Oil Market Report - October 2025

The dynamic of crude oil market in October 2025 was driven by the combined weight of a persistent oversupply narrative, deteriorating demand expectations, and intermittent bursts of geopolitical tension that briefly arrested the decline but failed to reverse the fundamental weakness.

EXECUTIVE SUMMARY

The dynamic of crude oil market in October 2025 was driven by the combined weight of a persistent oversupply narrative, deteriorating demand expectations, and intermittent bursts of geopolitical tension that briefly arrested the decline but failed to reverse the fundamental weakness. Both ICE Brent and NYMEX WTI front-month futures exhibited pronounced downward bias through most of the month, extending the bearish momentum that had started in late September. By the end of the month, on October 30, the benchmarks settled at $63.86 and $60.01 respectively, marking month-to-date losses of $2.17 per barrel for Brent (-3.3%) and $2.36 per barrel for WTI (-3.8%). These declines capped a third consecutive monthly contraction and underscored how concerns over global consumption and swelling inventories overwhelmed sporadic bullish impulses stemming from supply-risk headlines. Over the month, Brent traded between a low of $60.84 and a high of $66.78, implying a $5.94 range (9.7% from bottom to top). WTI’s corresponding range was $57.26–$62.59, or 9.3%. Both contracts averaged substantially below their September means: Brent’s October average stood near $63.7, compared with $67.6 in September (-5.8%), while WTI averaged $60.2, down from $63.6 (-5.3%). The forward curve flattened further, with the Brent–WTI spread narrowing from roughly $3.7 at the end of September to $3.4 by October 30, as the U.S. benchmark proved marginally more resilient during the mid-month rebound.

Heading into November 2025, the outlook for both ICE Brent and NYMEX WTI crude futures remains cautious, with fundamentals still skewed to the downside despite the late-October stabilization above their respective monthly averages. The technical setup—prices hovering near $63.9 for Brent and $60.0 for WTI, roughly in line with October means—suggests short-term equilibrium, yet the underlying balance of forces continues to favor sellers rather than sustained recovery. Fundamentally, the key issue remains structural oversupply: OPEC+ output is edging higher after its modest November quota increase, U.S. production is steady near multi-year highs, and Russian export volumes continue to find alternative routes despite Western sanctions. Simultaneously, demand indicators show no convincing improvement. Refinery margins in Asia are thin, product cracks in Europe have softened, and the IEA’s autumn outlook points to a potential inventory build persisting into the first half of 2026. While U.S.–China trade talks and partial tariff relief could lend mild support via sentiment and marginally improved global manufacturing expectations, the market’s forward curve still implies abundant supply and sluggish consumption growth. The late-October rebound—fueled by short-covering and inventory draw headlines—did little to alter that macro reality. Unless November brings clear signs of demand normalization or credible OPEC+ restraint, both benchmarks are likely to remain range-bound to slightly lower, with Brent trading mostly between $60 and $66 per barrel and WTI confined to roughly $56 to $62. Price risks are asymmetrical: geopolitical flare-ups or unplanned outages could generate temporary rallies, but absent a tangible tightening of physical balances, any strength will likely be faded. In sum, November opens with a market that is technically neutral but fundamentally heavy—stabilized for now, yet lacking the conviction or catalysts required to sustain a durable upward trend.

The International Energy Agency reported that total global oil supply rose in September 2025 by 760 kbd relative to the prior month to a record high of 108 mbd, as OPEC+ production surged by 1 mbd led by the Middle East. The same time, global oil supply in September was up by a massive 5.6 mbd compared with a year ago. OPEC+ accounted for 3.1 mbd of the increase, as the Group of 8 unwound 2 mbd 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 mbd on average this year and by a further 1.2 mbd in 2026. Non-OPEC+ producers are set to add 1.6 mbd and 1.2 mbd, respectively, over the same timeframe, with the United States, Brazil, Canada, Guyana and Argentina leading growth. Taken together, world oil supply is on track to rise by 3 mbd to 106.1 mbd this year and by 2.4 mbd next year. 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 kbd, 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.

The U.S. Energy Information Administration provided even more optimistic estimates of global oil production growth over the month. According the agency’s data, world output of oil increased in September by 1.8 mbd from August, equating to a 1.7% month-over-month expansion that marked the fastest monthly advance in 54 months and extended a five-month run of sequential gains. In result, the output reached its new all-time high of almost 108.5 mbd, underscoring how strong the current upswing has become. Compared with a year earlier, global oil supply was higher by 6.67 mbd, a 6.5% year-over-year rise that not only preserved a 12-month streak of annual increases but also delivered the quickest yearly growth in 43 months. The strength was not merely cyclical noise around a trend; relative to the five-year seasonal benchmark for September, aggregate supply stood 9.81 mbd above, a 9.9% surplus that signals a substantial positive deviation from historical norms. Taken together, this indicates a phase of exceptional supply availability, or even supply glut, at the global level, with the momentum metrics and the distance above the seasonal baseline pointing in the same direction.

