Economic and political uncertainty roil oil markets but increased inventory reins in prices

By Mark Jaffe, EUCI energy writer

While geopolitical risks tend to push up the price of oil, an increase in supply and global economic uncertainties has tamped down the price of oil to its lowest in nearly three years.

Global petroleum inventories rose by an average of 1.8 million barrels a day in the second and third quarters, according to the U.S. Energy Information Administration (EIA).

“Global oil inventories have been growing in 2025 as crude oil production from OPEC+ members and non-OPEC+ producers in North and South America has outpaced global demand growth,” the EIA said.

OPEC+ announced multiple increases in output helping to “offset geopolitical tensions.”

In the third quarter of 2025, Russia stepped up attacks on Ukraine, and Ukraine responded with successful attacks on Russian energy infrastructure. In the Middle East, unidentified saboteurs have launched drone attacks on Iraqi oil fields.

In August, the U.S. slapped a 25% punitive tariff on India for buying Russian oil, and the European Union is also planning additional measures against processors of Russian crude oil in response to Russia’s military flights over Estonia, Poland, and Romania.

Still, the EIA is forecasting the price of Brent Crude falling to $52 a barrel in the first quarter of 2026, when global inventory is estimated to reach its peak, from the September price of $68 a barrel.

Bolstering the Brent Crude oil price has been an increase in Chinese oil inventories of about 90,000 barrels a day between January and August, “essentially acting as a source of demand by removing barrels from the global markets,” the EIA said.

World oil demand is forecast to increase by 740,000 barrels a day in 2025 compared to 2024, while supply will rise by 2.7 million barrels per day, up from 2.5 million barrels a day in the agency’s previous forecast.

The price of West Texas Intermediate (WTI) oil is at a four-year low of $62 a barrel as “U.S. tariffs and counter-tariffs continue to provoke market angst about weakening crude oil demand,” according to financial analyst Morningstar.

“The two main adversaries in the trade war—the U.S. and China—are, respectively, the number one and number two consumers of crude oil in the world,” Morningstar said, with the U.S. accounting for 20% and China 16% of the 104 million barrels a day of oil demand in 2024.

Morningstar increased its 2025 full-year price forecast for WTI to $65 a barrel from $60 a barrel to reflect year-to-date prices.

It warned, however, that “a more severe global economic slowdown, which may be caused by the trade war between the U.S. and China, could have a significant negative effect on crude oil demand.”