Brent crude oil prices in May 2025 where largely shaped by escalating geopolitical tensions, strategic output decisions by OPEC+, and deepening concerns over demand-side fragility. Brent opened the month trading at $63.12 per barrel before falling to a year low of $60.23 on the 5^th May. The primary driver of the downturn was OPEC+’s continuation of its production increase strategy, with member states signalling further output growth as part of a longer-term play to maintain market share amid resilient non-OPEC supply, particularly from U.S. shale. The group’s positioning, while aimed at longer-term control, raised immediate concerns over an impending oversupply in the second half of the year. However, market losses were temporarily cushioned mid-month following a breakthrough in U.S.-China trade negotiations. Both sides signalled progress on tariff exemptions for key goods and a willingness to reestablish regular diplomatic trade dialogues. The news injected a degree of optimism into global markets, with Brent prices staging a brief rally as traders priced in the potential for improved global demand conditions. The market reached a month high of $66.63 per barrel on the 14^th May. However, a shift in sentiment saw prices fall steadily, closing the month slightly lower than where it opened at $ 62.49 per barrel. Russia is seen to be stalling on peace negotiations with Ukraine, while progress remains slow on talks between the US and Iran on Tehran’s nuclear program.

The British Pound (GBP) traded firmly against the U.S. Dollar (USD) throughout May, supported by robust UK economic data and relative policy divergence between the Bank of England and other major central banks. Opening at $1.3357, the pound reached a monthly high of $1.3502 before closing marginally lower at $1.3483. Aiding Sterling’s strength were strong UK retail and wage growth figures, which bolstered market expectations that the Bank of England would hold back on deeper rate cuts in comparison to the European Central Bank and the U.S. Federal Reserve. Meanwhile, U.S. retail sales remained subdued, and rising inflationary concerns created uncertainty around future U.S. rate trajectories.

The U.S. signalled a renewed push for sanctions against Russia amid ongoing hostilities in Ukraine. Energy markets were particularly sensitive to these developments, as additional restrictions on Russian crude and product flows could reintroduce supply bottlenecks. In the Middle East, Saudi Arabia revised its fiscal policy guidance following a significant drop in oil revenues. With Brent prices trending downwards and tariff-related demand fears looming, the Kingdom signalled a reassessment of its public spending outlook. Markets interpreted this as a possible precursor to renewed OPEC+ coordination later in the year should prices remain under pressure. Meanwhile, the Trump administration’s broad-based tariff policy, targeting imports from the EU, China, Canada, and Mexico contributed to deteriorating global trade sentiment. The resulting equity market weakness and strength in the U.S. Dollar capped oil price recoveries and added a layer of complexity to global economic forecasts.