OPEC crude oil production strengthened further in September 2025, reflecting organization’s efforts to unwind its earlier output cuts and restore its market share.  According to cartel’s own data, the group produced 492 kbd more crude oil versus August, a 1.8% month-over-month gain. That increment was the briskest monthly advance in 11 months and marked the fifth consecutive monthly increase, lifting the aggregate output to its highest level in 29 months. Compared with September 2024, crude supply from OPEC was larger by 2.4 mbd, a 9.2% year-over-year rise. The annual expansion has now persisted for 10 months and, in intensity, was the strongest year-on-year growth in 36 months. Relative to the typical seasonal pattern, OPEC crude output exceeded the five-year September average by 1.69 mbd, representing a 6.3% premium. The cluster of momentum metrics—fastest monthly gain in nearly a year, strongest annual pace in three years, five straight monthly increases, and a near two-and-a-half-year peak—confirms that the upswing is not just a deviation but a strategic shift in cartel’s production strategy.

OPEC+ ministers meeting on October 5, 2025 agreed to continue easing curbs with another modest quota increase of 137 kbd starting in November, matching October’s step-up. The move extends a sequence of incremental hikes this year that the group has framed as a calibrated effort to recapture market share while monitoring inventories and compliance. If continued at this pace, lifting the full 1.65 mbd tranche of cuts made in April 2023 would take 12 months and end in September 2026, leaving the 22-member alliance with 2 mbd of supply cuts still in place. OPEC+ core members also reiterated monthly check-ins and the need to compensate for any earlier overproduction. The decision to continue cuts unwinding with September speed of 137 kbd means that cumulative quota rises in 2025 now total more than 2.5–2.7 mbd. The next meeting is scheduled on November 2, 2025.

Non-OPEC total oil supply reached a new historical pinnacle in September 2025, extending the expansion that has been building through most of the year. Aggregate output rose by 0.65 mbd from August, a 0.9% monthly increase that delivered the new highest level on records of 73.8 mbd and marked the sixth consecutive month of gains. On a twelve-month comparison, production stood 3.28 mbd above September 2024, up 4.7% YoY, the strongest annual pace in twenty-one months and the ninth straight positive year-on-year print. The scale of the outperformance against seasonal norms remains striking as well: relative to the five-year average for September, non-OPEC total supply was higher by 6.38 mbd, or +9.5%. The monthly increase in production was almost entirely generated in the Western Hemisphere, with modest positive inputs from Asia-Pacific and Europe and a small drag from the CIS, while the annual expansion was broad, with each major region contributing a measurable share. The sustained premium to five-year averages across most regions adds a layer of confirmation that the upturn is more than seasonal, reflecting structural strength that, for now, continues to define the non-OPEC oil supply landscape.

U.S. total liquids supply set another high-water mark in September 2025, with the aggregate rising by 100 kbd from August, a 0.4% MoM step-up that extended a three-month run of increases even as the cadence eased from earlier in the summer. In year-on-year terms the expansion was far more forceful: total output stood 1.18 mbd above September 2024, a 5.2% YoY gain and the sharpest annual growth in eight months, capping a full year of positive YoY prints. Measured against seasonal history, the aggregate sat 3.09 mbd above the five-year average for this month, a 15.0% premium that underlines the degree to which today’s supply stack is operating beyond recent norms. The tempo therefore combines record scale with a slightly slower near-term cadence, a configuration typical of a maturing but still expanding cycle. The composition of the September total increase clarifies why the headline rose modestly despite robust movement in one of its pillars. Crude oil provided the entire net increase and more, while the other components either stalled or slipped: NGLs were flat on the month, while renewable fuels and processing gain fell month-on-month.

U.S. shale oil production also advanced in September, though with a more measured cadence than the overall crude supply, remaining the structural anchor of U.S. crude sector. Volumes rose by 47 kbd on the month, a 0.4% MoM increase that represented the fastest sequential gain in three months and the second consecutive monthly uptick. Even with the modest monthly increment, shale output set a new record high of 10.47 mbd, reaffirming the segment’s role in setting the ceiling for national production. The annual profile was characteristically steady: shale volumes stood 225 kbd above September 2024, up 2.2% YoY, extending an extraordinary 53-month streak of positive year-over-year comparisons. Compared with the five-year seasonal benchmark, shale operated 1.33 mbd above average, a 14.6% premium that captures the structural step-change achieved over recent years. In terms of composition, shale represented 76.39% of U.S. crude in September, a level that declined by 67.8 basis points from August and by 98.0 basis points from a year earlier.

