Oil prices took a sharp tumble on Thursday, September 11, 2025, sliding nearly 2% as markets wrestled with a mounting sense of oversupply and softening U.S. demand, despite ongoing geopolitical tensions in the Middle East and Ukraine that might otherwise have sparked fears of disruption. According to Reuters and The Economic Times, Brent crude futures closed down $1.12, or 1.7%, at $66.37 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $1.30, or 2.0%, to settle at $62.37. Earlier in the trading day, Brent had touched $67.30 and WTI $63.42, but the downward momentum proved too strong to resist.
What’s fueling this latest bout of volatility? In a word: supply. The International Energy Agency (IEA) issued a bearish monthly report, warning that global oil supply is set to rise much more rapidly than previously thought. The agency now forecasts supply growth of 2.7 million barrels per day in 2025 and 2.1 million barrels per day in 2026, up from earlier estimates. "Oil prices are falling today in response to bearish IEA headlines, which suggest massive oversupply on the oil market next year," said Carsten Fritsch, an analyst at Commerzbank, as reported by Reuters.
Much of the anticipated increase comes from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), which agreed on Sunday, September 7, to raise production starting in October. While the IEA’s report painted a picture of swelling output, OPEC’s own report, released later, kept non-OPEC supply and demand forecasts unchanged, citing steady demand—a sign of the uncertainty gripping the market.
The situation is further complicated by the market’s conflicting signals. As Tamas Varga, an analyst at PVM Oil Associates, put it to Reuters, the market is "torn between a perceived supply shortage due to a rise in tensions in the Middle East and Ukraine and actual oversupply from higher OPEC+ production and swelling stocks." The threat of conflict-driven disruptions lingers, but the numbers tell a different story: there’s simply more oil sloshing around than buyers seem ready to absorb.
One of the most notable shifts is coming from Saudi Arabia, the de facto leader of OPEC. Several trade sources told Reuters that Saudi crude exports to China are set to surge in October, with state-controlled Aramco shipping about 1.65 million barrels per day—up sharply from 1.43 million barrels per day in September. This move underscores both China’s ongoing appetite for oil and Saudi Arabia’s determination to secure its market share, even as questions swirl about how long China can keep soaking up excess barrels and keeping Organization for Economic Co-operation and Development (OECD) inventories low. "The market is also questioning how long China could continue to absorb barrels and keep OECD inventories low," said Giovanni Staunovo, an analyst at UBS, as reported by The Economic Times.
Meanwhile, across the Atlantic, the U.S. is seeing its own signs of softening demand. The Energy Information Administration reported a surprise rise in crude inventories—up 3.9 million barrels in the week ending September 5, against expectations of a 1 million barrel draw. This unexpected build has raised eyebrows and contributed to the bearish mood. At the same time, U.S. consumer prices saw their largest jump in seven months in August, driven by higher housing and food costs. However, a surge in first-time applications for unemployment aid has kept alive expectations that the Federal Reserve will cut interest rates at its next meeting, a move that could ultimately boost economic growth and, in turn, oil demand.
Central banks in Europe are also in the spotlight. The European Central Bank (ECB) left interest rates unchanged on Thursday, offering no clear guidance on future moves. Investors and traders are now left guessing whether the ECB will offer more support as inflation dips below target next year. According to Reuters, traders have become more cautious about betting on another ECB rate cut, with the odds now seen as a toss-up.
Geopolitical intrigue hasn’t gone away, even if it’s been overshadowed by supply and demand fundamentals. U.S. Energy Secretary Chris Wright and European Commissioner Dan Jorgensen met in Brussels to discuss efforts to further restrict Russian energy trade. Jorgensen acknowledged that the European Union’s planned deadlines for reducing reliance on Russian oil were ambitious but stressed the need to speed up the process. Investors are also keeping a close eye on the potential for additional sanctions affecting Russian oil, which could yet alter the global supply picture.
Russia, for its part, remains the world’s second-largest oil producer behind the U.S.—at least as of 2024. However, the IEA noted that Russian revenue from crude and oil product sales declined in August to one of the lowest levels since the start of the conflict in Ukraine. That’s not the only challenge facing Russian oil: in India, the Adani Group, the country’s largest private port operator, has banned vessels sanctioned by Western countries from entering its ports, according to multiple sources and official documents. This move could disrupt Russian oil supplies to at least two Indian refiners, further complicating the flow of crude in Asia.
For all the hand-wringing about oversupply, some analysts argue that demand is still holding up, and could potentially absorb increased OPEC+ output—at least in the near term. Ole Hvalbye at SEB Research told The Economic Times that going into 2026, the market could register a hefty surplus, but demand appears resilient for now. Still, the mood remains cautious. Investors and traders are watching China’s buying patterns, U.S. inventory data, and the interplay of central bank policies for clues about where oil prices might head next.
As for the numbers, Thursday’s price declines capped a week of choppy trading. Brent crude futures ended at $66.37 a barrel, U.S. WTI at $62.37, with earlier lows of $66.38 and $62.47, respectively. The IEA’s forecast of a bigger-than-expected supply glut has clearly rattled the market, and OPEC+’s decision to ramp up production adds another layer of uncertainty.
All told, the global oil market finds itself at a crossroads—caught between the push of swelling supply and the pull of uncertain demand, set against a backdrop of geopolitical risk and shifting economic currents. For now, the numbers are pointing down, but as anyone who’s watched oil markets knows, today’s surplus can quickly become tomorrow’s shortage. The only certainty is that volatility is here to stay.
