OPEC+ Policy and Geopolitical Risks Driving Near-Term Oil Price Momentum

The global oil market in late 2025 is a battleground of competing forces: OPEC+’s strategic production adjustments, U.S. shale output surges, and geopolitical tensions. These dynamics are reshaping crude and refined product futures markets, creating both risks and opportunities for investors.

OPEC+’s Calculated Gambit

OPEC+ has accelerated the unwinding of 2.2 million barrels per day (bpd) of voluntary production cuts, injecting 547,000 bpd in September 2025 alone [1]. This move aims to counter non-OPEC supply growth from the U.S., Brazil, and Canada while stabilizing prices amid a projected 1.7 million bpd global surplus in 2025 [2]. However, the strategy is a double-edged sword. While the EIA forecasts Brent crude averaging $58 in Q4 2025 [1], the cartel faces a critical inflection point: the September 7, 2025, meeting will determine whether production increases pause or continue, depending on inventory levels and geopolitical shocks [3].

Geopolitical risks remain a wildcard. U.S. tariffs on Indian imports of Russian oil and potential sanctions on Russian crude buyers have disrupted trade flows [1], while Ukrainian strikes on Russian energy infrastructure have reduced refining capacity [2]. These factors create a volatile backdrop for OPEC+’s strategy, as even minor disruptions could amplify price swings.

Speculative Positions and Inventory Dynamics

The U.S. crude oil inventory build of 12.3 million barrels in a single week—far exceeding expectations—has triggered a 15% reduction in net long speculative positions [3]. This oversupply, driven by Permian Basin production outpacing refining capacity, has pushed WTI futures into a record net short position [4]. Meanwhile, refined product markets show divergent trends: ULSD inventories are 16.1% below the five-year average, reflecting strong distillate demand, while RBOB gasoline futures trade in a bearish channel [5].

Investors are hedging these imbalances through contango trades, selling near-month RBOB and ULSD contracts while buying longer-dated ones to capitalize on backwardated curves [5]. The RBOB crack spread has widened to $12.30 per barrel, signaling refining margin expansion [5], but bearish crude sentiment continues to drag refined product prices lower.

Strategic Positioning Ahead of Key Events

The September 7 OPEC+ meeting will be pivotal. If the group pauses production increases, it could stabilize prices amid a projected 2 million bpd inventory surplus in 4Q25 [1]. Conversely, a continuation of output hikes risks further price declines, particularly if U.S. production remains resilient. The EIA forecasts U.S. output at 13.28 million bpd in 2026, a decline driven by low crude prices [5], but this timeline may shift if shale companies ramp up drilling.

Investors should also monitor EIA inventory reports, which have historically driven sharp price corrections. For example, the 12.3 million barrel crude inventory build in August 2025 caused a 1.47% drop in WTI [4]. Similarly, a 3.04 million barrel draw in U.S. crude inventories highlighted tightening markets, pushing refining margins higher [4].

Conclusion

The interplay of OPEC+ policy, geopolitical risks, and inventory dynamics creates a high-stakes environment for oil investors. While OPEC+’s production strategy aims to balance market share and price stability, speculative positioning and inventory reports suggest near-term volatility. Traders who hedge with futures collars or exploit contango opportunities in refined products may find asymmetric upside, but all must remain vigilant as the September 7 meeting and EIA data events loom.

Source:
[1] Rising Geopolitical Risks and OPEC+ Dynamics [https://www.ainvest.com/news/rising-geopolitical-risks-opec-dynamics-strategic-case-crude-oil-exposure-2509/]
[2] OPEC+ and the Delicate Balance: Strategic Implications for ... [https://www.ainvest.com/news/opec-delicate-balance-strategic-implications-energy-markets-2025-2509/]
[3] Biggest Crude Inventory Build of Decade Slams Oil Bulls [https://discoveryalert.com.au/news/crude-inventory-build-causes-2025]
[4] Crude Oil Falls as EIA Forecasts Larger Global Oil Surplus [https://www.garbercoop.com/news/story/34086776/crude-oil-falls-as-eia-forecasts-larger-global-oil-surplus]
[5] Energy Market Volatility and EIA Inventory Trends [https://www.ainvest.com/news/energy-market-volatility-eia-inventory-trends-navigating-crude-rbob-ulsd-futures-surplus-driven-landscape-2508/]