Oil Prices Dip On Demand Fears Despite Geopolitical Tensions; Weekly Gains Intact

This week’s support for prices came largely from Ukrainian strikes on Russian oil export infrastructure, as well as the absence of progress in peace talks between Moscow and Kyiv.

OPEC+ producers are gradually easing voluntary output curbs, raising expectations of more crude entering global markets.

Source : Freepik

Global crude markets saw a decline on Friday as concerns over slowing demand outweighed supply risks, yet both major benchmarks remain on track for modest weekly gains.

The retreat comes as the peak summer driving season winds down in the United States, the world’s largest oil consumer, while traders also assess the evolving outlook for Russian exports, reported Reuters.

Market Performance and Weekly Outlook

Brent crude futures for October delivery, due to expire on Friday, slipped 53 cents or 0.8 per cent to trade at $68.09 by 8:21 AM. The more liquid November contract shed 48 cents, or 0.7 per cent, to $67.50. West Texas Intermediate (WTI) futures were down 51 cents, or 0.8 per cent, at $64.09. Despite the day’s losses, Brent is still on course for a 0.6 per cent weekly rise, while WTI is set to climb 0.8 per cent.

This week’s support for prices came largely from Ukrainian strikes on Russian oil export infrastructure, as well as the absence of progress in peace talks between Moscow and Kyiv. German Chancellor Friedrich Merz confirmed on Thursday that there would be no meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, adding to geopolitical uncertainty.

Demand Concerns Take Centre Stage

With the US Labour Day holiday marking the close of the summer travel period, analysts expect fuel consumption to decline. At the same time, OPEC+ producers are gradually easing voluntary output curbs, raising expectations of more crude entering global markets.

"We expect rising OPEC+ supply and a seasonal fall in global refining activity from September will result in a pick-up in global oil stockpiles in coming months. We forecast Brent oil futures falling to $63/bbl in Q4 2025," Vivek Dhar, commodities analyst at the Commonwealth Bank of Australia, wrote in a note.

Geopolitical Risks and Sanction Uncertainty

Fresh Russian attacks on Kyiv on Thursday, which left 23 people dead, have prompted speculation about a stronger US and European sanctions response. Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said: "Uncertainty lingers over whether US and Europe may tighten sanctions against Russia following its attack on Ukraine, and over the potential impact of US tariffs on India, making investors reluctant to take large positions."

The White House is also pressuring India to reduce its imports of discounted Russian crude. However, traders noted that shipments to India are likely to increase in September, showing resilience in Moscow’s energy trade despite Western pressure.

Shifts in Global Supply

In Asia, Saudi Arabia, the world’s largest crude exporter, may lower its official selling prices for October deliveries amid ample supply and softening demand, according to refining industry sources. Meanwhile, Russian flows to Hungary and Slovakia via the Druzhba pipeline have resumed after being disrupted by Ukrainian strikes last week, Hungary’s MOL and Slovakia’s economy minister confirmed.

Overall, oil markets are being pulled between weakening seasonal demand and geopolitical supply risks, leaving investors weighing whether the modest weekly gains can be sustained into September.

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