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Crude sideways early Fri, awaiting clarity on new Russia sanctions - Sept. 19, 2025
Crude stuck in neutral: Risk premium holds, no oversupply in sight - Sept. 19, 2025
Brent has now been stuck in the $65-70/barrel range for 13 weeks except for a late-July pop. Near-term sentiment is pinned between two forces: Russia supply risk from Ukrainian strikes and prospects of tighter joint G7-EU sanctions (supportive to bullish), versus a widely predicted global oil surplus (bearish). We expect the market’s breakout watch to continue.
Ukrainian drones have targeted ~2.2 mil b/d or around 40% of Russia’s operable refining capacity since early July, according to our tally. While refinery disruptions in the country typically don’t impact crude sentiment, the recent strikes on the Primorsk and Ust-Luga terminals, curtailing Russia’s crude-loading capacity, has changed the calculus and will remain an area to watch.
The US-G7-EU remain in a stalemate over the next round of joint Russia sanctions. Brussels is not warming up to Trump’s proposal for Europe to impose steep tariffs on China and India for buying Russian oil and Trump appears reluctant to tighten US sanctions without commensurate measures from the G7 and EU allies. More sanctions will likely come, but they may be same old-same old in scope.
Crude sold off slightly this week on market nervousness over softening US oil demand. How solid is that narrative? We look under the hood.
Also in this issue:
Aug 2025: Mildly bullish near-term, Moderately bullish H1 Sep - Aug. 22, 2025
Our latest crude price outlook:
Trump's Iran attack jolts markets but worst-case scenarios capped - June 22, 2025
Mideast tensions surged after the US hit Iran’s three main nuclear sites in a pre-dawn strike Sunday, marking a sharp reversal from President Trump’s earlier two-week diplomatic window.
Brent could briefly jump above $80/bbl at Monday’s open, but a quick pullback is likely as markets reassess the escalation risk.
Despite fiery rhetoric, Iran’s actual response appears measured. We do not expect a near-term blockade of Hormuz or strikes on Gulf producers’ oil assets, keeping worst-case risks contained.
Trump’s “one-and-done” signal and Tehran’s continued openness to talks raise the odds of resumed nuclear negotiations — potentially easing the $12–14/bbl risk premium, though volatility will stay elevated.
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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