Oil futures remain stuck in a holding pattern, with Brent crude continuing to trade within a tight $63 – 66 per barrel range. The market is caught between short-term supportive factors and longer-term demand anxieties, leaving traders hesitant to commit to a decisive move.
Short-Term Supports: Geopolitics and a Weaker Dollar
Prices have found some relief from stabilizing U.S. equity markets and renewed diplomatic efforts between Washington and Tehran. The prospect of eased sanctions on Iranian oil – should nuclear talks progress – adds a layer of uncertainty, but for now, the market is cautiously optimistic. Meanwhile, a softening U.S. dollar has lent support to commodities broadly, making crude more affordable for foreign buyers.
Demand Worries Loom Large
However, the bullish case is being undermined by persistent concerns over global oil consumption. Major forecasting agencies have been slashing their demand growth estimates for 2025 – 2026, reflecting fears of economic slowdowns and prolonged trade tensions.
- OPEC revised its 2025 – 2026 demand growth forecast downward by 100,000 barrels per day (bpd), now expecting an increase of 1.3 million bpd – still one of the more optimistic outlooks.
- The U.S. Energy Information Administration (EIA) took a sharper knife to its projections, cutting 2025 demand growth by 30% to just 900,000 bpd last week.
- The International Energy Agency (IEA) was even more pessimistic, lowering its 2025 forecast from 1.03 million bpd to 730,000 bpd, with a further slowdown to 690,000 bpd expected in 2026.
The Balancing Act Ahead
With OPEC+ maintaining production discipline and U.S. shale growth showing signs of moderation, supply-side risks appear contained for now. But the real wild card remains demand. If trade tensions escalate or major economies stumble, oil’s fragile equilibrium could tilt toward a steeper correction.
For traders, the current rangebound action suggests a wait-and-see approach – until either geopolitics or macro data provide the next catalyst.
Sources: OPEC Monthly Report, EIA Short-Term Energy Outlook, IEA Oil Market Report