The decline in oil prices this year is rooted in both politics and supply. Since President Trump returned to power, his push for lower prices has carried weight, and OPEC+ has responded by adding barrels to the market, signaling comfort with current levels. This, combined with psychological market cues, has pressured prices downward. The IEA warns of insufficient upstream investment, which typically leads to short-term softness as capital shifts into new projects. Despite near-crisis conditions in a region producing 25 million b/d, OPEC’s flexibility has ensured stability. Ultimately, the group remains the single most important factor in setting oil’s price path.
Non-OPEC supply and long-term risks
Outside OPEC, the U.S. continues to be shaped by private equity investment flows, which determine how long current output can be maintained. Other producers, from Brazil to West Africa, lack major new additions in the near term. Within OPEC, however, the pressure to monetize idle capacity is intensifying, which could push more crude onto the market by 2026. Meanwhile, tariffs on metals and other goods may also dampen industrial demand, a risk not yet fully reflected in forecasts. Longer term, oil remains essential to balancing the global energy system, with IOCs also returning to hydrocarbons amid a more pragmatic view of the Energy Transition.