Oil prices continued to retreat on Friday, with both Brent and West Texas Intermediate futures heading for monthly losses as concerns over oversupply and weakening demand outlooks dominated sentiment. Brent crude slipped below $68 per barrel, while WTI traded near $64, extending August’s decline to more than 5 per cent.
Global supply dynamics
The downturn has been driven largely by expectations of increased supply. Reports indicate that OPEC+ members, particularly in the Gulf, have maintained production levels despite weaker consumption forecasts. At the same time, higher U.S. shale output has added to the sense of imbalance, amplifying fears of a supply glut. Traders now see limited upside potential in the near term, as inventory builds put downward pressure on prices.
Demand outlook under scrutiny
Global demand signals remain mixed. While economic activity in parts of Asia continues to expand, concerns over slowing growth in Europe and persistent inflationary pressures in the U.S. are capping energy consumption forecasts. Analysts suggest that refinery throughput in major importing nations may soften into the final quarter of the year, further weighing on sentiment.
Geopolitical backdrop
Geopolitical developments have added to market volatility. Shifts in the Ukraine conflict and the broader reshaping of energy trade flows have injected uncertainty into crude pricing. Meanwhile, heightened U.S.–India tensions over trade and tariffs have also unsettled commodity markets, raising questions about energy demand resilience in emerging economies.
Investor response
Investors have responded with caution, scaling back long positions and seeking safety in alternative assets. The futures curve for both Brent and WTI has flattened, suggesting expectations for subdued prices well into the fourth quarter. Market participants now await signals from OPEC+ on possible output adjustments, though consensus remains that any meaningful cuts may be politically and economically difficult to achieve in the current climate.
Implications for markets
The persistent weakness in oil prices could bring relief to import-dependent economies by easing inflationary pressures. However, it also poses risks to producer nations, many of which face fiscal pressures that rely heavily on higher crude revenues. For global investors, the balance between cheaper energy costs and potential instability in oil-exporting regions is becoming a central theme in portfolio allocation strategies.
REFH – Newshub, 29 August 2025
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