspective, the headline advanced by 203.0 kbd, a 0.8% MoM increase, stretching the current upward sequence to five months. On an annual basis, volumes were higher by 1.132 mbd, translating into a 4.9% YoY gain; the annual growth rate remained positive for a fourteenth consecutive month, although the pace sat at the softer end of what has been observed over roughly the last three months. The gap versus the typical November outcome over the past five years was exceptionally wide at 3.092 mbd, or +14.6%, underscoring how far the U.S. supply stack has been re-based upward. The defining characteristic of the month was not merely the new all-time high in the aggregate, but the continued deepening of the non-crude base. Crude advanced to a record yet ceded share; NGLs combined record levels with double-digit annual growth and further share gains; renewables improved sequentially but remained a modest contributor to growth; processing gain rebounded sharply after a brief downswing.

Shale oil production in the United States averaged 10.654 mbd in November. Unlike the national crude headline, shale volumes declined on the month: output fell by 58.4 kbd versus October, a -0.5% MoM move that marked the steepest monthly contraction seen in six months. The decline also interrupted a prior upward run that had lasted two months. Even with that sequential softness, shale remained on a positive year-over-year footing. Production was higher by 199.4 kbd than a year earlier, equivalent to a 1.9% YoY increase. The annual expansion persisted for a remarkably long 55-month stretch, although the growth rate in November was the weakest pace of yearly improvement observed over roughly the past six months, implying a cooling trajectory rather than a reversal. Within the national crude total, shale accounted for 76.87% in November. That share compressed meaningfully, falling by 79.1 bps from October and easing by 55.6 bps versus last year, a clear indication that shale’s contribution to the marginal barrel was less dominant in November than it has been historically. Relative to the five-year mean for the month, shale output was higher by 1.350 mbd, or +14.5%, which keeps the longer-run message intact: even with a month-to-month downtick, shale production is operating far above the recent seasonal norm.

According to the International Energy Agency, global oil demand is set to rise by 830 kbd in 2025 amid an improving macroeconomic and trade outlook. These brighter prospects extend to IEA’s 2026 forecast, which the agency has upgraded in its recent monthly report by 90 kbd, to 860 kbd year-over-year. Gasoil and jet/kerosene account for half of this year’s gains, while recent strength in US gas liquids demand has been largely offset by persistent weakness in Europe and accelerated substitution away from oil in power generation in the Middle East. In 2026 petrochemical feedstocks will dominate growth, with their share rising to more than 60% from 40% in 2025.

The U.S. Energy Information Administration reported that global oil consumption in November 2025 advanced decisively on a sequential basis, with demand rising by 0.91 mbd from October, equivalent to a 0.9% MoM gain. The year-over-year picture reinforces that the November acceleration did not come at the expense of the underlying trend. Global oil demand was 1.61 mbd higher than the same month in 2024, a 1.6% YoY increase, extending an upward annual run to six months. A further perspective is offered by the five-year benchmark: world demand was 5.00 mbd higher than the five-year average for November, a 5.0% premium that signals a still-wide gap between the current level of total oil use around the world and the trailing multi-year seasonal norm.

Global observed oil inventories rose to four-year highs in October 2025, climbing up to 8.03 billion barrels, as per the most recent data provided by the International Energy Agency. Stock builds averaged 1.2 mbd during the first ten months of the year. October saw a 42 mb build (+1.4 mbd), led by higher oil on water (+83 mb), while on-land stocks declined by 41 mb, led by a 26 mb contraction in the OECD. Preliminary data for November 2025 indicates a further increase of global stocks, largely due to higher non-OECD on-land crude. Year-to-date, observed global oil stocks rose by 424 mb from January through November, or 1.3 mbd on average. Notably, crude oil on water has surged by 213 mb since end-August, as sanctioned barrels struggled to find buyers, record long-haul shipments from the Americas to Asia boosted volumes in transit and exports from OPEC+ members in the Middle East rose on higher quotas and seasonally weaker regional demand. China’s crude stocks built by 58 mb from January to November while US gas liquids were up by 63 mb. But in stark contrast to the broader picture, crude and refined product stocks in key pricing hubs have seen only marginal builds.

Detailed oil inventories statistics on September 2025 confirmed earlier IEA’s estimates that OECD commercial oil inventories posted a third consecutive monthly during the month, extending a late-summer rebuilding phase but doing so with a notably restrained pace. Total stocks rose by 0.8 mln tons from August, equivalent to a 0.2% month-on-month increase, lifting the aggregate level to the firmest reading since mid-2024. The broader global backdrop in September was defined by abundant crude availability and softer call on refinery intake as maintenance began to intensify, with the IEA describing a surge in supply and an approaching seasonal low in crude runs as autumn turnarounds ramped up. The year-on-year picture, however, was materially more constructive than the month-to-month profile implies. Total OECD commercial inventories were higher by 4.7 mln tons versus September 2024, a 1.0% YoY increase and the fastest annual expansion in more than four years. That annual improvement sits awkwardly beside the remaining structural deficit to seasonal norms: total stocks still stood 23.4 mln tons below the 5-year average for September, down 4.7% versus that benchmark. This reading is consistent with the IEA’s contemporaneous framing of 2025 as a year in which global balances were leaning surplus.

U.S. total oil inventories advanced by 10.62 mb in November 2025 versus the prior month, equivalent to a 0.6% month-on-month increase. The broader comparison was more striking: stocks were higher by 60.42 mb than in November 2024, a 3.7% year-on-year expansion that extended the YoY rebuilding phase to five consecutive months and represented the fastest YoY growth rate recorded over the last 60 months. Even after that replenishment, the total stocks remained well below its seasonal reference point, running 56.50 mb under the 5-year average for November, a 3.2% deficit. In balance-sheet terms, the month combined a modest headline build with an unusually strong annual restocking impulse, yet it did not fully repair the buffer eroded during the heavy drawdown period of 2022–23.

Cushing crude inventories tightened further in November. Stocks declined by 1.57 mb versus October, down 6.9% MoM, leaving the hub at its lowest level in five months. The move extended a three-month sequence of consecutive month-on-month declines, and this drop was the steepest monthly pullback over the last five months. The weekly profile indicates that the draw was distributed across the month rather than concentrated in a single week. The cross-year picture reinforced that the weakness was not purely seasonal. Inventories were 2.90 mb below November 2024, a 12.0% YoY decline that extended the downtrend to 13 consecutive months, while also marking the fastest annual rate of decline over the last four months. Relative to the 5-year average for November, stocks were 11.57 mb lower, a 35.2% shortfall, underscoring an unusually large deficit versus history. With inventories around 21.3 mb at month-end, the hub remained close to levels that market participants have previously characterized as operationally tight.

Global oil inventories on water stood at 132.9 mb in November 2025, according data provided to Vortexa Ltd., reaching a 62-month high. The level was 41.30 mb above the five-year mean for November, implying an overshoot of 45.1% versus the seasonal baseline. On the flow side, the global total rose by 44.9 mb from October, an increase equivalent to 51.1% MoM and the strongest monthly build in seven months. Relative to November 2024, the stock was higher by 61.3 mb, translating into an 85.7% YoY rise and the largest annual increase in 59 months. This data aligns with IEA’s recent reports documented that global observed inventories surged in September 2025 and that oil on water itself rose sharply, with preliminary October data pointing to another large increase led by crude. The agency explicitly linked the rise to a combination of sanctioned barrels (around 32% of the two-month increase in crude on water), surging long-haul shipments from producers in the Americas to markets east of Suez, and a sharp rise in Middle East loadings that increased the flotilla of stocks.

AC - Oil Market Report - Dec-2025.pdf

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