We are in the final innings of the third quarter, and energy markets remain tepid amid bearish sentiment. Brent crude for November delivery was trading at $69.45 per barrel at 8.45 am ET on Friday, more than $10/bbl below the current year’s peak at ~81/bbl, while WTI crude was changing hands at $65.05 per barrel compared to the January peak of $78.71 per barrel. Oil prices have mostly traded ~15/bbl lower in 2025 compared to the previous year, primarily due to oversupply fears due to OPEC+ accelerating the unwinding of production cuts, coupled with sluggish global economic growth and heightened trade tensions that suppressed oil demand, leading to ample global supply outweighing demand. Increased output from non-OPEC+ countries also contributed to a build-up of oil inventories.
Lately, Wall Street has been warning that oil markets could soon face a surplus, putting more pressure on already depressed oil prices. To wit, Goldman Sachs has predicted that oil markets could be oversupplied by 1.9 million b/d in 2026 amid OPEC+ unwinding production cuts and production in the Americas rising. Wall Street now sees oil prices sinking to the $50s per barrel next year, further compounding this year’s decline.
In sharp contrast, commodity analysts at Standard Chartered have predicted that oil prices will move higher in the coming year driven by robust demand and a raft of economic stimulus measures.
StanChart notes that U.S. supply has hit an all-time high in the current year, but is predicting that producers will be forced to cut output due to prevailing low oil prices. On the demand side, expectations of weaker global demand in the final quarter of the year, driven by trade wars and tariffs, are likely to trigger a raft of economic stimulus in the form of rate cuts in the United States and potential for China to respond with a package of measures.
Further, Ukraine’s targeted attacks on Russian energy infrastructure have forced Russia to cut refinery runs and ramp up crude exports. According to StanChart, vessel-tracking data suggests that Russia’s seaborne crude exports jumped to a 16-month high at 3.62 million barrels per day (mb/d) in August. The analysts note that Ukrainian attacks have also focused on both pipeline pumping stations and export terminals, which would pressure crude loadings further if they become significant enough to halt flows for extended periods. Meanwhile, an escalation in the unfolding tensions between Europe and Russia is likely to increase the risk premium for crude oil and natural gas.
Speaking recently at the United Nations General Assembly (UNGA) 80th Session General Debate. U.S. President Donald Trump ordered NATO nations to shoot down Russian aircraft violating their airspace. He also mentioned further potential sanctions on Russia: “In the event that Russia is not ready to make a deal to end the war, then the United States is fully prepared to impose a very strong round of powerful tariffs…. But for those tariffs to be effective, European nations, all of you are gathered here right now, would have to join us in adopting the exact same measures... Europe has to step it up…. They’re buying oil and gas from Russia while they’re fighting Russia.” However, only three NATO members, namely Türkiye, Slovakia, and Hungary still buy Russian oil.
Meanwhile, Europe’s natural gas selloff appears to have found a floor, hovering around €32 per megawatt-hour since mid-September thanks to ample inventories. According to Gas Infrastructure Europe, the continent’s inventories have hit 95.5 billion cubic
metres (bcm), 6.66bcm below the five-year average, and 14.6 bcm lower y/y. The daily injection rate over the past week clocked in at 0.19 bcm/d, representing the seasonal slowing at the end of the injection period. StanChart has now forecast that Europe’s gas stores will reach a maximum fill of 100.2 bcm on 2 November.
On a brighter note, Europe’s consumers are not likely to see massive spikes in gas prices again, thanks to the ongoing LNG infrastructure buildout in the United States. Indeed, TotalEnergies’ (NYSE:TTE) CEO Patrick Pouyanné has warned of a looming LNG supply glut in the United States, shortly after Texas-based NextDecade Corp. (NASDAQ:NEXT) announced it has made a positive final investment decision (FID) on Train 4 at its Rio Grande LNG liquefaction plant with a planned total capacity of 48 million tonnes per annum (mpta). Pouyanné says the U.S. is building too many LNG plants, which could trigger a long-lasting glut if the projects come online as planned. Pouyanné might have a valid concern.
Rio Grande’s Train 4 has LNG production capacity of ~6 mpta, bringing the plant’s total capacity under construction to 24 mpta. Meanwhile, NextDecade has revealed that Train 5 is nearing a positive FID while Trains 6-8 are currently in the development and permitting process. Project costs for Train 4 are expected to total ~$6.7 billion, financed with 40% equity and 60% debt. TotalEnergies holds a 10% stake in Rio Grande LNG.
By Alex Kimani for Oilprice.com
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