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THE FINAL COUNTDOWN TO BREAK 60 ON BRENT

ADMIN || 20th October 2025

We have been bearish crude since early 2025, even during the brief Israel Iran war. We have been writing in our premium opinion pieces that we expect $60 levels in Brent by end CY25.

Now, we believe it is a matter of days before we break 60 levels convincingly on Brent. The strongest evidence is that more than 1 billion barrels have been amassed on the world’s tanker fleet, according to consultant Vortexa Ltd. It’s the biggest flotilla of oil on the water since 2020, when a price war between Saudi Arabia and Russia flooded the market during the Covid-19 pandemic. Hence if it was not for Chinese SPR buying in the last 6 months, we might have broken 60 levels earlier itself.

The scale of the projected oversupply started to swell in April this year, when Saudi Arabia and its partners in the Organization of the Petroleum Exporting Countries said they would begin reviving idle oil production far faster than scheduled. The fight was for market share and not for price control. Saudi can see the advent of NEVs (New Energy Vehicles) as well as likely fall in traditional energy demand few years down the line. Hence the need to crank up idle oil supply even at the cost of price fall.

World inventories have been accumulating at a rate of 1.9 million barrels a day so far this year, according to the IEA. The surge in barrels at sea could be the precursor to an even bigger buildup in 2026. Next year this surplus can go up anywhere between 2.2-2.5 mbpd. In absolute supply itself, IEA sees supply outstripping demand by 4mbpd in CY26 against 3.3 mbpd in CY25.

From the physical markets we are hearing that Middle Eastern exporters such as the United Arab Emirates and Qatar struggled to sell cargoes for loading in November. Some shipments from the region have only just found buyers, later than normal, while a few others remain unsold. This is reflected in very low premiums for front month contracts. Back in April, it was most expensive to guarantee supplies for next-month delivery, a structure known as backwardation that indicates supply scarcity. That premium has disappeared, with much of the curve now showing the opposite pattern known as contango, a sign of abundant supply where immediate delivery of crude is cheaper.

Now how OPEC reacts to the event when Brent breaks below 60 might be interesting. For the past few years, every dip toward $60 brought intervention and a rebound. This time seems different and if that proves to be the case, oil’s most reliable floor of the post-pandemic era may finally give way. What’s more, market structure is shifting (from backwardation to contango) to align with the bearish broader view. Oil’s muted reaction to President Donald Trump’s suggestion that India agreed to wind down purchases of Russian crude suggests there’s a good deal of scepticism about the US president’s remarks, at least for now. Hence once we break 60 and there is no OPEC response to it, 60 might then become the cap for Brent for H1CY26.

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