Is crude oil on the brink of another crisis in 2025?

In January 2025, the global commodity market faces significant pressures, largely due to a sluggish economic outlook and a strengthening dollar. Experts predict a drop in commodity prices overall, with crude oil seeing continued instability because of a weak demand from China and a supply glut. In particular, Brent crude is trading similarly to prior year levels, around $76.34 per barrel. Additionally, the halt of Russian gas flow to several European nations has raised uncertainty in the global gas markets. Despite these challenges, certain commodities, especially gold and gas, are poised for a rebound. In 2024, gold performed exceptionally well, marking its best annual return in a decade as investors turned to it as a hedge against inflation and geopolitical instability. Analysts from various firms, including JPMorgan and BullionVault, express optimism for gold and silver prices in 2025, particularly if U.S. policies escalate economic tensions through increased tariffs or trade disputes. Conversely, commodities like iron ore and copper could see declines, impacted by oversupply issues and demand uncertainties—especially as China’s recent economic performance has been less than robust. Iron ore prices fell over 24%, marking a notable decline despite projections of record imports driven by ongoing infrastructure developments in China. Meanwhile, copper faces a potential downturn following its record highs last year, owing to the energy transition dynamics that originally elevated its demand. Similarly, in the soft commodities sector, cocoa and coffee prices reached record highs in 2024 driven by adverse weather conditions affecting production. However, demand for these commodities is expected to stabilize in 2025. Market observers are particularly focused on how further stimulus measures from China might affect global demand across various commodities This fluctuating environment demands attentiveness to geopolitical events, trade relationships, and economic data releases, as they all play crucial roles in shaping commodity prices in the coming months.