Saudi Arabia decided to keep the official selling prices for its flagship Arab Light crude to Asia unchanged at $2.20 per barrel over the benchmark for November loadings. This decision comes despite OPEC+’s agreement to increase oil production by 137,000 barrels per day in November.

The Brent prompt timespread showed a slight increase, trading in a backwardation of $0.42 per barrel, compared to $0.37 per barrel at the previous week’s end. Official selling prices for all grades into the US and Europe were reduced by $0.50 and $1.20 per barrel, respectively, due to expectations of slower demand in these regions.

Early Trading Session Dynamics

Ice Brent and NYMEX WTI experienced an upward rally in the early trading session. This was attributed to ongoing risks to Russian oil supplies coupled with a moderate output hike by OPEC+.

FXStreet Insights Team, consisting of journalists and analysts, curates market observations, offering insights from both commercial sources and internal and external analysts. Their content reflects the current dynamics in global oil markets.

Based on our current perspective on October 7, 2025, this analysis from a few years ago highlights a market dynamic that remains highly relevant. The divergence between strong Asian demand and weaker Western economies is a theme we continue to see play out. Traders should therefore look for opportunities that capitalize on this ongoing split in global energy consumption.

Looking back, the decision by the Saudis to hold prices firm for Asia while cutting them for the West was a key tell. We are seeing a similar trend now, as the latest IEA data for the third quarter of 2025 confirms Asian demand grew by nearly 1.2 million barrels per day year-over-year, while OECD demand was largely stagnant. This reinforces the view that being long oil, particularly the Brent benchmark, remains a core position.

Market Signals and Trading Strategies

The backwardation mentioned in the historical analysis is another critical signal for today’s market, indicating tight immediate supply. The front-month spread for Brent is currently trading at a similar premium of around $0.50/bbl, which we interpret as the physical market paying up for prompt barrels amidst disciplined OPEC+ supply. This suggests that the front end of the futures curve should continue to find strong support in the coming weeks.

Given the persistent economic headwinds in Europe and the US, outright long positions carry significant risk. A more prudent approach for derivative traders would be buying near-term call options on Brent to capture any upside from supply tightness, while simultaneously considering bear put spreads on WTI to hedge against signs of a US industrial slowdown. This strategy allows for participation in a rising market while defining the risk.

We also note the historical context of Russian supply risks, which have now evolved but not disappeared from the market. While the initial shock of 2022 has passed, ongoing sanctions and logistical challenges continue to add a structural risk premium to prices. This underlying tension means that any unexpected outage could cause prices to gap higher, making long volatility positions via options an attractive portfolio addition.

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