Topic 4: CRUDE: HOLDING HANDS

In September 2025, crude oil prices, particularly Brent crude, exhibited a generally downward trend, although the market experienced notable volatility driven by a complex interplay of geopolitical developments and supply-side dynamics. Throughout the month, Brent crude fluctuated within a range of $64 to $70 per barrel, ultimately closing at approximately $67.02 on September 30. This represented a decline of around 4% for the month, driven primarily by growing concerns about a potential oversupply in the global oil market, which outweighed short-term price spikes caused by geopolitical risks. One of the central factors putting downward pressure on oil prices was the decision by OPEC+ to significantly increase production levels. The alliance, which had previously implemented voluntary cuts to stabilize prices, announced a major expansion of output for October and November, including a tripling of production hikes planned for November. This supply-driven pressure was further amplified by increased output from non-OPEC producers and the adaptation of sanctioned countries like Russia, whose crude exports in September reached a 16-month high, signalling a strong recovery in global oil supply. Despite these supply increases, several geopolitical flashpoints kept oil markets on edge. The escalating conflict in Gaza and continued instability in the Middle East introduced short-term fears of potential supply disruptions. Similarly, Ukraine’s drone attacks on Russian oil refineries raised concerns about short-term refinery shutdowns. Another critical factor influencing oil markets in September was the rising level of US crude and gasoline inventories. Seasonal declines in refinery activity and weakening demand led to inventory build-ups, reinforcing concerns about a potential imbalance between supply and demand. Furthermore, uncertainty surrounding the US economy—particularly fears of a potential government shutdown—added a layer of demand-side pessimism. With investors wary of how a political standoff might impact economic activity and energy consumption, this uncertainty further suppressed oil prices. Additionally, Iran remained in focus due to renewed US sanctions and ongoing ambiguity regarding its nuclear deal. While concerns over reduced Iranian oil exports briefly supported prices, the overall market consensus leaned toward bearishness as supply increases elsewhere appeared more than sufficient to offset any losses from Iran. The unwinding of OPEC+’s voluntary cuts also highlighted the group’s strategic shift from price defence to market share protection, particularly in response to rising output from US shale and other non-OPEC producers. Broader global uncertainties—ranging from macroeconomic risks to unresolved geopolitical conflicts—also played a role in market volatility. However, they failed to provide lasting support to prices given the overwhelming narrative of increasing global supply. In summary, September 2025 was a month where supply-side developments, particularly OPEC+ production increases and rising inventories, took precedence over geopolitical concerns, resulting in a general downward trend in oil prices despite occasional rebounds caused by conflict-driven fears.