Navigating Uncertainty in the Crude Oil Market

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Updated: Aug 7, 2025, 13:54 GMT+00:00

Being a trader is inherently challenging, and this is especially true for those in the oil market.

The past several months have been particularly turbulent, with oil traders constantly having to react to a series of high-stakes events. Specifically, the market’s volatility has been amplified by President Trump’s unpredictable tariff threats, as well as a surge in global geopolitical conflicts.

A recent armed conflict between Israel and Iran, for instance, introduced the significant risk of a major disruption to the world’s physical crude oil supply, adding further stress to an already tense market. In this article, Kar Yong, a financial market analyst at Octa broker, shares his expert opinion on the current stake in the oil market and provides a forward-looking perspective on future trends.

Brent сrude oil price plunged by almost 4.0% on Wednesday after President Trump said that there was ‘great progress’ in talks with Russian President Vladimir Putin. This created uncertainty about whether the U.S. would follow through with its threat of new sanctions against Russia, a major global oil producer. ‘Any potential deal that eases sanctions would increase the availability of Russian crude in the market and after Trump’s remarks, the market is focusing on the possibility of some kind of a breakthrough in the U.S.–Russia talks on Ukraine and that is why we see crude oil prices lose some ground’, says Kar Yong.

Earlier in the day, prices had seen some support after Trump imposed a new 25% tariff on India due to the country’s purchases of Russian oil, forcing traders to price in the possibility that India may be forced to look for alternative sources of crude oil supply. However, the new tariff wouldn’t take effect until August 28, leaving enough time for diplomatic maneuvering and thus further contributing to the overall market uncertainty.

‘To be honest, the current situation is a complete mess’, argues Kar Yong. ‘On the one hand, traders need to react to a series of political and geopolitical developments, which are very difficult if not impossible to predict. On the other hand, the market is influenced by conflicting signals on supply and demand as OPEC plans to increase supply. On the surface, this measure is supposed to respond to strong demand, but in reality, it aims to regain market share from non-OPEC producers, particularly U.S. shale’.

Indeed, grasping investors’ sentiment and keeping a pulse on the market is very difficult when a trader needs to constantly monitor numerous dynamic factors, which are continuously shifting and changing, sometimes quite rapidly. Trump’s aggressive trade policy, with its ever-evolving deadlines and new tariff threats, complicates traders’ decision-making and creates a climate of significant market uncertainty. Focusing on the fundamental variable of the market is perhaps the only way to avoid being lost in the headlines. As Kay Yong says, ‘Fortunately, we can always study the fundamentals. The good old supply and demand figures provide some much-needed clarity amidst the geopolitical noise. Personally, I think that long-term fundamentals are turning bullish and more factors favour a long, bullish position’.

Bearish Factors

OPEC+ recently agreed to a significant production increase for September, adding 547,000 barrels per day.^{^[1]}
The International Energy Agency (IEA) has noted that production from non-OPEC+ countries, particularly the United States, Brazil, and Guyana, is expected to be more than sufficient to meet global demand growth in the coming years.^{^[2]}
Global recession risks. For example, Goldman Sachs’ economists believe that the U.S. economy is growing at a ‘below-potential pace’ and has increased the chance of a recession.^{^[3]}

Bullish Factors

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, has justified its upcoming supply increase by citing a strong global demand and low oil inventories.^{^[4]}
The total volume of commercial refined oil products in storage at five major ports (Amsterdam, Antwerp, Fujairah, Rotterdam, and Singapore) is some 3.4 million barrels (MMbbl) below last year’s level.^{^[5]}
U.S. crude inventories fell by 3 MMbbl in the week ended 1 August, a larger draw than analysts predicted.^{^[6]}
U.S. crude oil production is likely to slow as the current WTI price is very close to break-even for many producers, which disincentivises new drilling and investment.^{^[7]}
Saudi Arabia, the world’s largest oil exporter, hiked its September crude oil prices for Asian buyers for the second consecutive month.^{^[8]}
Geopolitical tensions and supply risks—particularly, secondary sanctions on Russia’s trading partners and Middle East instability—could potentially limit the supply of new crude oil.

Potential Scenarios

Technically, Brent crude oil looks weak. It has been trading within a descending parallel channel since September 2023. Recently, it has fallen below a key support level, with technical indicators like the Relative Strength Index (RSI) signalling negative momentum.

‘Although short-term technicals remain bearish with clear targets of 65.10, 63.30, and 60.70, the long-term fundamentals are slowly turning bullish. In case Brent crude oil price can clear the 71-75 congestion zone and consolidate above the $70 per barrel level, there is a very good chance it will ultimately break above the parallel channel and head towards new highs’, concludes Kay Yong.

Brent Crude Oil Weekly Chart

Source: TradingView, Octa

Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk, and we and Octa do not accept any liability for any resulting losses or consequences.

About the Author

Ang Kar Yongcontributor

Kar Yong achieved financial independence through trading and investing, recognized as a top FX analyst and trainer in Asia.

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