Reasons for the Decline in Oil Prices and Why They Continue to Fall

Oil prices fell on March 19, 2025, with Brent crude falling to $70.37 per barrel and West Texas Intermediate crude falling to $66.70 per barrel.

Reasons for the Decline in Oil Prices

One of the main reasons for this decline is the agreement between the United States and Russia to halt attacks on energy infrastructure for 30 days. This agreement could lead to increased Russian oil supplies in global markets, easing pressure on prices.

Additionally, Goldman Sachs lowered its forecast for Brent crude prices by $5 per barrel to a range of $65-80, citing risks related to escalating tariffs and rising excess production capacity.

These factors could negatively impact global demand for oil, putting downward pressure on prices.

Furthermore, data from the American Petroleum Institute showed that crude oil inventories rose by 4.59 million barrels in the week ending March 14, indicating an oversupply in the market. Conversely, gasoline inventories fell by 1.71 million barrels, and distillate inventories fell by 2.15 million barrels.

Ongoing trade tensions, including U.S. tariffs on Canada, Mexico, and China, have raised concerns about a potential economic recession, which could weaken oil demand.

Finally, OPEC+ announced an increase in oil production starting in April, adding 2.2 million barrels per day over 18 months, which led to a significant drop in Brent crude prices to $70.60 per barrel, a five-month low.