OIL prices have entered the final stretch of 2025 locked in a tug-of-war between persistent oversupply and occasional flares of geopolitical support, leaving the market largely range-bound over the past month. Despite brief rallies triggered by headlines, the broader trend remains muted, shaped by the fact that the world is still producing more oil than it consumes.
Recent industry updates paint a clear picture: global supply growth is showing no signs of slowing as non-Opec producers continue to expand output aggressively. This comes at a time when Opec+ scaled back most of its voluntary cuts and now opted to pause further increases through early 2026, acknowledging that inventories are rising at an uncomfortable pace. Oil sitting on tankers has grown significantly in recent months, reinforcing the view that physical markets remain in surplus.
On the demand side, the story is equally subdued. Recoveries in Asia have been uneven, with China’s industrial sector still operating below pre-pandemic intensity in several regions and fuel consumption plateauing in key provinces. Europe continues to experience weak manufacturing activity, although the US is seeing somewhat steadier demand, if not more promising.
Overall, the global demand outlook remains sluggish, with 2025 oil demand growth now expected to be the slowest in four years. This widening supply-demand imbalance has kept Brent largely anchored in a broad consolidation of US$60 to US$73 per barrel in the second half of 2025, despite frequent headlines that would normally lift prices more decisively.
Geopolitical risk, however, continues to inject occasional volatility, although markets increasingly treat these events as tradeable noise rather than durable bullish catalysts – unless they result in sustained export disruptions. Sanctions on Russian oil add to the volatility mix. However, the scale of disruption to Russian flows to friendly nations remains negligible. In essence, geopolitics is adding short bursts of upward momentum, yet underlying fundamentals continue to cap those rallies.
Technically, the market shows signs of oversupply, with short-term prices remaining weaker than prices for later delivery – a typical signal that storage levels are high. Price charts show Brent repeatedly failing to sustain moves above the 50-day moving average of US$68.8 per barrel, suggesting that rallies are consistently met with selling pressure.
Momentum indicators such as the Relative Strength Index (RSI) remain neutral, reflecting a market lacking both the energy and conviction to break higher. From the recent highs of September 2023, a triangle formation consolidation looks to be in play (denoted in yellow). A descending trendline which also coincides with the 100-day moving average of US$74.44 per barrel continues to guide price action, and unless prices decisively clear this resistance, the broader structure remains sideways to soft.
Traders are increasingly watching the lower support within the triangle formation to act as a medium-term support base. However, a clear break below this level could expose lower zones last seen in 2020-21, particularly if inventory builds accelerate into Q1 2026.
Looking ahead, investors should focus on three key shifts that could alter the current narrative. Firstly, any surprise acceleration in Asian demand, especially from China’s industrial rebound or India’s transport sector, could help absorb some of the surplus.
Secondly, Opec+ policy remains pivotal; while the group is committed to a pause for now, any coordinated action to re-tighten supply would alter the technical landscape swiftly. Lastly, geopolitical risk warrants close monitoring, especially disruptions substantial enough to remove meaningful volumes from global supply and counteract the prevailing surplus.
Until one of these catalysts materialises, the base case remains a broadly range-bound market with modest downside bias. For investors, this phase calls for patience, tactical positioning, and close attention to inventory data. The earliest sign of tightening fundamentals could signal that a more meaningful price recovery is forming.
The writer is senior market analyst at Phillip Nova
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
