Geopolitics and Speculation: What Pressures the Oil Market

XTI/USD

Key zone: 61.50 - 63.50

Buy: 63.50 (on strong positive fundamentals); target 65.50-67.50; StopLoss 62.80

Sell: 61.50 (on a pullback after a correction); target 60.00-59.50; StopLoss 62.20

Oil has long been perceived as an independent, highly efficient market where producers and buyers operate with colossal volumes of crude. This market processes an immense flow of data, and any, even temporary or partial, “opacity” of information complicates analysis, distorting the real picture of supply and demand.

Today, the market is ignoring two critically important factors: the scale of sanctioned oil and the volume of accumulated reserves. Combined with the risks of trade wars, this explains the consolidation of prices in a narrow range — $65–70 for Brent. Despite verbal warnings about oversupply, major players avoid aggressive bets due to the absence of a unified view on the fundamentals.

Current forecasts for the oil market differ substantially. The IEA expects global oil consumption in 2025 to rise by 740,000 barrels per day, while OPEC projects an increase of 1.3 million barrels. Such a wide gap in estimates intensifies risks and triggers uncontrollable volatility.

The China Factor

China’s crude imports in 2025 significantly exceeded refinery processing volumes, pointing to active accumulation of hidden reserves. The average surplus for eight months reached 990,000 barrels per day — nearly 1% of global demand. This may indicate either “blind spots” in statistics or covert stockpiling of refined petroleum products.

Global Reserves

The traditional market benchmark has been OECD reserve data, reported to the IEA. Yet today, China does not disclose actual reserve figures. According to Kayrros estimates, since the beginning of the year China added 73 million barrels to onshore storage, while OECD inventories grew by only 40 million barrels in the same period.

The “Shadow Fleet”

The situation is further complicated by the use of uninsured tankers transporting crude from sanctioned countries (Russia, Iran, Venezuela). Combined output from these three states is about 13.5 million barrels per day, or 13% of global supply.

These tankers create “blind spots,” where buyers (such as India) conceal the origin of cargoes. For instance, since June 2022 China has stopped reporting Iranian crude imports in official customs data. The IEA is aware of the problem but shifts responsibility for addressing it to policymakers.

Additional pressure now comes from U.S. inventory data and the Federal Reserve, which could boost optimism regarding U.S. economic growth and oil demand.

From a technical perspective, both WTI and Brent are moving within a consolidation zone. For WTI, support lies at $63.50–62.50. A steady move above $63.50 could open the way for a retest of resistance at $65 and $67, while a breakdown below risks driving prices down to $61.50–60.00. The balance of risks is tilted toward buying, but there are still no solid fundamental reasons for a strong rally.

So we act wisely and avoid unnecessary risks.

Profits to y’all!