Oil prices under pressure on surplus fears

October 03, 2025 (MLN): Crude oil markets remain under intense pressure, with both West Texas Intermediate (WTI) and Brent crude hitting their lowest levels since early summer. The selloff has deepened concerns over global oversupply ahead of a pivotal OPEC+ policy meeting.

Brent crude futures decreased by $0.35, or 0.55%, to $64.46 per barrel. 

West Texas Intermediate (WTI) crude futures fell by $0.36, or 0.60%, to $60.84 per barrel by [4:45pm] PST.

The OPEC+ alliance is gradually unwinding production cuts, raising supply by 137,000 barrels per day (bpd) in October.

Markets now anticipate the group could expand output by as much as 500,000 bpd in November if Saudi Arabia pushes forward with its market-share strategy.

Compliance, however, remains uneven. Iraq has pledged a 130,000 bpd adjustment through early 2026, while Kazakhstan has delayed significant cuts until mid-2026.

Analysts warn that failure to meet these commitments could undermine confidence in OPEC+’s strategy, adding downside pressure to already fragile markets.

Geopolitical risks are amplifying market uncertainty. The UN has reimposed sanctions on Iran, targeting oil shipments, though Tehran continues to export roughly 1.5m bpd well above pre-sanctions levels.

Meanwhile, Russian crude exports have surged to 16-month highs despite U.S. and G7 sanctions.

Reports also confirm Washington will provide intelligence to Ukraine to target Russian energy infrastructure, raising supply disruption risks even as global availability remains elevated.

On the demand side, forecasts are softening. PVM Energy cut global oil demand projections by 150,000 bpd between January and September 2025.

Europe’s gas inventories remain high at 82.3% capacity, reducing demand for crude-linked fuels.

China has continued to stockpile crude oil, providing temporary market support. However, traders caution that once storage capacity fills, demand could weaken quickly.

The U.S. Energy Information Administration (EIA) reported crude stocks rising by 1.8m barrels to 416.5m in late September.

Gasoline and distillate inventories also increased, signaling softer refinery activity as seasonal demand dips.

JPMorgan analysts expect the oil market to shift into a “sizeable surplus” in Q4 2025 and throughout 2026, driven by higher OPEC+ output and slowing refinery runs.

Forecasts for crude oil prices show a wide divergence among major institutions.

Macquarie projects Brent to average $67.95 per barrel in 2025 before easing to $60.75 in 2026, while WTI is expected at $64.13 in 2025 and $56.63 in 2026. J.P. Morgan holds a slightly lower view, with Brent seen at $66 and WTI at $62 in 2025.

Meanwhile, the U.S. Energy Information Administration (EIA) has the most bearish outlook, estimating Brent at $67.80 in 2025 but dropping sharply to $51.43 in 2026, with WTI forecast at $64.16 in 2025 before slipping below $48 in 2026.

Corporate sentiment shows this caution. The Dallas Fed Energy Survey showed executives from 136 oil and gas firms expect WTI to average $63.06 per barrel by end-2025, down from nearly $70 in the prior quarter.

Over 70% of exploration and production companies have delayed investments due to ongoing price uncertainty.

With oversupply concerns mounting, geopolitical risks persisting, and demand outlook weakening, crude oil markets appear set for a prolonged period of volatility.

Analysts warn that unless OPEC+ delivers stricter compliance and global demand stabilizes, WTI could struggle to stay above $60, with further downside possible heading into 2026.

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