The global crude oil market is exposed to a pronounced supply glut as OPEC+ accelerates the rollback of voluntary output cuts while demand weakens under the strain of escalating US–China trade tensions. The combination of output hike from the producer group, a resilient response from US shale, and the deterioration of fuel consumption driven by trade‑related economic uncertainty has shifted the market balance decisively toward surplus. Benchmark prices have reacted accordingly, with NYMEX light sweet crude tracking a third consecutive monthly decline and trading near five‑month lows. A similar fall was witnessed in the North Sea’s Brent variant in the Intercontinental Exchange, with both benchmarks falling to their lowest point since fuel markets were rebounding from the Covid crash. The outlook points to continued inventory accumulation, heightened volatility, and sustained downward pressure on crude prices unless coordinated policy action or a meaningful demand recovery intervenes.
The Supply Surge and OPEC+ Strategy
The organization of Petroleum Exporting Countries and its key allies, known as OPEC+, has pursued a program of modest monthly output increases even as it formally unwound the deeper cuts introduced since July 2023. Cumulative increases this year exceed 2.7 million barrels per day through a combination of official quota adjustments and higher compliance among major producers. The alliance’s decision to raise output by 137,000 barrels per day from November follows a similar modest increment in October, signaling a steady restoration of volumes to global markets. Key OPEC members including the United Arab Emirates and Saudi Arabia have registered some of the largest month‑on‑month increases, contributing materially to the overall rise in supply.
Beyond OPEC+, US shale producers and other non‑OPEC suppliers have demonstrated agility in lifting production in response to price signals and favorable infrastructure. This responsiveness has amplified the effect of OPEC+ rollbacks and undermined the intended tightening that the voluntary cuts were designed to achieve. The net result is a market where headline policy moves are no longer the sole determinant of crude availability and where cumulative output across diverse producing regions is flowing into global storage and shipping networks.
Inventories and Floating Stocks
Significant signs of physical accumulation are already evident in shipping and storage data. The International Energy Agency reports that the volume of oil at sea surged by roughly 3.4 million barrels per day during September, the largest monthly increase since the pandemic. This buildup reflects both deliberate commercial strategies to exploit contango structures and genuine oversupply across regions where storage remains the fastest outlet for incremental production. Onshore inventories have similarly shown upward momentum as refiners cut throughput in response to weaker product demand and logistical congestion limits absorption rates.
China’s increased crude imports have temporarily masked the global oversupply by shifting barrels into strategic and commercial storage rather than immediate consumption, providing a support for the prices lately. However, this stockpiling only postpones the underlying imbalance driven by rising OPEC+ and non‑OPEC output, meaning that once storage fills or buying incentives wane, inventory builds and downward pressure on prices could resume.
In the meantime, Donald Trump’s renewed pressure on India to curb its Russian oil purchases risks depriving Moscow of vital export revenue while largely diverting flows into an expanding shadow market, rather than eliminating them. Although the U.S. president asserted that India pledged to halt purchases, a claim that has not confirmed, the subcontinent has already emerged as a major buyer of discounted Russian crude, taking roughly 1.9 million barrels per day in the first nine months of 2025, or about 40% of Russia’s exports, and continued diplomatic coercion is more likely to push trading into opaque channels and trading hubs than to choke off supply, even as Ukraine’s strikes on Russian energy infrastructure add further geopolitical strain.
Demand Weakness Driven by Trade Uncertainty
On the demand side, the U.S.–China tariff dispute has emerged as a critical headwind for oil consumption. Prolonged trade tensions have reduced global trade volumes, dampened industrial output, and constrained transport activity that historically underpins diesel and jet fuel demand. Multinational supply chains have contracted in certain cases, thereby reducing the need for freight and associated fuel use. Business sentiment and capital spending have weakened in key demand centers, further eroding the growth trajectory that had supported oil prices.
Major energy market watchdogs have trimmed near‑term demand growth projections in response to these developments. Lowered expectations for industrial activity and transport consumption create a thinner buffer to absorb the incremental supply returning to the market. Reduced demand growth magnifies the impact of even modest production increases and raises the probability of persistent inventory accumulation through the remainder of the year and into 2026.
The combination of renewed supply and impaired demand has translated into tangible price weakness. The inventories on the rise and the growth in supply outpacing demand revisions, the market is increasingly susceptible to bearish sentiment and episodic volatility. The crude oil market stands at a precarious juncture where the rollback of OPEC+ voluntary cuts, heightened non‑OPEC production, and a deteriorating demand backdrop driven by trade disputes converge to create a meaningful risk of an extended supply glut. The physical accumulation of crude at sea and in storage coupled with downward pressure on benchmark prices illustrates that the market is already adjusting to this reality. Without decisive policy coordination, deeper production restraint, or a rapid improvement in global economic conditions, crude prices are likely to remain under pressure, and volatility is likely to persist through the near to medium term.
