…  oil prices weaken, as supply outpaces demand

… EV boom, emissions cut undermine oil demand in transport sector

Oredola Adeola

Brent crude fell by 14.97% to $69.21 per barrel on Tuesday, June 24, from a five-month high of $81.40 the previous day, and West Texas Intermediate (WTI) dropped to $66.37 (14.5% down) after peaking at $77.58 on Sunday, as optimism over a U.S.-brokered ceasefire between Israel and Iran faded following its reported breach.

Crude oil prices continued to decline sharply as easing tensions in the Middle East reduced geopolitical risk premiums, following the U.S.-led B-2 bomber strikes on Iran’s nuclear facilities at Fordow, Natanz, and Esfahan.

However, tensions reignited after Israel accused Iran of launching a ballistic missile toward northern Israel, breaching the ceasefire agreement.

The reported incident has triggered growing calls within Israel’s ruling coalition and opposition for immediate and forceful retaliation targeting Iranian regime assets in Tehran.

In contrast, General Staff of the Iranian Armed Forces in a statement released on Tuesday via the state media rejected claims that it launched any missile attacks following the ceasefire.

This contradicts a statement from the Israel Defense Forces (IDF), which confirmed that a ballistic missile was intercepted over northern Israel in the early hours following the truce announcement.

Analysis the market even amidst the violation of the truce, Advisors Reports gathered that the broader crude oil outlook points to rising supply outpacing demand in the second half of the year, which could lead to a build-up in global inventories and exert further downward pressure on prices.

Industry experts have projected that the crude oil markets are likely to see continued weakness in prices driven by oversupply concerns, with oil prices likely to remain under sustained pressure unless significant demand-side catalysts emerge.

According to the latest data from the International Energy Agency (IEA) and other reputable forecasts, global oil supply is expected to outpace demand in the second half of 2025.

Supply is projected to grow by approximately 1.8 million barrels per day (mb/d) in 2025, reaching around 104.9 mb/d, driven largely by increased output from non-OPEC+ producers such as the U.S., Brazil, and Canada.

The U.S. Energy Information Administration (EIA) also anticipates a build-up in global oil inventories, with an average increase of 0.8 mb/d, suggesting a significant oversupply.

One of the key factors behind the expected surplus is weaker-than-anticipated demand growth.

The IEA recently revised its global oil demand forecast for 2025 downward to 741,000 b/d, citing sluggish consumption in non-OECD countries like India and structural declines in OECD regions.

In developed economies, demand is projected to fall by 120,000 b/d in 2025 and by an even steeper 240,000 b/d in 2026, as improvements in energy efficiency and the shift toward renewable energy sources accelerate.

Additionally, macroeconomic headwinds such as slower growth in major markets—including the Eurozone and North America—are dampening demand recovery prospects.

On the supply side, robust output from non-OPEC+ producers is expected to continue outpacing contributions from the OPEC+ alliance.

Countries like the U.S., Brazil, Canada, and Guyana are all set to increase production significantly in 2025, especially as they rebound from earlier disruptions caused by extreme weather and regional instability in early 2025.

While OPEC+ had implemented voluntary cuts to stabilize the market, the group has gradually unwound these measures since April 2025, with an initial increase of about 30,000 b/d.

 Despite U.S. sanctions on Russia and Iran and ongoing trade tensions with China, global supply growth has not been meaningfully curtailed.

Instead, the easing of OPEC+ production restraints and strong output from key non-OPEC+ players have continued to weigh on prices.

Additionally, the energy transition, marked by rapid electric vehicle adoption and tighter emissions regulations, is eroding long-standing demand in the transportation sector.