Page 23 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Oil Market

Crude oil price – Monthly Review

The apparent disconnect between the current global oil surplus on the one hand and inventories near
decade lows at key pricing hubs on the other. Indeed, despite record volumes of oil piling up on water,
benchmark crude oil prices eased only marginally in November, with North Sea Dated last trading at
around $63/bbl and WTI at $59/bbl, with lower forward disincentivizing storage. Still, the market mb/d
Demand/Supply Balance trends have clearly been affecting prices over time, with ICE Brent down by
nearly $20/bbl since January.

Hedge funds and other money managers maintained a broadly bearish stance toward crude oil prices in
November, reinforcing downward pressure on the futures complex. Between the weeks of 28 October
and 25 November, speculative participants sold the equivalent of around 51 mb, reflecting a continued
retreat from bullish positions. Net long positions in ICE Brent futures and options declined as short
positions rose to near-record levels, amplifying bearish sentiment and heightening market volatility. The
build-up in short exposure came alongside continued liquidation of bullish positions following the
previous month’s selloff.

Crude spot prices averaged lower in November. Selling pressure in futures markets, along with efforts by
refiners and traders to keep oil stocks low to avoid high value-based inventory taxes at the end of the
year, weighed on spot prices. High freight rates for main routes also weighed down on spot prices. These
factors were partially offset by positive developments that limited the decline in prices, including higher
global refinery intake in November and stronger refining margins across all major trading hubs. Signs of
renewed demand in the spot market, as well as concerns about the supply of sour crude due to additional
supply restrictions in Eastern Europe, helped to support prices.

The premium of light sweet over medium sour crudes narrowed in November across all major refining
hubs, reflecting a broad softening in the light sweet crude market. Concerns over sour crude availability
persisted, as tighter restrictions on supply flows from Eastern Europe increased demand for medium- and
heavy-sour grades in other regions, thereby increasing their relative value. Meanwhile, the supply of light
sweet crude remained ample, with US crude exports supported by favourable outbound arbitrage
economics. This occurred despite weaker high-sulphur fuel oil and a widening of product cracks between
light/medium distillates and heavy distillates, including the gasoline-HSFO and diesel/gasoil-HSFO
spreads.

In November, the ORB value dropped by 74¢/b, month-on-month (m-o-m), to average $64.46/b. The
ICE Brent front-month contract dropped by 29¢/b, m-o-m, to average $63.66/b, and the NYMEX WTI
dropped by 59¢/b, m-o-m, to average $59.48/b. The ICE Brent–NYMEX WTI front-month spread averaged
$4.18/b in November, up by 30¢/b, m-o-m. The GME Oman front-month contract dropped 41¢/b, m-o-m,
in November to average $64.53/b.

Brent crude ranged an average to $61.58 a barrel and WTI ranged to $58.00 per barrel in the month of
December 2025.

November 2025 Page | 22