Oil Prices Slip Amid Inflation Concerns and OPEC Uncertainty

Highlights:

• Brent crude fell 0.8% to $US71.89 per barrel at the time of writing, amid inflation-driven market caution.
• ANZ warns that OPEC's supply strategy may face challenges from soft U.S. and Chinese demand.
• Oil markets may move into a 1.6 million barrels per day surplus in Q4, potentially weighing on prices.

Inflation jitters dampen oil prices

Crude oil prices declined overnight as investor sentiment turned risk-averse following higher-than-expected U.S. inflation data. The drop came despite growing geopolitical tensions, including the United States' warning to penalise India for maintaining energy ties with Russia.

Brent crude oil fell by 0.8% to $US71.89 per barrel at the time of writing, as traders remained cautious ahead of the upcoming OPEC meeting this weekend. According to analysts at Australia and New Zealand Banking Group Limited (ASX: ANZ), the oil market is treading carefully despite OPEC’s plan to gradually unwind 2.2 million barrels per day in voluntary production cuts—a strategy the bank says aligns well with current demand trends.

Demand strength may not last

While global oil demand has been stronger than expected so far in 2025, helping maintain inventory levels outside of China, concerns remain. ANZ noted that weakening U.S. petrol consumption, tepid demand from China, and seasonal refinery maintenance could tilt the market balance in the coming months.

Surplus risks on the horizon

Looking ahead, ANZ forecasts a shift in market dynamics, predicting a surplus of 1.6 million barrels per day in the fourth quarter. This excess supply could exert downward pressure on oil prices, especially if Western crude inventories start to rise meaningfully.

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