Brent Crude Oil Price Increases Slightly, Remaining at $70.19
The current market for Brent crude oil is experiencing a delicate balance, with geopolitical risks, OPEC+ production decisions, and global economic factors all playing significant roles.
According to Fawad Razaqzada, market analyst at StoneX, concerns about crude oil demand have decreased dramatically, but this has not led to the anticipated recovery in inflation rates. The upward trend in oil prices could be attributed to the factors mentioned by Mr. Razaqzada, including the central banks' interest rate cuts and the uncertainty surrounding US trade plans.
The recent attacks by the Yemeni rebel Shia militia Houthi on ships in the Red Sea have added a new layer of complexity to the oil market. The potential impact of these attacks on crude supply through the Red Sea maritime route is currently being assessed, and the market is closely monitoring the situation.
In a positive note, the International Energy Agency (IEA) projects world oil demand to increase by about 720,000 barrels per day in 2025, providing some resilience to prices. However, this demand growth is relatively modest compared to supply increases.
The U.S. Energy Information Administration (EIA) recently upgraded its 2025 Brent crude oil price forecast to an average of about $68.89 per barrel, up by nearly $3 from the prior estimate. This upward revision is mainly due to increased geopolitical risk premiums following heightened tensions in the Middle East.
Despite this short-term upward revision, the EIA expects Brent prices to decrease over the course of 2025, with prices starting around $75.83 per barrel in Q1 2025 but falling to about $64 by Q4 2025, and further down to an average of $58.48 in 2026. This decline is attributed to a significant build in global petroleum inventories as supply outpaces demand.
The OPEC+ alliance's production increase announced in July 2025 exceeds previous assumptions in the EIA's forecasts. This production rise is part of OPEC+'s unwinding of voluntary production cuts, which, combined with stagnating global demand growth, is expected to contribute to rising global oil inventories and downward pressure on prices.
U.S. oil production remains high, with a record 13.5 million barrels per day in Q2 2025, although slight declines are forecast by the end of 2026 due to industry spending cuts in response to lower prices.
In summary, while geopolitical risks have recently pushed Brent crude prices higher, the overall medium-term outlook points to a gradual decline in prices through 2025 and 2026, driven by increased OPEC+ production, strong U.S. supply, and only moderate global demand growth leading to inventory builds. The Brent price is expected to average close to $69/bbl in 2025 but move down to the high $50s by 2026.
The finance industry’s latest forecasts reveal an expected increase in Brent crude oil prices due to geopolitical risks and OPEC+ production decisions, which could impact the energy sector's global economics. The upward trend in oil prices also coincides with the central banks' interest rate cuts and the uncertainty surrounding US trade plans, further indicating a possible influence of financial factors on the energy industry.
