Macro analysis of the global oil markets to distill the evolving risks and opportunities for energy industry stakeholders and wealth managers.
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Crude stalls around 4-week highs as Trump announces auto tariffs - March 27, 2025
Tariffs limit crude's headroom amidst geopolitical tensions - March 21, 2025
Brent futures remained locked in the $69-71 range for the third week in a row. They stuck their head above the $72 mark on Thursday, but had been swatted back down by Friday evening in Asia, as we closed the weekly report.
On the supportive front, there were the incremental rounds of US sanctions against Iranian oil and OPEC+ looking to rein in its output by overlaying an expanded compensatory production cuts scheme on the planned 2.2 million b/d of phased supply boost starting in April. Even the Fed managed to inject some cheer in the markets on Wednesday, saying it was revising its average 2025 US inflation projection from 2.5% expected last December to 2.7%, but sees it cooling off quickly to 2.2% in 2026. But the gloom from the tariff wars unleashed by President Trump remains overpowering.
There were no fresh headlines on that front this week but it felt like the calm before yet another storm. As April 2 comes into view next week, so do Trump’s threat of reciprocal tariffs on all countries and the end of a 30-day suspension of tariffs against Canada and Mexico on goods covered by the USMCA.
In this issue, we distil the key forces at work on oil sentiment and look under the hood of OPEC+’s surprising shift in the compensatory cuts strategy, to assess its potential impact.
Feb 2025: Neutral near-term, mildly bearish March - Feb. 21, 2025
After weighing the factors supporting and weighing on crude, we conclude:
The neutral sentiment for the near-term corresponds to Brent futures remaining in the $75-77 range.
The mildly bearish sentiment for March corresponds to Brent dropping back into the $72-74/bbl band.
US' tough new Russia oil sanctions may have a short shelf life - Jan. 12, 2025
The Biden administration took oil market players by surprise on Friday by announcing the most expansive sanctions yet against Russia’s oil sector.
We suspect it was not only the oil market; the US’ European Union allies across the pond may have also been caught unawares – we couldn’t find a single reaction from any of the region’s leaders! The UK, for what it is worth, joined the US, simultaneously announcing sanctions against Gazpromneft and Surgutneftegas,
It was curious to see Biden fire the bazooka just 10 days before handing over charge to Donald Trump, who is clearly going to have a vastly different approach to resolving the Ukraine war.
What does the upcoming change of guard in the US say for the durability of the latest round of sanctions and crude’s 4% spike on Friday? Our succinct insights in this report.
OIL IN 2025: Softer crude prices but not because of oversupply - Dec. 27, 2024
Benchmark Brent crude prices averaged just under $80/barrel in 2024, about 2.7% lower versus last year.
We expect the average to dip into the $70-75/barrel band in 2025, but not because of a sizeable oversupply in the market, let alone a “glut”.
A sombre economic outlook for 2025, bolstered by China’s uphill battle to jump-start growth and amplified by expectations of a fresh round of trade wars under Trump 2.0, has shaped a bearish narrative around oil demand.
But we would caution against leaning too much into the gloom-and-doom scenario.
Crude is more likely to come under pressure from an evaporating geopolitical risk premium and worries over economic stability than any severe economic downturns or recessions.
Oil demand could remain relatively resilient, helped by softer prices, leading to a largely balanced market, especially with OPEC+ remaining extra cautious and conservative in bringing back the barrels it has locked away.
What challenges our baseline views? We also bring you the contrarian perspective and wildcards!
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