Oil Prices Dip as Asian Buyers Turn to Middle East Grades
Oil prices eased on Monday, retreating from three-month highs, as Asian buyers shifted their focus to Middle Eastern crude grades amidst mounting fears of a global economic slowdown.
Brent crude, the international benchmark, fell by 0.6% to $76.01 per barrel, down from $76.47 in the previous session. Similarly, the US benchmark, West Texas Intermediate (WTI), dropped by 0.6% to $73.18 per barrel.
The market’s initial strength in 2025 has been supported by robust demand for Middle Eastern crude, with Brent trading above $76 per barrel earlier in the day. ING strategists noted that the Brent/Dubai spread had recently turned negative, reflecting the pivot of Asian buyers away from Russian and Iranian oil due to broader sanctions.
Analysts are closely watching the potential impact of incoming US President Donald Trump’s administration, with stricter enforcement of sanctions against Iran anticipated. “Tighter sanctions would likely strain the market, but they could also provide OPEC+ an opportunity to increase supply,” ING strategists remarked.
Meanwhile, uncertainty surrounding US trade policies and Federal Reserve decisions continues to weigh on markets. Investors await US employment data and the Federal Open Market Committee (FOMC) minutes, set for release this week. Richmond Fed President Tom Barkin indicated a cautious approach, suggesting the central bank would wait for further data before making any policy shifts.
Economic concerns also linger in China, the world’s largest crude importer. Weak domestic demand and subdued economic activity could dampen global oil consumption, analysts warned.
European Gas Prices Strengthen Amid Supply and Weather Concerns
In Europe, natural gas prices showed resilience. The Dutch TTF benchmark climbed above EUR50/MWh last week before settling slightly lower. The halt of Russian gas flows via Ukraine, following the expiration of Gazprom’s transit deal, has tightened the market.
Europe faces a colder-than-expected winter, with storage levels currently at about 70%—significantly below the 85% of the same period last year. Although storage levels are expected to suffice for this winter, replenishing reserves during the injection season could prove challenging.
TTF’s forward curve reflects this uncertainty, with summer 2025 prices trading at a premium to the 2025/26 winter rates, signalling market apprehensions about meeting future demand.
As oil and gas markets navigate geopolitical tensions, economic shifts, and seasonal demand patterns, volatility remains a key theme for 2025.
