Page 26 - Policy Economic Report - November 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Oil Market

Crude oil price – Monthly Review

Global oil market balances are looking increasingly lopsided, as world oil supply is forging ahead while oil
demand growth remains modest by historical standards. At the same time, the risks to the forecast remain
plentiful, with the economic repercussions of the recent tariff turmoil and the US federal government
shutdown still uncertain, and the impacts of new sanctions on Russia yet to become clear. North Sea Dated
crude oil prices slumped by $3.26/bbl in October, their fourth consecutive monthly decline, to average
$64.64/bbl, and were trading at around $62/bbl.

Russia’s oil industry has come under more severe pressure after the United States and the United Kingdom
sanctioned the two largest Russian producers Rosneft and Lukoil, which together produce and
internationally market about half of the country’s crude. The latest sanctions come into effect on 21
November, but so far Russian exports have continued largely unabated, even as volumes have piled up on
water as buyers evaluate compliance risks and possible workarounds.

Hedge funds and other money managers turned increasingly bearish on crude oil futures for most of
October before sentiment reversed in the last week of the month. Money managers sold the equivalent
of 157 mb in the ICE Brent market between the weeks of 30 September and 21 October. Net long positions
in ICE Brent futures and options fell sharply, reaching a one-year low in the week to 21 October. This was
partly due to short positions in ICE Brent futures and options reaching a record high, according to
Intercontinental Exchange data going back to 2011, which added downward pressure on prices. However,
in the final week of the month, money managers covered a significant portion of these short positions
following the announcement of new restrictions, which were viewed as potentially impacting oil supply.

Crude spot prices declined in October, partly reversing the gains of the previous month. Prices came under
pressure from heavy selling in the futures market and the easing of supply risk premiums. Global refinery
intakes fell by around 1.7 mb/d in October, marking the third consecutive monthly drop amid planned
and unplanned outages in major refining hubs. This reduced crude demand in the spot market, and
weighed down on prices. The EIA also reported a build in US crude oil stocks during the first half of the
month, adding to the bearish sentiment.

Crude differentials weakened mainly across the Atlantic Basin in October for both light sweet and sour
grades. In the North Sea market, price differentials were mixed, with sour crudes declining sharply amid
ample supply and softer demand during the refinery maintenance season. Abundant availability weighed
down on spot prices, although some grades found support from regional demand as high freight costs
curtailed the economic viability of arbitrage flows to Northwest Europe. Forties crude differentials rose
by 41¢/b m-o-m, to stand at a premium of 46¢/b, while Ekofisk crude differentials declined by 8¢/b m-o-
m to a premium of $1.31/b. Meanwhile, weak demand for sour grades, such as Johan Sverdrup, amid high
supply availability, weighed on the value of sour crude. Johan Sverdrup crude differentials dropped by
$1.22/b m-o-m to settle at a discount of $1.00/b.

In October, ORB value dropped by $5.19/b, month-on-month (m-o-m), to average $65.20/b. The ICE Brent
front-month contract dropped by $3.63/b, m-o-m, to average $63.95/b, and the NYMEX WTI front-month
contract dropped by $3.46/b, m-o-m, to average $60.07/b. The GME Oman front-month contract dropped
in October by $5.09/b, m-o-m, to settle at $64.95/b.

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