For months, analysts have warned that crude oil was heading into oversupply. Demand growth looked sluggish, inventories were forecast to climb, and energy transition policies were supposed to cool the market. Yet on Thursday, the story told on trading floors was strikingly different: crude prices are holding steady, cushioned by supply shocks, sanctions, and cautious producer behaviour.
At mid-day, Brent crude, the global benchmark closely tracked by Nigeria’s Bonny Light, inched to $69.59, WTI crude traded at $65.26 per barrel, up 0.43%. while natural gas hovered near $3.22/MMBtu.
Geopolitics Overrides Supply Models
The market has not collapsed because geopolitics has rewritten the equations. Russia’s energy exports remain under heavy strain from both sanctions and Ukrainian strikes on refineries and depots. Moscow has already moved to restrict diesel and gasoline exports to protect domestic supply, a step that immediately tightened global product availability.
For OPEC+, the issue is no longer about discipline alone but also under-delivery. The group is pumping nearly 500,000 barrels per day below target, leaving the market structurally tighter than anticipated. This under-supply is critical: it effectively shields prices from falling into the $50s, as many Wall Street forecasts had suggested.
China’s Silent Hand in the Market
Another force propping up prices is China’s stockpiling strategy. Even as economic data points to a cooling industrial sector, Beijing has kept crude imports elevated, funnelling excess barrels into storage. This action creates an artificial floor, ensuring that spare cargoes find a buyer and keeping physical markets balanced.
For traders, this matters. Physical differentials for Atlantic Basin crudes, including Nigeria’s light sweet grades, remain supported because Chinese refiners continue to absorb cargoes that might otherwise weigh on European markets.
Inventory and Demand Signals: A Market in Transition
On the demand side, the picture is mixed. U.S. Energy Information Administration (EIA) data showed crude stockpiles fell by about 607,000 barrels last week, against expectations of a build. That surprise drawdown offered bulls temporary comfort.
Yet, the medium-term outlook is less forgiving. The EIA’s Short-Term Energy Outlook projects Brent crude averaging $59 in Q4 2025 and slipping further into the low $50s by early 2026. Rising global inventories, slower OECD demand, and energy transition headwinds all play into that forecast.
The contradiction is clear: near-term fundamentals are tight, but forward models still see imbalance. Traders are caught between these narratives, which explains why prices are stuck in a narrow corridor instead of breaking out or collapsing.
Why the Crash Hasn’t Happened
Several structural factors explain why crude has resisted sliding into a freefall:
- Producer restraint: U.S. shale drillers are scaling back new rigs, aware that margins collapse if WTI dips too far below $60.
- Sanction pressure: Russian barrels, though flowing via “shadow fleets”, remain constrained in volume and insurance coverage, effectively tightening supply.
- Storage dynamics: OECD and floating storage levels are not flashing a glut signal. Stocks are manageable, unlike the oversupply of 2014 or 2020.
- Predictability: Markets often crash on surprise. This time, the supposed glut has been priced in for months, robbing bears of the shock factor needed for a steep downturn.
Outlook: Range-Bound, But Fragile
Going forward, crude appears range-bound between $60 and $72 per barrel. Supply shocks—whether from Russia, the Middle East, or domestic politics in producer states—will keep upside risks alive. On the flip side, weaker consumption in the United States and China, coupled with OPEC+’s limited spare capacity, could tilt prices lower as 2026 approaches.
For Nigeria, this price band carries both opportunity and caution. Bonny Light’s close tie to Brent means budgetary revenues remain supported in the short run. However, if the bearish scenario plays out next year, the government’s fiscal projections under the Medium-Term Expenditure Framework may require revision.
Oil today is not just about barrels and balance sheets—it is about politics, strategy, and the quiet decisions of players like China and OPEC+. The market has not crashed because fundamentals are not as weak as models suggest. Instead, crude continues to trade on a knife’s edge, where one drone strike, one OPEC meeting, or one policy reversal could swing prices dramatically.
