Oil Price Forecast: WTI at $65.72 and Brent Above $70 as Russian Refinery Strikes and OPEC+ Shortfalls Fuel Risk Premium

WTI (CL=F) and Brent (BZ=F) Rally on Geopolitical Tensions and Supply Risks

Crude oil ended the week with strength as WTI (CL=F) closed at $65.72 per barrel, up 1.14%, while Brent (BZ=F) settled at $70.13, gaining 1.02%. The gains came despite OPEC+ signaling production hikes, underscoring that actual supply remains tighter than headlines suggest. Analysts note that between April and August OPEC+ promised to return 1.92 million bpd of output, but deliveries lagged by 500,000 bpd, with Iraq and Kazakhstan unable to comply fully. Spare capacity across the cartel is shrinking toward 2 million bpd by late 2026, adding to the risk premium already building in futures markets.

Russian Refineries Under Attack, Over 1 Million bpd of Capacity Offline

Ukraine’s drone and missile campaign has taken more than 1 million barrels per day of Russian refining capacity offline, hitting facilities that process diesel, gasoline, and kerosene. While Moscow has redirected crude flows to seaborne exports, domestic fuel shortages are now being reported, raising internal unrest and forcing Russia to sell crude into Asia at steeper discounts. The Kremlin’s war economy is being squeezed: with fewer refined products available, global markets are now bracing for tighter diesel and jet fuel supply into Q4. Reports suggest that Russia may be forced to shut in crude production if exports cannot absorb redirected volumes, a scenario that would accelerate bullish momentum in oil benchmarks.

Trump’s Energy Policies Revive Coal but Add Pressure to Oil Market Dynamics

President Trump’s renewed push to keep aging coal plants online has added noise to the U.S. energy mix. While coal’s role is framed as a tool for “energy security,” the cost of production has surged, making coal 28% more expensive in 2024 than in 2021. Utilities in Georgia and South Carolina report consumer power bills rising as coal plants remain online past retirement. While this shift does not directly boost crude demand, it reshapes fossil fuel sentiment and reinforces Trump’s commitment to domestic hydrocarbons, including oil. Traders now view U.S. fossil policy as tilted heavily toward extending the lifespan of traditional energy, while renewables face headwinds. This policy backdrop strengthens expectations of robust U.S. crude production, but also a slower energy transition than previously projected.

U.S. Pushes India on Russian Oil Imports, Raising Trade and Geopolitical Stakes

Washington is intensifying pressure on India to curb Russian oil imports, warning that trade deals could be jeopardized. India, one of the largest buyers of discounted Russian crude, is central to Moscow’s export survival. If New Delhi bows to U.S. demands, a significant portion of Russian crude could be stranded, forcing production curtailments. For Brent (BZ=F), this risk has underpinned pricing above $70, even as global economic concerns linger. Asian refiners are already recalculating sourcing strategies, with Middle Eastern suppliers like Saudi Aramco poised to benefit if India trims Russian inflows.

Supply-Side Disruptions Extend Beyond Russia

Sabotage at Nigeria’s key refineries and labor strikes at French LNG terminals have reduced European energy flexibility, reinforcing bullish undertones in both crude and gas. Meanwhile, China is moving to block shadow fleet tankers at key import ports, which could further disrupt flows of sanctioned Russian oil. Iraq, however, is preparing to restart Kurdistan exports on September 27, a move that could restore over 400,000 bpd of supply. At the same time, Vitol is finalizing a deal to market Kurdish barrels, suggesting a return of a critical stream for Mediterranean refiners.

Market Data Points to Tightness Despite Talk of a Glut

Despite widespread talk of an oil glut, fundamentals highlight fragility. U.S. gasoline futures settled at $2.038 per gallon, up 1.77%, supported by ongoing inventory draws. Louisiana Light jumped 2.50% to $67.78, while Bonny Light from Nigeria slumped 2.84% to $78.62 as export disruptions weighed. OPEC’s basket crude closed at $71.50, up 1%, showing resilience despite bearish headlines. Analysts at trading desks emphasize that geopolitical risk premiums are doing more to move prices than macro demand fears.

Forward Outlook: Bullish Bias Strengthens as Risk Premium Builds

The combination of Ukrainian strikes removing refining capacity, OPEC+ failing to restore promised barrels, and U.S. foreign policy reshaping flows toward Asia has created a bullish backdrop. Brent (BZ=F) holding above $70 and WTI (CL=F) consolidating near $65–66 suggests downside remains limited as long as supply risks dominate. With inventories falling in the U.S. and refining margins tightening in Europe, the setup points toward further price appreciation into Q4. Market sentiment now favors a Buy stance on oil, with Brent potentially retesting the $75–77 range, while WTI eyes $68–70 if disruptions persist.

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