Oil Price Forecast - (WTI CL=F, Brent BZ=F) Rises to $65.47 as OPEC+ Adds 137K bpd

Oil Prices Rebound as OPEC+ Output Hike Disappoints, WTI (CL=F) Trades at $61.69 and Brent (BZ=F) Holds $65.47 Amid Tight Refining Margins

Global crude benchmarks showed resilience early in the week as OPEC+’s latest supply decision failed to deliver the expected production shock, calming fears of oversupply in a market still wrestling with conflicting fundamentals. WTI crude (CL=F) settled at $61.69 per barrel, up 1.33%, while Brent crude (BZ=F) closed at $65.47, a 1.46% gain. The modest output increase of 137,000 barrels per day (bpd) for November, identical to October’s quota, underscored Saudi Arabia’s cautious stance amid rising exports from Venezuela and resumed Kurdish oil flows via Turkey, which have added over 400,000 bpd back to the market. Despite the uptick, prices remain well below September highs near $70, weighed by deteriorating demand expectations into Q4 and the persistence of record global shipping and storage volumes.

Split Market Dynamics: Paper Strength vs. Physical Weakness

The market’s structure continues to expose the divide between futures optimism and physical oversupply. Paper markets remain in backwardation, indicating near-term tightness, yet physical indicators tell a different story. North Sea light sweet grades such as Forties have been trading with difficulty at premiums to Dated Brent, while U.S. crude is again landing in Northwest Europe at heavy discounts, around $3.50–$4.00 per barrel below regional benchmarks. Mars U.S. crude traded down 1.33% to $71.01, and Louisiana Light fell 3.01% to $63.50, illustrating the growing physical slack even as traders hedge against potential disruptions. Freight rate volatility has further distorted the arbitrage, with VLCC (Very Large Crude Carrier) spot prices jumping nearly 25% in a week, amplifying regional price dislocations.

Refinery Margins Surge as Conversion Capacity Tightens Globally

Refining margins—especially for distillates—have expanded sharply, signaling pressure on downstream systems rather than crude availability. The New York Harbor diesel crack spread reached $0.85 per gallon in July, nearly double last year’s level, before easing to $0.60/gal in August and rebounding into September as Russia’s refinery attacks and a ban on diesel exports cut global distillate supply. Refining flexibility, not crude production, has emerged as the critical bottleneck. With conversion units in India, OECD Asia, and Saudi Arabia running near maximum, operational reliability remains fragile. Brazil reported its highest crude throughput in a decade, while Saudi refiners increased gasoil exports by over 200,000 bpd year-on-year. In this environment, even a minor refinery outage—like Russia’s Kirishi plant shutdown following the October 4 drone strike—can tighten product balances instantly.

Geopolitical Friction Offsets Oversupply Concerns

The oil complex remains anchored by persistent geopolitical tension. In Europe, Ukraine’s attacks on Russian export infrastructure have heightened risk premiums in forward curves, while in the Middle East, drone strikes on Iraqi fields and a 12-day war between Israel and Iran earlier this year have kept insurance and shipping costs elevated. The United States’ 25% punitive tariff on India’s purchases of Russian crude, raising total U.S. tariffs to 50%, continues to reshape trade flows, pushing Indian refiners to seek alternative suppliers. Meanwhile, EU discussions on new sanctions against Russian oil processors and Denmark’s crackdown on Russia’s shadow tanker fleet add layers of uncertainty to maritime logistics. Despite these risks, the OPEC Basket price slipped 2.59% to $65.48, reflecting that supply adjustments have thus far outweighed geopolitical fear premiums.

OPEC+ Balances Market Optics and Fundamentals

The OPEC+ alliance, led by Saudi Arabia and Russia, has now maintained measured output increases for two consecutive months—each capped at 137,000 bpd—as the group navigates a fine line between revenue preservation and market share. Saudi Arabia has held its Arab Light official selling price unchanged for Asia, defying expectations for a premium increase. This decision followed a collapse in Middle East benchmark premiums to a 22-month low due to ample regional supply and slower Chinese demand recovery. While OPEC+ communications stress “healthy market fundamentals,” the reality shows inventories rebuilding and floating storage rising. According to EIA data, global crude exports are running near multi-year highs, and total oil on water has increased by 6.8% month-over-month, signaling a mild supply glut entering Q4.

EIA Confirms Q3 Stability, but Warns of Q4 Pressure

The U.S. Energy Information Administration (EIA) reported that Brent crude averaged $68 per barrel in September, down from $70 in July, while WTI averaged $64, marking the narrowest quarterly range in over a year. Despite this stability, refining margins reached their highest point of 2025, driven by robust gasoline demand and constrained distillate output. The gasoline crack spread exceeded $0.60 per gallon in September, double its 2024 level, as inventories dropped below the five-year average. However, the EIA cautioned that upcoming refinery maintenance season in the Middle East and North America could soften demand in Q4. Coupled with rising Venezuelan exports—up 320,000 bpd since midyear—and renewed Iraqi exports via Ceyhan, global balances could tip into surplus unless winter consumption strengthens.