Crude oil prices surge amid a weakening US dollar and disruptive supply from Russia

In the heart of Beijing, Chinese President Xi Jinping, Russian counterpart Vladimir Putin, and Indian Prime Minister Narendra Modi are gathering for a regional summit, amidst a turbulent oil market.

Geopolitical tensions, traditionally a significant factor in oil prices, are being offset by fears of a fourth-quarter supply glut. This unexpected equilibrium is causing a ripple effect in the market.

As of now, U.S. West Texas Intermediate crude is trading at $64.81 per barrel, marking a 1.3% increase. Meanwhile, Brent crude is at $68.28 per barrel, a 1.2% rise. However, both benchmarks experienced a monthly decline in August, with WTI losing 6% and Brent dropping by more than 6%.

The decline in prices in August was primarily due to increased supply from the OPEC+ producer group. This surge in supply has led to expectations of a rise in oil inventories in the last quarter of 2025 and the first quarter of 2026, with a surplus of 1.6 million barrels per day in the fourth quarter. This forecast comes from Goldman Sachs analysts.

Weekly Russian oil shipments from ports have dropped to a four-week low of 2.72 million barrels per day (bpd). This decrease is partially due to intensified airstrikes by both Ukraine and Russia, targeting energy infrastructure and disrupting Russian oil exports.

The upcoming U.S. labour market report will provide insights into the economy's health and test investor confidence in the possibility of interest rate cuts. The strength of this view has increased the appetite for riskier assets such as commodities.

Amidst this volatile market, trading is expected to be muted due to a U.S. public holiday. The OPEC+ meeting is scheduled for September 7, a crucial event that could shape the future of the oil market.

Ole Hansen, head of commodity strategy at Saxo Bank, has stated that oil prices have no clear direction within established ranges. This sentiment is echoed as oil prices have started September with no clear direction.

In a recent development, Ukrainian President Volodymyr Zelenskiy has vowed to retaliate with more strikes deep inside Russia following Russian drone attacks on power facilities. The geopolitical implications of this escalation remain to be seen.

As global leaders convene and the oil market navigates through these challenges, the future of energy prices remains uncertain. The upcoming events, including the OPEC+ meeting and the U.S. labour market report, will provide valuable insights into the market's direction.

Crude oil prices surge amid a weakening US dollar and disruptive supply from Russia