Seven Weeks of Sinking Oil: What's Driving WTI's Relentless Decline and Where Does It Stop?

West Texas Intermediate crude oil has entered uncharted territory in 2025, posting its seventh consecutive weekly decline as of early March, a streak not seen since November 2023. On March 11, 2025, wti closed at $66.68 per barrel reflecting a drop of approximately 4.2% for the week ending March 7.

This prolonged downturn has slashed prices from their January highs, leaving the market anxious and scrambling to decipher the forces at play. Is this a temporary blip, or a sign of deeper trouble for the oil market? 

Economic Perspective: Demand Woes and Tariff Tensions

The global economy is flashing warning signs, and WTI is feeling the heat. A key culprit is the weak demand, particularly from China, the world's second-largest oil consumer.

Chinese customs data revealed a decrease from 11.3 million barrel import per day in 2023 to 11.1 million barrel import per day in 2024 and a total of 9% year-over-year drop in crude oil imports in November 2024, driven by high inventories and slowing industrial activity. This trend has persisted into 2025, with weak economic data from China as a drag on oil prices. The U.S., meanwhile, isn't providing much relief. Shock waves over President Donald Trump's tariff policies, as officially became effective since March 12th 2025, has clouded the outlook for industrial demand, raising fears of a broader trade war that could stifle growth.

On the supply side, the picture is equally grim. The U.S. Energy Information Administration (EIA) forecasts global oil production to rise by 1.4 million barrels per day in 2025, with non-OPEC+ producers like the U.S. and Brazil leading the charge. OPEC+ has also increased output, adding to an oversupply that's clashing with faltering demand. The EIA's March 11, 2025, Short-Term Energy Outlook pegs Brent crude at an average of $74 per barrel in 2025, down from earlier projections, with WTI typically trading $5–$10 cheaper. A stronger U.S. dollar, fueled by tariff rhetoric and sanctions, further weighs on oil by making it pricier for foreign buyers. Economically, WTI's seven-week slide is a textbook case of oversupply meeting underwhelming demand.

Geopolitical Perspective: Trade Wars, Sanctions, and Regional Flash points

Geopolitical turbulence is battering WTI crude oil prices, with a cocktail of trade disputes, sanctions, and escalating conflicts shaping a bearish outlook. Leading the charge are the U.S. tariffs slapped on Canada, Mexico, and China, a crucial factor that has to be reiterated again. These measures have rattled global trade, spooking markets with the prospect of sluggish industrial growth and shrinking oil demand. The uncertainty isn't just noise; it's a tangible drag, as higher costs and disrupted supply chains threaten to choke energy consumption worldwide.

Sanctions add another layer of chaos. The U.S. has doubled down on Russia and Iran, but the results are uneven. Iran's crude exports have taken a modest hit, yet its shadow fleet keeps oil trickling out. Meanwhile, Russia's flows remain stubbornly strong, defying sanctions with a web of tankers and loopholes. Enter the Trump administration's latest gambit: threats to inspect Iranian oil tankers at sea and impose fresh penalties on Russian banks over Ukraine. These moves could tighten the screws, potentially crimping supply, but there's a flip side. Talk of a Russia-Ukraine peace deal and sanctions relief could unleash a wave of Russian oil, piling more downward pressure on prices.

The Middle East, ever a powder keg, is heating up again. Israeli airstrikes on Hezbollah in Lebanon have sparked fears of a wider war, one that could snarl oil routes from the Gulf. Yet, the panic is tempered by OPEC+'s hefty spare capacity, over 5 million barrels per day, with Saudi Arabia and the UAE poised to plug any gaps. This safety net blunts the risk of a supply shock, keeping a lid on price spikes. Still, traders are jittery; a misstep here could ignite a rally, however fleeting.

Then there's the U.S. dollar, flexing its muscle amid tariff threats and sanction saber-rattling. A stronger greenback makes oil costlier for foreign buyers, sapping demand and reinforcing WTI's slide. Together, these forces, tariffs clouding growth, sanctions juggling supply risks, and regional tensions teetering on the edge, paint a grim picture. For now, geopolitics is a headwind, not a lifeline, for WTI. But in this volatile brew, a sudden jolt could flip the script overnight.

Technical Perspective: Bears Tighten Their Grip

For chart-watchers, WTI's decline paints a starkly bearish picture. Technical analysts have flagged a descending triangle structure forming since late 2024, with price rejections at resistance levels near $70–$72 per barrel. Seven straight weekly closes below the prior week's low, culminating with the week ending March 7, signal unrelenting seller control. The $66 level, a psychological and historical support zone, is now under pressure, with some Analysts calling it a pivotal threshold.

Momentum indicators tell a similar story. The Relative Strength Index (RSI) is flashing oversold conditions, but in a strong downtrend, this can persist for weeks. The Moving Average Convergence Divergence (MACD) shows no hint of bullish divergence, reinforcing the bearish outlook. Until WTI reclaims its 50-day moving average, hovering near $70, the technical bias remains downward. The charts suggest the bears aren't ready to relinquish their grip anytime soon.

Market Sentiment: Fear and Forecasts

Sentiment in the oil market has turned decidedly bleak. Forecasts are tilting bearish: the EIA sees Brent averaging $74 in 2025, while Goldman Sachs predicts $76, with WTI trailing at a discount. Analysts cite seasonal weakness and macroeconomic headwinds as drivers of further declines by year-end.

Still, glimmers of optimism persist. Some contrarians argue the market is oversold and due for a bounce, especially if geopolitical tensions flare. Others pin hopes on China's early 2025 stimulus measures to revive demand. With bearish momentum this strong, sentiment remains a headwind and investors are selling first and asking questions later.

Where Does It Stop?

So, where might WTI find a bottom? The $66 support level is critical; a weekly close below it could trigger a plunge toward $60, last seen in late 2023. On the flip side, reclaiming $70 would hint at a trend shift, though current dynamics make that a tall order. Three catalysts could halt the descent:

Geopolitical Shock: A Middle East escalation or major supply disruption could spark a rally, though OPEC+'s spare capacity might cap gains.

Economic Rebound:Positive signals from China or the U.S. could lift demand, but tariff uncertainties muddy the waters.

OPEC+ Action: Deep production cuts could stem the tide, yet recent OPEC+ moves suggest tolerance for lower prices to squeeze out rivals.

For now, WTI's path of least resistance is lower, but oil's volatility is legendary, reversals can strike with little warning. Where it stops is a question that the market can answer with certainty, but the ride promises to be anything but smooth.Traders should buckle up and watch economic data, technical levels, and global headlines closely.