According to the International Energy Agency, the third quarter of 2025 saw global oil demand growth rebound to 750 kbd year-over-year from the second quarter’s 420 kbd pace, when consumption was weighed down by tariff turmoil, especially for LPG/ethane feedstocks that posted a rare contraction. Third-quarter gains were largely in line with IEA’s annual growth forecast of around 700 kbd in both 2025 and 2026 which is well below historical trend. The agency also stated that despite recent sluggish growth, the petrochemical sector will reassume its position in the driving seat of oil demand growth, as subpar economic conditions, increasing vehicle efficiencies and strong EV sales make for strong headwinds for road transport fuels.

As for the U.S. Energy Information Administration, the agency recorded roughly flat monthly dynamic of global oil demand in September 2025, albeit its composition tells a more complicated story. Worldwide consumption rose by 42 kbd versus August, which rounds to a less than 0.1% month-on-month gain, yet it still set the highest global level in seven months and extended a two-month run of sequential increases. On a year-over-year basis, the world added 0.86 mbd, or +0.8% YoY, keeping a sixteen-month expansion streak intact, albeit at the slowest annual growth rate in three months. Relative to historical context, the global tally stood 4.54 mbd above the five-year average for September, a 4.5% premium that underscores demand’s resilience even as the headline monthly gain appeared negligible.

The International Energy Agency reported that global observed oil inventories rose by a further 17.7 mb in August 2025 to a four-year high of 7 909 mb, as a 36.2 mb build in products was partly offset by an 18.5 mb decline in global crude, NGLs and feedstocks. OECD total commercial inventories rose by 22 mb, non-OECD by 4 mb, supported by rising Chinese crude inventories, while oil on water dropped 8 mb. Preliminary data for September 2025 shows sharply higher oil stocks, led by a strong build in oil on water. 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 mbd, the largest increase since the Covid-19 pandemic.

Detailed oil inventories statistics on July 2025 confirmed earlier estimates that commercial oil inventories across OECD were up over the month, in line with the seasonal trend. The stocks advanced by 1.5 million tons from June, a 0.3% month-on-month increase that marked the quickest pace of accumulation in six months and signaled a modest easing of the tightness that characterized the first half of the year. On an annual basis, however, the balance remained lighter: total stocks were 2.1 million tons lower than in July 2024, a decline of 0.4% YoY that extended a four-month sequence of negative year-over-year prints, though this latest reading was the gentlest contraction within that stretch. The structural shortfall versus seasonal norms remained substantial, with holdings standing 35.9 million tons below the five-year average for July, a gap of 7.1% that underscores how far inventories still sit from typical midsummer levels even after the most robust monthly build since early 2025.

U.S. oil inventories closed September 2025 with a broad-based build that extended the summer upswing and pushed headline stocks to levels not seen since early 2022. Total inventories increased by 17.05 mb from August, posting a 1.0% month-on-month expansion that marked the third consecutive monthly gain and culminated in the highest aggregate reading in 41 months. On a year-on-year basis, the total was 34.15 mb higher than in September 2024, up 2.1% YoY, preserving a three-month streak of positive annual comparisons and delivering the fastest yearly growth in seven months. The cyclical tone was firm, yet the structural picture still featured a sizable cushion to rebuild: even after September’s additions, total stocks remained 75.93 mb below the five-year average for the month, a deficit of 4.3% that underscores how the recent rebuilding has not yet erased the structural deficit accumulated over prior years.

Cushing crude inventories again closed September 2025 materially below longer-term seasonal averages, reinforcing a tight starting point for the fourth quarter. Versus the five-year norm for September, stocks were lower by 8.88 mb, a 27.5% deficit that confirms a structural shortfall rather than a fleeting deviation. On an annual lens, the hub remained below year-earlier levels for the eleventh consecutive month. The gap to September 2024 was modest—down 0.20 mb, or -0.8% YoY—and notably marked the gentlest year-over-year contraction in that eleven-month sequence. The persistence of negative prints alongside a slowing rate points to stabilization at a lean level rather than a reversal. Monthly momentum turned lower again. Inventories fell by 0.76 mb from August 2025, a 3.1% month-on-month draw that halted a two-month stretch of builds. It was also the quickest monthly decline in three months, underscoring a re-acceleration of near-term tightness after a brief replenishment phase.

Global floating oil inventories advanced sharply in September 2025, as per data of Vortexa Ltd., a cargo-tracking company. On a month-over-month basis, the worldwide total increased by 25.78 mb, posting a 38.2% expansion and the quickest monthly acceleration in five months. Versus September 2024, global holdings were up by 27.58 mb, a 42.0% YoY rise. That year-over-year pace marked the fastest in twenty-six months and extended a three-month sequence of annual increases. Relative to the typical seasonal level, the world aggregate stood just 119 kb above the five-year average for September, a marginal 0.1% premium. The combination of a strong monthly build and an even stronger annual comparison sets the top-down tone: the stocks on water are expanding on both short-term and year-ago frames, albeit only marginally above their five-year seasonal norm. The global upswing in September was overwhelmingly led by Asia, where stocks jumped to a 5-month high and reversed the prior run of annual declines.

AC - Oil Market Report - Oct-2025.pdf

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