Brent has traded in a narrow band of $67–68 per barrel, giving the impression of a quiet market. Yet beneath the surface, significant developments are reshaping the outlook for the months ahead. Two forces in particular stand out as critical drivers for oil markets as we move into the final quarter of the year and into 2026. The first is the Ukraine conflict and President Trump’s effort to bring it to an end. His push has hit major obstacles, largely because the complexities of the war were underestimated. The second factor is the market’s growing awareness of a potential supply overhang. Both the IEA and EIA, in reports published in early August, projected an oversupply of between two and four million barrels per day over the coming quarters. These issues represent opposing pressures - geopolitical uncertainty on one side and supply fundamentals on the other - creating a push and pull that will shape sentiment through year-end.
China Demand Remains Underestimated
The market has been slow to recalibrate expectations for Chinese consumption. Monthly PMI readings, export revenues, and other data points have been volatile, often creating more noise than clarity. What will truly matter, is how the U.S.–China trade dispute evolves, and whether tariff extensions are resolved in a way that supports growth. For now, Chinese oil demand remains steady, and warnings of collapse appear overstated. Forecasts from the IEA placing Chinese annual demand growth at just 70, 000 b/d look unrealistically low. A more reasonable range, and one consistent with broader consensus, is closer to 200, 000–300, 000 b/d. In addition, China has been building its strategic reserves aggressively - buying about half a million b/d more crude in the first seven months of this year, compared with last year. While stockpiling could weigh on demand once these barrels are released, the timing is uncertain. For now, it still counts as real demand. Post-COVID, growth has slowed, but it is far from collapsing.