Page 27 - Policy Economic Report - October 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Oil Market

Crude oil price – Monthly Review

The oil market has been in surplus since the start of the year, but stock builds have so far been
concentrated in crude in China and gas liquids in the United States. By September, however, a surge in
Middle East production, coinciding with seasonally lower regional crude demand, boosted exports to
two and a half-year high. This, combined with robust flows from the Americas, swelled oil on water in
September by a massive 102 mb, equivalent to 3.4 mb/d, the largest increase since the Covid-19
pandemic. Brent crude oil futures rose by an average $0.30/bbl to $67.60/bbl m-o-m in September. But
by early October, the wave of tankers at sea and the announcement of new trade measures pushed
prices down by $4/bbl to $64/bbl.

Global oil supply in September was up by a massive 5.6 mb/d compared with a year ago. OPEC+
accounted for 3.1 mb/d of the increase, as the Group of 8 unwound 2 mb/d of production cuts, and as
Libya, Venezuela and Nigeria all posted strong gains. Based on their latest agreement, OPEC+ is now on
track to lift output by 1.4 mb/d on average this year and by a further 1.2 mb/d in 2026. Non-OPEC+
producers are set to add 1.6 mb/d and 1.2 mb/d, respectively, over the same timeframe, with the
United States, Brazil, Canada, Guyana and Argentina leading growth. Risks to the forecast remain, with
sanctions imposed on Russia and Iran compounding geopolitical concerns. Persistent attacks on Russian
energy infrastructure have cut Russian crude processing by an estimated 500 kb/d, resulting in domestic
fuel shortages and lower product exports. The drop in Russian middle distillate exports reverberated
globally as regular buyers scrambled to secure alternative supplies, bidding up diesel and jet fuel cracks
in the process. Light sweet crude refining margins hit two-year highs in Europe and 18-month highs on
the US Gulf Coast and in Singapore in September.

Hedge funds and other money managers maintained a bearish stance on crude oil futures in September,
with combined NYMEX and ICE WTI positions remaining net short for most of the month. Speculative
trading was volatile, amplifying price fluctuations. Speculators increased their short positions in ICE
Brent to a four-month high while reducing their longs, amid concerns about an uncertain economic
outlook, as well as concerns about the oil supply and demand outlook. However, money managers
turned bullish on refined products, raising ICE gasoil net long positions by 33.4% over September to their
highest level since March 2022.

Crude spot prices were mixed in September. Light sweet benchmarks edged lower m-o-m, while
medium sour grades posted gains. North Sea Dated and WTI came under pressure from softer refinery
demand amid the autumn maintenance season in the US and Europe, and higher WTI availability from
the USGC. Additional downward pressure stemmed from selling activities in the futures market.
However, losses were partly offset by more substantial refining margins, particularly for middle
distillates, and stronger buying interest from Asia-Pacific refiners. Improved west-to-east arbitrage
economics also supported demand for Atlantic Basin crudes.

In September, OPEC Reference Basket (ORB) value increased by 66¢, m-o-m, to average $70.39/b. The
ICE Brent front-month contract increased in September by 32¢, m-o-m, to average $67.58/b, while the

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