Crude Oil Faces Pressure: Demand Concerns Outweigh Geopolitical Developments

Crude oil futures opened the week relatively flat but remained under significant pressure as the market continues to be predominantly concerned about global demand dynamics.

While geopolitical tensions have injected some volatility into the market, the overall impact on oil supplies has been limited thus far.

The ongoing geopolitical situation could introduce some short-term risks but is unlikely to lead to a sustained bullish trend in the global crude oil market in the near to medium term, as demand concerns continue to outweigh geopolitical developments.

The dominant factor weighing on the market remains concerns about weakening demand, particularly in China, the world’s second-largest oil consumer.

Data from October showed a notable drop in China’s refinery throughput, alongside a broader slowdown in factory output, which points to weaker-than-expected oil consumption.

Compounding these concerns, the International Energy Agency’s latest forecast suggests that global oil supply is set to exceed demand in 2025, even in the event that OPEC+ production cuts are maintained. This projection exacerbates bearish sentiment, suggesting a potential oversupply scenario that could further suppress prices.

In addition, the decrease in the number of operating oil rigs in the U.S. and the ongoing uncertainty surrounding U.S. interest rate decisions have added to the negative outlook for the market.

Given these factors, the global crude oil market is facing a bearish near to medium-term outlook, with supply likely to outpace demand, reinforcing a prevailing sense of market caution and contributing to downward pressure on oil prices.