Global oil prices steadied Thursday after days of volatility, bolstered by tightening supply conditions that tempered investor concern over fresh U.S. trade tariffs and a downgraded global demand forecast from OPEC.
While market sentiment remains fragile, both Brent and WTI managed slight upward movement:
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Brent crude rose by $0.19, closing at $68.83 per barrel.
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WTI crude ticked up $0.26, settling at $66.83 per barrel.
The recovery comes as oil traders weigh near-term supply disruptions against long-term headwinds in global consumption and economic policy.
Supply Resilience vs. Demand Fragility
OPEC’s Cautious Outlook
OPEC has revised its medium-term oil demand forecast downward by 1.6 million barrels per day (bpd), estimating global consumption at 106.3 million bpd by 2029. The change reflects slower-than-expected demand from China and increased investment in clean energy alternatives, further pressuring oil’s long-term outlook.
“We’re entering an era where demand volatility may rival supply shocks,” said Nadia Khan, chief strategist at Enermark Capital.
Tariff Tensions Roil Markets
President Trump’s recent announcement of 35% tariffs on Canadian imports, along with signals of impending duties on other major trade partners, jolted markets. Energy economists warn that a full-fledged trade conflict could compress global demand and tighten access to refined fuels.
“These tariffs threaten to suppress industrial demand in key oil-importing nations,” said UBS analyst Frederick Deacon.
Physical Tightness Offsets Sentiment Dip
Despite policy pressure, analysts point to persistent supply constraints that continue to support prices:
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Low spare capacity from major producers like Saudi Arabia and Iraq
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Strong refinery demand during the northern hemisphere summer
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Geopolitical bottlenecks in major shipping lanes (Red Sea, Strait of Hormuz)
Backwardation in oil futures markets—where near-term contracts cost more than future ones—also suggests that current supply-demand conditions are tightening.
Institutional Caution Creeps In
Though institutional investment in commodities remains strong, Citi analysts warned against prematurely labeling oil or Bitcoin as “safe havens” akin to gold.
“Comparisons to digital or liquid gold are overreaching at this point,” noted Citi’s Dirk Willer. “Both markets are volatile and closely tied to shifting political sentiment.”
Energy Markets at a Policy Crossroads
As global economies teeter between growth and geopolitical uncertainty, oil markets are increasingly shaped by non-market forces. The U.S. Energy Information Administration (EIA) continues to monitor rising shipping costs, inflation risks, and potential central bank responses.
“We’re in a waiting game—watching whether fiscal stimulus or trade friction defines the next quarter,” said Eleanor Voss of the EIA’s market strategy group.
Conclusion
While oil prices showed signs of short-term strength, underlying demand worries and policy-driven disruptions continue to make the market vulnerable. As investors recalibrate expectations, the second half of 2025 will likely see heightened volatility driven by geopolitics, regulatory shifts, and fluctuating consumption patterns.
