By Giulia Petroni

Here's a look at what happened in oil markets in the week of Sept. 22-26 and what the focus will be in the days to come.

OVERVIEW: A higher geopolitical risk premium has crept its way into prices, with Brent crude and West Texas Intermediate on track to rise 4.3% and 5.9% this week, respectively. Still, futures continue to trade in a tight range, as uncertainties over the broader economic outlook and fears of a looming supply glut weigh on sentiment.

MACRO: The latest U.S. data showed the PCE index--the Fed's preferred inflation gauge--rose at a slightly elevated pace in August, but not enough to suggest much bigger increases tied to tariffs are on the way. According to the CME FedWatch Tool, investors now see an 85.5% probability of a rate cut in October and a 62.1% chance of another one in December. Meanwhile, weekly jobless claims in the U.S. fell last week, easing concerns about the job market, while the economy grew faster than previously estimated.

GEOPOLITICAL RISKS: Intensifying pressure on Russia from Western allies, coupled with growing fears of significant production and supply disruptions due to sustained Ukrainian attacks, have driven oil prices higher this week.

Ukrainian drone strikes have been increasingly successful in targeting Russian energy infrastructure, with major disruption reported to diesel and gasoline refining. According to media reports, Russia now plans to ban diesel exports from resellers until the end of the year and extend its gasoline-export ban.

"For much of this year, spare capacity held by OPEC+ has gone some way to dampen the price impact of geopolitical risks," said Olivia Cross at Capital Economics. "However, with OPEC+ unwinding their output cuts relatively quickly, the return of those barrels is somewhat priced in already, meanwhile there are questions over whether OPEC+ production will be able to keep up with higher quotas."

SUPPLY AND DEMAND: Traders continue to monitor Russian oil flows, weighing the potential impact of the EU's proposed sanctions targeting oil industry entities in third countries and President Trump's repeated calls for NATO allies to halt purchases of Russian energy. Investors are also keeping a close eye on the latest developments in Kurdistan following news that Iraq and Turkey reached a deal to restart crude pipeline exports in the region.

Meanwhile, the latest EIA report showed weekly U.S. crude stockpiles fell more than expected by 607,000 barrels, while gasoline inventories were down by 1.1 million barrels, providing support to prices. The near-term outlook, however, shows a different picture, with excess oil supplies expected to hit global markets soon.

WHAT'S AHEAD: Next week brings some Fed speakers and U.S. economic indicators that could shape market expectations around interest rates and the broader economic outlook. Markets will be listening closely for monetary policy cues, as remarks from the central bank officials could offer insight into inflation progress and the likelihood of rate cuts in the coming months.

Traders will also watch for job openings and consumer confidence data, the ADP employment report, the ISM Manufacturing PMI and U.S. manufacturing PMI for updated readings on factory activity. Toward the end of the week, attention turns to weekly initial jobless claims, a timely gauge of labor market conditions.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

September 26, 2025 10:48 ET (14:48 GMT)

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