Global oil prices dropped sharply this week as mounting concerns over future demand and a strengthening U.S. dollar put pressure on the market.
Both major oil benchmarks are headed for weekly losses exceeding 3%, with Brent crude falling to $72.55 per barrel and West Texas Intermediate (WTI) declining to $69.06.
A key factor driving the price decline is weakening demand outlook in China, the world's largest crude oil importer. Chinese refining giant Sinopec released its annual energy outlook predicting that the country's oil imports could hit their peak by 2025, followed by overall consumption reaching its summit around 2027. This forecast reflects expected drops in diesel and gasoline demand.
Adding to market pressures, the U.S. dollar climbed to a two-year high after the Federal Reserve indicated a careful approach to interest rate cuts in 2025. The stronger dollar makes oil purchases more expensive for buyers using other currencies, potentially reducing demand in international markets.
The technical outlook appears bearish, with WTI crude breaking below key support levels. Prices are testing support at $68.73, with further downside targets at $66.11 and $65.23 if current levels fail to hold.
Market analysts note that OPEC+ will need to maintain strict supply management to balance growing uncertainties. JPMorgan projects an oil market surplus of 1.2 million barrels per day by 2025, as non-OPEC+ supply growth outpaces demand.
The combination of China's cooling demand prospects, dollar strength, and looming supply increases suggests continued pressure on oil prices in the near term, barring new developments that could tighten market conditions.