High-Level Summary & Surprises
OPEC+ delivered a modest production increase of 137,000 b/d for December, but crucially announced a pause on further output hikes through at least Q1 2026. This signals growing concern over oversupply and softening demand.
Brent averaged $63.66/b in November (down $0.29 m/m), with WTI at $59.48/b. Futures curves remain in mild backwardation, but physical market fundamentals are weakening as inventories build.
OPEC’s global oil demand growth forecast for 2025 is unchanged at +1.3 million b/d, with 2026 seen at +1.4 million b/d. However, non-OECD Asia (notably China and India) remains the key growth engine.
Non-OPEC supply growth for 2025 was revised up slightly, led by the US, Brazil, Canada, and Argentina. OPEC+ crude output rose marginally in November to 43.06 million b/d.
Refining margins rose globally in November, but product inventories remain tight, especially for middle distillates in Europe due to unplanned outages and sanctions on Russian products.
The market is now bracing for a period of lengthening balances and downward price pressure, with OPEC+ holding back on further supply to defend price floors.
Market View:
Bearish-to-Neutral. The OPEC+ pause on output hikes is supportive, but the overall tone is bearish given rising inventories, robust non-OPEC supply, and only modest demand growth. China’s ongoing stockpiling is a key wild card—if it slows, price pressure could intensify.
China – Detailed Oil Market Rundown (December 2025 OPEC MOMR)
Demand & Fundamentals
China’s oil demand in October grew by +214,000 b/d y/y, but the pace slowed from +427,000 b/d in September.
Growth was driven by naphtha (+130,000 b/d y/y), jet/kerosene (+93,000 b/d), and “other products” (+136,000 b/d), offsetting declines in diesel (-64,000 b/d) and residual fuel oil (-110,000 b/d).
Gasoline demand was nearly flat (+15,000 b/d y/y), a rebound from September’s decline.
For 2025, OPEC forecasts China’s oil demand to average 17.1 million b/d (+197,000 b/d y/y), with continued growth in petrochemical feedstocks (naphtha, NGLs/LPG) and jet fuel, but only slight gains in gasoline/diesel due to EV penetration and efficiency gains.
Commercial Storage & Stockpiling
China has been aggressively building both strategic and commercial crude inventories, absorbing much of the global surplus and helping to stabilize Brent in the $65/b range.
Estimated crude inflows to storage have averaged 0.5–1.2 million b/d in 2025, with total storage (strategic + commercial) now estimated at 1.2–1.3 billion barrels, and capacity expanding further.
This stockpiling acts as a “floor” for global prices, but is highly price-sensitive and could reverse if China slows purchases.
Imports & Russia Relationship
China’s crude imports remain robust, averaging over 11 million b/d in 2025, with Russia a key supplier.
Despite expanded US/EU sanctions on Russian oil, Chinese refiners continue to buy Russian barrels, often at a discount and increasingly settled in yuan.
Russian crude flows to China are expected to remain resilient, as China uses its buying power and storage to buffer against geopolitical shocks.
Economic Growth & Outlook
OPEC holds China’s 2025 GDP growth forecast at 4.8% (2026: 4.5%), with policy support expected to continue as the property market stabilizes and export diversification advances.
Domestic consumption and infrastructure investment are expected to remain resilient, supporting oil demand—especially for petrochemicals and aviation.
Downside risks: persistent property sector weakness, global trade tensions, and any abrupt halt in stockpiling.
Summary Table: China Oil Market Fundamentals (Dec 2025)
Metric | Latest Value | Trend/Comment |
|---|---|---|
Oil demand (Oct 2025) | 17.58 mmbbl/d | +214 kb/d y/y, slowing growth |
2025 demand forecast | 17.1 mmbbl/d | +197 kb/d y/y |
Crude imports (2025 avg) | >11 mmbbl/d | High, driven by stockpiling |
Storage build (2025 est.) | 0.5–1.2 mmbbl/d | Strategic + commercial, still rising |
Russian crude share | ~20%+ | Resilient despite sanctions |
GDP growth (2025/2026) | 4.8% / 4.5% | Stable, policy support ongoing |
Bottom Line:
China’s ongoing crude stockpiling is the main stabilizing force in the global oil market, but the pace is slowing and is highly price-dependent. Any shift in China’s buying or storage behavior is a key risk for oil prices in 2026. The OPEC+ output pause is supportive, but fundamentals remain heavy with persistent oversupply risk.