AUTUMN REASSESSMENT

November began for the oil market with significant fluctuations. On one side, a strong wave of sanctions against Russian oil companies and increased restrictions on Iran; on the other, cautious but consistent OPEC+ policies managing supply and signs of weakening demand in some developed economies. All these events have indirectly affected both the supply-demand structure and, naturally, fuel prices.

Swinging sanctions

The oil market is experiencing another round of swings after the US Treasury announced a new package of restrictions on October 22, 2025, targeting major companies in Russia’s oil and gas sector, e.g. Rosneft, Lukoil, and several of their subsidiaries. According to reports, these measures aim to "limit Russia’s ability to earn revenue from energy exports used to finance military operations."

The Guardian notes that "the new sanctions package is the most sensitive for the Russian oil sector since 2022, instantly affecting market participants’ expectations."

Indeed, the market reacted swiftly: Brent prices rose by several percent in the first days as investors factored in the risk of potential supply disruptions and increased pressure on Russian exports.

However, the effect proved more restrained than explosive. This is because Russia increasingly offers larger discounts to buyers (which naturally reduces its revenue), who—especially in Asia and some regions—partially switch to cheaper grades.

According to the International Energy Agency, Russian oil and petroleum product exports fell by only about 150,000 barrels per day in October. Analysts note that the market perceives the new sanctions more as a factor of uncertainty and potential shortage rather than a real threat to the current balance.

"New sanctions against the Russian oil sector will have a moderate impact: production may slightly decline, and freight rates might increase; overall, the market is likely to adapt to the new conditions. Although the impact on Russian oil exports remains unclear, we estimate a modest production decline of around 0.1 million barrels per day in Russia in the first quarter of 2026, as we believe the world oil market will adjust to the new restrictions," write analysts from the US Energy Information Administration (EIA) in their monthly report.

Between stability and caution

Amid geopolitical tension, market attention in early November focused on an OPEC+ decision that largely defined short-term oil price dynamics. At their latest meeting, ministers from eight alliance countries, taking into account stable global economic prospects and favourable current market conditions—confirmed by low oil inventories—decided to increase oil production quotas by 137,000 barrels per day in December. However, following December, due to seasonality, production growth will be paused in January, February, and March.

"We must maintain a balance between protecting revenues and supporting market stability," stated Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman.

Recall that OPEC+ members voluntarily reduce oil output in addition to overall quotas for all alliance countries; there were two restriction packages—2.2 million and 1.65 million barrels per day. The latter was originally in effect until the end of 2026 but in September, after reintroducing the 2.2 million barrels per day restrictions to the market, the "volunteers" returned to limiting at 1.65 million barrels per day: for October, November, and now December—each month by 137,000 barrels per day.

In any case, the market interpreted the alliance’s decision as a signal of stability: Brent crude prices settled within $82-85 per barrel.

For Azerbaijan, participating in the OPEC+ agreement, this decision holds strategic importance: the ongoing deficit of investment activity in the extraction sector creates conditions for maintaining prices at levels favourable to producers.

Forecasts and prospects

In this context, a recent EIA forecast is notable: in the first quarter of 2026, the average Brent oil price is expected to be about $83 per barrel, remaining close to the current $82-85 range.

The agency’s analysts link their conclusion to market adaptation to the new sanction environment. They point out that despite reduced exports from Russia and Iran, overall supply on the global market remains sufficient. The shortfall is compensated by production increases in the US, Brazil, and Guyana, as well as by OPEC+ countries gradually restoring part of their voluntarily limited capacities.

Another important factor is slowing demand for oil due to declining industrial activity and reduced fuel consumption in developed economies, primarily Europe and Japan. According to EIA estimates, global demand growth in 2025 will be about 1 million barrels per day, significantly lower than last year’s level of 2.2 million barrels per day. China remains a restraint as well—its domestic demand continues weak due to slowed GDP growth caused by various internal and external reasons.

A key element of the short-term balance remains the US where oil production has reached an all-time high—13.4 million barrels per day—intensifying price pressure. According to Reuters data, inventory increases and moderate demand growth in Asia keep Brent within $80-85 per barrel; meanwhile, any geopolitical news—from sanctions to supply disruptions—triggers short-lived volatility spikes.

The EIA scenario presented is generally acceptable for Azerbaijan as well: maintaining an average Brent price within $80-85 per barrel ensures stable export revenues and budgetary policy sustainability.

Summing up autumn 2025, it can be concluded that the global oil market has entered a phase of managed instability where sanction-related, political, and structural factors intertwine to form a new power configuration. The ability of exporting countries to adapt quickly to this reality will determine their position and role in the energy system of 2026.