Oil market forecast: anticipated price trends
In the early 2000s, oil prices began to climb above $40 per barrel, marking the start of a new era in the global oil market. This trend continued, and from 2011 to 2014, prices remained within a consistent range of $90-$110.
However, the 1960s saw a significant shift in power, with Middle East exporters' influence rising due to rapid demand growth consuming spare capacity in the US. This trend continued, and by the 1970s, the oil price was relatively stable, but was controlled and equivalent to about $30 in today's terms.
But the stability was short-lived. In 1973, oil prices soared due to an embargo on exports by Middle Eastern producers in response to countries supporting Israel during the Yom Kippur War. The price surge was followed by another spike in 1979 following the Iranian Revolution and the disruption of production due to the Iran-Iraq War.
Fast forward to the 2000s, the US shale oil boom was sparked by a rebound in the economy. However, US shale wells decline faster than conventional ones, and new ones aren't drilled if prices fall below a breakeven price of $60, according to a survey by the Federal Reserve Bank of Dallas. Another survey suggests that if prices fall below $60, US shale supply should be squeezed. Existing US shale wells needed $39 to cover costs earlier this year, according to the same survey.
The balancing act now is between US shale and Saudi Arabia's oil production. Saudi Arabia, in an attempt to crush the US shale oil boom, increased production, halving prices. Saudi Arabia's oil production fell from around over 10mb/d in 1980 to under 3mb/d in 1985 due to attempts to defend higher prices.
The historical trend of oil prices in emerging markets, particularly China, has shown increasing sensitivity and influence over recent years. China's oil consumption increased significantly, going from 4.6 million barrels a day in 2000 to 9.3 million barrels a day by 2010. China’s crude oil imports have been rising steadily, with July 2025 seeing a 11.5% year-over-year increase. This growth in demand from China, the world’s top crude oil importer, has supported global oil markets but also contributed to heightened price sensitivity in its equities.
However, global oil supply increases led by OPEC+ and non-OPEC producers like the U.S., Brazil, and Norway, have been leading to downward pressure on prices despite rising demand. As of mid-2025, forecasts suggest Brent crude prices falling from $71 per barrel in July to around $49 by early 2026, driven by a 2 million barrels per day increase in global production and large inventory builds.
The unrolling of cuts from OPEC+ and high inventories are key factors pushing prices lower. Geopolitical events, including sanctions, conflicts, and the COVID-19 pandemic, have also heavily influenced supply-demand balance and price volatility, impacting emerging markets and global markets alike.
In summary, while emerging markets like China remain key drivers of oil demand growth, their impact on prices is now part of a more complex global system where supply increases and geopolitical factors strongly influence overall market direction. The trend indicates that the future of oil prices will be shaped by a delicate balance between supply and demand, as well as geopolitical events and economic factors.
[1] Source: China's July crude oil imports rise by 11.5% year-over-year
[2] Source: China's equity beta to oil prices rises
[3] Source: Global oil prices set to fall as OPEC+ boosts output
[4] Source: Geopolitical risks to oil markets
The financial implications of the rising oil prices in the 2000s significantly impacted the energy industry, particularly the oil-and-gas sector, as it marked the start of a new era in the global oil market. In contrast, the steady oil prices in the 1970s, though relatively stable, were controlled and equivalent to around $30 in today's terms, signifying less impact on the finance sector.
Amidst the complex global system influencing oil prices, the finance sector remains crucial in determining the breakeven prices for US shale oil production, with surveys suggesting a bottom limit of $60. This sensitivity is particularly visible in emerging markets like China, where increases in oil consumption and demand have supported global oil markets but also contributed to heightened price sensitivity in its equities.
