Oil price tension: Is the trajectory determined by supply or demand?

Faced with a complex equation of imbalanced equilibria, crude oil prices find themselves at a crossroads, where oversupply factors clash with weak global consumption. Developments are accelerating daily with additional production releases from OPEC+ and outside, while key demand drivers, especially from major industrial economies, are slowing down. This sharp contradiction paints a vague picture of the upcoming price trend, which warrants a careful examination of current data.

The Dark Side of Demand: A Chinese Economy Stagnating

It is almost impossible to discuss oil price forecasts without considering what is happening in China. The Chinese economy has been on a downward path since October 2023, unable to regain growth rates exceeding 6%, recording a peak growth of only 5.4% after a series of consecutive contractions.

Not only that, but actual consumption figures tell a bleaker story. Chinese retail sales have been continuously declining, dropping from 6.4% in May to just 3% by September. The Consumer Price Index contracted by -0.3% and producer prices by -2.3% during the same period, indicating deep deflationary pressures. The triple threat of weak growth, low prices, and modest demand weighs heavily on global oil consumption accounts.

The Balancing Entity: Global Demand That Lags Behind Supply

The International Energy Agency lowered its forecast for oil demand growth in 2025 to only 710,000 barrels per day, a modest figure compared to historical standards. Meanwhile, growth is unevenly distributed among countries, with developing countries outside the OECD expected to contribute 1.2 million barrels per day, while OECD countries see a decline of 0.1 million barrels per day. This gap is not just a numerical statistic but reflects a troubling reality: major demand engines are weak.

Supply Side: Inflation in Production Despite Obstacles

On the other side of the equation, supplies are growing at an accelerated pace. OPEC+ decided in October to increase its production by 137,000 barrels per day starting November, a move aimed at easing the voluntary cuts adopted since 2023.

Based on these increases, the total global supply is expected to reach 106.1 million barrels per day in 2025, an increase of 3 million barrels per day from previous estimates. But Saudi Arabia and the UAE are not the only ones boosting production. The United States hit a record of 13.6 million barrels per day in July 2025, and non-OPEC allies are expected to contribute an additional 2 million barrels per day.

The supply picture is further complicated by a concerning development: Global inventories have reached record levels, especially “oil on water,” which increased sharply in September 2025, indicating a buildup of ships waiting to unload.

The Final Equation: Surplus on the Horizon

Adding both sides of the equation, the IEA forecasted a supply surplus that could reach 4 million barrels per day in 2026—a high figure reflecting the depth of imbalance. Conversely, OPEC remains optimistic about demand stability and growth of 1.38 million barrels per day in 2026, with a potential market balance.

Investment bank forecasts vary slightly. J.P. Morgan expects stability around $66 per barrel by the end of 2025, while Morgan Stanley suggests $60 as a possible price.

Currently, Brent is at $65.44, with a short-term corrective move likely.

What Does the Chart Say?

From a technical perspective, the picture is not decisive. The price has been moving within a clear downtrend channel since Q3 2024, but it has just bounced from strong support at $59.9 and broke through the middle band of the indicators.

The Bollinger Bands indicate a potential continuation of the upward move toward $67.6, a key technical resistance level that coincides with the upper boundary of the downtrend channel. The MACD shows a positive crossover between the line and the signal, supporting the possibility of a short-term technical rebound.

The real key level is at $70.8—the point that separates a continued downtrend from a genuine bullish reversal. If Brent manages to break this level decisively, we could see targets around $73.6 before the end of 2025 and $74.9 in early 2026. Conversely, failure to sustain the correction would mean prices retreating toward $61.1 by the end of 2025 and $58.5 in early 2026.

The Main Point

The current struggle between supply and demand creates a state of worrying uncertainty. Excess supply pushes prices downward, while short-term technical rebounds suggest limited correction opportunities. As long as the price remains below $70.8, the broader outlook remains bearish in the medium and long term, regardless of current correction signals.