2025-09-04
Crude oil prices are sliding today, extending this year’s bearish streak as supply growth continues to outpace demand. Markets are bracing for the next OPEC+ meeting, a decision that could shape the path into 2026.
As of September 4, 2025, Brent crude traded at $66.82 per barrel (-1.15%), while WTI hovered around $63.50 per barrel.
The U.S. Energy Information Administration (EIA) forecasts that Brent could dip below $60/barrel by Q4 2025 and approach $50 in 2026, underscoring how supply imbalances are weighing heavily on the market.
1. OPEC+ Supply Pressure
Markets are preparing for an OPEC+ decision where the group may authorise another production hike. Earlier in 2025, the bloc increased output by 2.5 million barrels per day (bpd), with the UAE granted an extra 300,000 bpd quota.
This strategy is seen as an attempt to defend market share, even at the expense of lower prices in the $60–$65 range. (Reuters)
2. Rising U.S. Crude Inventories
The American Petroleum Institute (API) reported an unexpected build of 622,000 barrels in U.S. crude stockpiles, versus analyst expectations of a 2-million-barrel drawdown. This surprise increase signals oversupply and weaker demand, fueling further price declines.
3. Weakening Demand Outlook
With the conclusion of the U.S. summer driving season, demand appears to be diminishing. Analysts and organisations such as the IEA highlight slow demand expansion in major markets, including the U.S., China, and India.
| Driver | Effect on Oil Prices |
|---|---|
| OPEC+ output increase | Puts downward pressure |
| U.S. stockpile rise | Reinforces oversupply |
| Demand slowdown | Weakens price support |
| China stockpiling | Temporary buffer |
1. Glut Expectations & Forecasts
A Reuters survey predicts Brent will average $67.65 in 2025, lower than previous forecasts due to OPEC+ increases and weak demand.
The EIA forecasts Brent will fall below $60 in Q4 2025 and hover around $50 in 2026, as supply continues to exceed demand.
S&P Global flags a similar trend: supply is growing faster than demand, leading to inventory builds.
2. Market Resilience Despite the Downside
Despite bearish fundamentals, oil prices haven’t dropped further lately due to geopolitical tensions and stockpiling by China. Still, many traders remain short, the most bearish since 2008. (Barron's)
1) EIA
Projects Brent averaging < $60 in Q4 2025 and near $50 in 2026, based on large inventory build-ups and supply exceeding demand.
2) Reuters Poll
Supports flat-to-lower prices owing to OPEC+ increases and weak demand.
3) S&P Global
Expects continued price declines through 2025–2026 unless inventory builds slow down.
Risks That Could Disrupt the Trend
Geopolitical shocks (conflict escalation, sanctions, or shipping disruptions).
OPEC+ policy shifts, if the cartel cuts production instead of raising it.
Climate policy & EV adoption, which could structurally curb oil demand faster than expected.
Geopolitical oil stockpiling, where a sudden reduction in reserve buying accelerates the downturn.
1) Consumers & Equities
Lower oil prices reduce fuel costs, benefiting consumers and sectors like airlines, shipping, and logistics.
Oil giants might experience pressure on their margins, whereas downstream sectors could benefit.
2) Energy Stocks & ETFs
Energy ETFs such as XLE and VDE have lagged behind the S&P 500 as oil prices decline.
3) Currencies
Currencies from oil-exporting countries such as the Canadian dollar (CAD), Norwegian krone (NOK), and Russian ruble (RUB) generally decline in value when crude oil prices fall.
Oil-importing nations, particularly India and Japan, benefit from cheaper import bills.
4) Corporate Impact
ConocoPhillips plans to reduce its workforce by 25% amid the oil downturn, highlighting pressure on margins.
Oil prices are falling because of anticipated OPEC+ supply increases, unexpected U.S. inventory builds, and weaker global demand following the summer driving season.
Crude stockpiles unexpectedly rose by 622,000 barrels, compared to forecasts of a 2-million-barrel drawdown. This surprise build signals weaker demand and worsens the supply glut.
The EIA projects Brent will average below $60 in late 2025 and near $50 in 2026. A Reuters poll forecasts Brent around $67.65 in 2025, while S&P Global anticipates further gradual declines.
Yes. Although the trend is bearish, geopolitical shocks, OPEC+ policy changes, or disruptions in key trade routes (e.g., Strait of Hormuz) could trigger a rebound.
Exporters (losers): Saudi Arabia, Russia, and Norway face revenue challenges.
Importers (winners): India, Japan, and the EU benefit from cheaper crude imports, lowering inflationary pressures.
In conclusion, oil prices are falling today due to a combination of OPEC+ supply growth, rising U.S. inventories, and weakening demand.
Most forecasts foresee prices to dip below $60 in Q4 2025 and approach $50 in 2026, barring unexpected geopolitical shocks.
For traders and investors, the next OPEC+ meeting and U.S. inventory data will be decisive in determining whether crude stabilises or continues its slide toward multi-year lows.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
