Topic 4: CRUDE OIL: FLICKERING FLAME

Crude oil prices in October 2025 experienced persistent downward pressure, marking the third consecutive month of decline. Prices fell by about 2.2% during the month, sliding from approximately $65.36 per barrel at the beginning of October to around $63.90 per barrel by month-end, with the lowest point recorded mid-month near $61.02 per barrel. The month’s movement reflected a confluence of bearish supply-demand fundamentals, rising inventories, a strong US dollar, and muted demand growth across key global economies. Despite intermittent geopolitical tensions offering temporary support, the broader sentiment in the oil market remained cautious and tilted to the downside.
In the first week of October (October 1–7), crude prices began around $65.36 and weakened slightly as the market anticipated a significant OPEC+ production hike of around 500,000 barrels per day starting in November. Expectations of this additional supply, coupled with softer refinery demand and the onset of seasonal consumption decline, outweighed geopolitical concerns that might have otherwise supported prices. Traders also factored in the likelihood of continued output growth from non-OPEC producers, setting a subdued tone early in the month. During the second week (October 8–14), Brent crude briefly approached a mid-month high near $66.40 on October 8 before retreating amid choppy and bearish trading conditions. A key catalyst for the decline was the unexpected surge in US crude inventories, which signalled that supply continued to outpace demand. The build-up in inventories raised concerns about a potential supply glut, dampening market optimism. Even as geopolitical risks persisted in parts of Eastern Europe and the Middle East, they failed to generate sustained price gains, as investors focused on the broader oversupply narrative and weaker refining margins. The third week (October 15–21) saw the steepest drop of the month, with crude prices tumbling to a low of around $61.02 per barrel on October 20. This phase was characterized by pronounced bearish momentum driven by abundant supply and limited demand growth. OPEC+ production remained high, while US shale producers continued to expand output. Meanwhile, large stockpiles both onshore and in floating storage underscored market oversaturation. Demand uncertainty from major consumers, particularly China—where industrial activity showed signs of slowing—further weighed on sentiment.
The combination of rising output, soft consumption, and excess inventories created a decisive downward turn in prices. In the final week of October (October 22–31), crude oil prices showed signs of stabilizing but remained subdued. Market participants reacted to reports of fresh US sanctions on Russian oil companies and regional geopolitical tensions, but these factors offered only fleeting price support. A robust US dollar added to the downward pressure, as it made oil more expensive for holders of other currencies, curbing international demand. OPEC+ confirmed another output increase planned for December but indicated a pause in production hikes for early 2026, providing mild reassurance to traders that the supply surge might soon moderate.
Overall, October 2025’s oil market was defined by the interplay of rising global supply, weakening demand, and macroeconomic headwinds. Production from both OPEC+ and non-OPEC nations continued to rise, creating an oversupplied market environment. Demand growth slowed, particularly in OECD countries and China, as global energy transitions and efficiency measures curtailed consumption. The strengthening of the US dollar compounded price pressures, while rising inventories across the US and other regions signalled slackening demand momentum. Although geopolitical uncertainties—such as tensions involving Russia and Iran—offered temporary support, they were insufficient to offset the prevailing bearish fundamentals.
Consequently, October closed as another challenging month for crude benchmarks, reinforcing the perception of a well-supplied market grappling with a fragile demand recovery and a stronger dollar backdrop.