Global oil markets treaded cautiously on Thursday, with Brent and WTI crude logging minor gains amid a tug-of-war between tight near-term supply, rising geopolitical uncertainty, and demand-side stress triggered by new U.S. tariffs and OPEC’s revised outlook.
- Brent crude inched up by $0.19, ending the day at $68.83 per barrel.
- WTI crude finished 26 cents higher, closing at $66.83 per barrel.
The modest uptick follows a volatile trading week, as investors weighed economic data, policy threats, and regional instability across key oil transit corridors.
Tensions Build: Tariffs and Trade Retaliation
President Trump’s announcement of 35% tariffs on Canadian goods, with warnings of similar actions against Mexico and the EU, injected uncertainty into global trade dynamics. The energy sector—especially oil logistics and refined product exports—faces renewed scrutiny.
“This is less about oil fundamentals and more about market psychology,” said Susan Aguilar, macroeconomist at Ampex Capital. “Uncertainty around tariffs affects everything from fuel hedging to freight costs.”
OPEC Revises Forecast, Global Demand Slows
In its latest report, the Organization of the Petroleum Exporting Countries (OPEC) cut its medium-term global oil demand outlook by 1.6 million barrels per day, down to 106.3 million bpd by 2029. The revision reflects increasing penetration of electric vehicles, a plateau in Chinese industrial consumption, and continued clean energy subsidies across OECD economies.
“The forecast underscores a structural shift—not just a cyclical one,” said Lena Osei, lead oil analyst at ING.
Supply-Side Support Keeps Market Buoyant
Despite policy headwinds, global supply remains constrained:
- Refinery utilization in the U.S. and Asia is at its highest since 2023
- Strategic petroleum reserves (SPRs) are near decade lows in many countries
- Geopolitical disruptions in the Middle East and Red Sea shipping lanes remain unresolved
These factors are contributing to a backwardated market structure, which rewards near-term buyers and suggests a strong physical market—at least temporarily.
Market Outlook: Volatility Is the Constant
Energy investors are increasingly risk-sensitive, reacting sharply to policy signals rather than fundamentals. Despite the short-term price resilience, many strategists warn of looming pullbacks, particularly if macroeconomic tightening resumes or global trade conditions worsen.
“There’s no escaping volatility—this market is tethered to both Washington and Vienna,” said David Yamato, an energy risk strategist at Barclays, referring to U.S. tariffs and OPEC decisions.
Conclusion
As H2 2025 unfolds, the oil market continues to grapple with heightened unpredictability. The delicate balance between supply strain, policy friction, and demand erosion will likely define pricing dynamics well into Q4. For now, prices hover, but beneath the surface, pressure is building.
