Oil Prices Stabilize Near $68 as Demand Concerns Offset Geopolitical Risks
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Crude oil prices found a tentative floor near $68 per barrel over the weekend after a steep slide prompted by softening demand expectations and rising supply.
Brent crude settled around $68.50 on Friday, down more than 4% for the week, while WTI hovered just above $67. The decline reflects growing investor concern over global economic growth prospects heading into 2026, particularly in top importer China.
Recent data showing slower manufacturing activity and persistent property sector woes in China have weighed heavily on sentiment. Meanwhile, OECD forecasts now project only modest global GDP expansion next year amid higher interest rates and trade frictions.
OPEC+ contributed to the bearish tone by confirming plans to begin unwinding voluntary production cuts starting in January. The group will add approximately 411,000 barrels per day to the market each month through much of 2026, betting that demand will absorb the extra supply.
“Compliance has been strong, and members want to regain market share,” explained one delegate speaking on condition of anonymity. “Inventories are comfortable, and fundamentals support gradual increases.”
Geopolitical tensions in the Middle East and Red Sea shipping disruptions have provided only fleeting support, as markets appear to price in limited actual supply threats. U.S. production continues to grow steadily, with shale operators adding rigs in response to prices that remain profitable for most basins.
The weaker outlook has punished energy stocks. The S&P 500 energy sector index fell nearly 5% this week, underperforming the broader market by a wide margin. Major integrated names like ExxonMobil and Chevron bore the brunt.
Refining margins have also compressed, squeezing downstream profitability. Gasoline prices at the pump have eased noticeably in recent weeks, offering some relief to consumers facing holiday travel costs.
Analysts see limited upside near-term. “Unless we get a meaningful demand surprise or significant supply disruption, $60–$70 feels like the new range,” said Helima Croft of RBC Capital Markets.
Renewable energy and transition-related investments have benefited from the rotation, with clean tech indices outperforming.
For central bankers monitoring inflation, softer commodity prices are welcome news, potentially giving more room for monetary easing without rekindling price pressures.
Still, the oil market remains notoriously volatile, and any escalation in global risks could quickly reverse the current downtrend.
