SINGAPORE / TOKYO, 2 September 2025 – Oil prices drifted within a narrow range as escalating geopolitical tensions met rising global output, setting the stage for an uncertain outlook ahead of the OPEC+ summit later this week.
Brent crude edged higher, trading above US$68 per barrel, while U.S. West Texas Intermediate (WTI) held steady near US$65, following the U.S. Labor Day closure.
On one hand, intensifying Russia–Ukraine tensions—fueled by drone strikes on Russian oil infrastructure that have removed nearly 17% of refining capacity—have heightened fears of supply disruptions. On the other hand, rising output from the U.S. (which hit a record 13.58 million barrels/day in June) and other producers is balancing markets, while OPEC+ signals a possible pause in further output cuts.
CLSA warns that if India halts its imports of Russian crude, global oil prices could surge above US$100 per barrel, amplifying inflationary risks and test global supply resilience. Yet, concerns over a surplus remain, with Goldman Sachs and JPMorgan pushing their 2025 price forecasts lower amid signs of waning demand and a supply glut.
Markets are now turning their attention to the upcoming OPEC+ meeting on September 7 and the U.S. nonfarm payrolls report, both potentially pivotal in setting the medium-term trajectory for crude oil.
For Southeast Asia, energy cost dynamics are critical. A sharp oil spike would strain economies like Thailand and Singapore, where a US$10/bbl increase could erode current account positions by 0.6–0.9% of GDP. Malaysia and Indonesia may be less affected, with Malaysia benefiting somewhat due to its status as a net oil and gas exporter.
Furthermore, emerging supply chain recalibrations—especially India’s deepening reliance on Russian oil amid U.S. tariffs—highlight Asia’s strategic role in global energy realignment. How closely policymakers in the region watch OPEC+ decisions—and adapt to volatile price swings—will significantly influence fiscal and growth strategies.
