The oil market is experiencing a period of significant volatility, with Brent falling to $65 in midweek, a decline of about 7% since the beginning of the month. This drop is driven by several converging factors: the bearish forecasts from the International Energy Agency (IEA), concerns over sanctions on Russia, and a global supply surplus expected to persist through 2026.
A Complex Global Economic Environment
The oil market remains under multiple pressures:
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Global supply surplus: The IEA predicts a significant increase in oil inventories, fueled by production recovery and the temporary easing of OPEC+ quotas.
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Geopolitical tensions: A potential meeting between Trump and Putin could alter access to Russian oil in the global market, either by tightening restrictions further or by easing them depending on the outcome of negotiations.
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Moderate global demand: Although consumption growth is expected, it will lag behind production increases, exacerbated by weak Chinese economic indicators (industrial production and retail sales).
In summary, oil is currently facing a structural imbalance between supply and demand, compounded by strong geopolitical uncertainty.
Why Consider Oil in a Portfolio?
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Volatility = Opportunity: Rapid corrections can provide attractive entry points for investors capable of managing risk.
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Strategic Safe Haven: Oil remains a central asset in the global economy and a hedge against inflation and certain economic turbulences.
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Rebound Potential: Any unexpected geopolitical event or supply tightening (sanctions, production cuts) could quickly drive prices back up.
👉 Investment Recommendation: Oil represents a short-term speculative opportunity, but also a strategic medium- to long-term asset to diversify a portfolio and benefit from the market’s sensitivity to geopolitical tensions and global supply fluctuations. Caution is advised, as the market remains fragile and reactive to international developments.
Conclusion
Oil perfectly illustrates the dual nature of commodities: an essential asset but one subject to violent price cycles and major geopolitical influences. For the savvy investor, understanding the balance between excess supply and fluctuating demand is key to capitalizing on this volatility.