By Colleen Howe

BEIJING (Reuters) – Oil prices fell in early trading on Friday, driven by concerns over demand growth in 2025, particularly in leading crude importer China. This places global oil benchmarks on track to end the week down more than 2%.

Brent crude futures decreased by 31 cents, or 0.43%, to $72.57 a barrel by 0139 GMT. Meanwhile, U.S. West Texas Intermediate crude futures dropped 26 cents, or 0.26%, to $69.12 per barrel.

Chinese state-owned refiner Sinopec released its annual energy outlook on Thursday, stating that China's oil imports could peak by 2025 and its consumption may peak by 2027 due to weakening diesel and gasoline demand.

Additionally, the dollar's rise to a two-year high has added downward pressure on oil prices. The Federal Reserve indicated it would approach rate cuts cautiously in 2025, raising concerns. A stronger dollar increases oil prices for non-dollar holders, and slower rate cuts may hinder economic growth and consequently reduce oil demand.

J.P. Morgan forecasts a shift in the oil market from balance in 2024 to a surplus of 1.2 million barrels per day (bpd) in 2025, as it anticipates non-OPEC+ growth to rise by 1.8 million bpd in 2025 while OPEC output remains stable.

In a potential supply-reducing strategy, G7 countries are contemplating stricter price caps on Russian oil, possibly through an outright ban or by lowering the price threshold. Reports indicate that Russia has been circumventing the $60 per barrel cap imposed in 2022 with its so-called "shadow fleet" of ships, which the EU and Britain have recently targeted with additional sanctions.