By Giulia Petroni

Here's a look at what happened in oil markets in the week of August 25-29 and what the focus will be in the days to come.

OVERVIEW: Oil prices are being tugged between fears of a supply glut and risks of disruptions to Russian exports. Brent crude, the global benchmark, hovered near $67 a barrel, while U.S. benchmark West Texas Intermediate was just under $64 in evening trade in Europe. Both contracts slipped Friday as traders fretted over a cloudy demand outlook, though geopolitical risks kept losses in check.

MACRO: Markets are betting heavily that the Federal Reserve will cut interest rates at its September meeting after weak July jobs data and comments from Chair Jerome Powell in Jackson Hole signaled such a move was on the table.

Fresh U.S. data Friday reinforced rate-cut expectations, showing consumer spending rose 0.3% in July--the strongest gain in four months--as rising compensation fueled demand despite still-elevated inflation. Also, Federal Reserve Governor Christopher Waller again called for lower interest rates, saying he would support a series of cuts beginning in September.

The macro mood this week was also heavily influenced by President Trump's move to fire Fed governor Lisa Cook, who sued the president in an unprecedented legal battle that will test Trump's power over the U.S. central bank.

GEOPOLITICAL RISKS: A meeting between Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin is seen as highly unlikely in the short term, leaving the threat of tougher U.S. sanctions hanging over the market.

Investors are closely monitoring Russian crude flows after the Trump administration doubled down on tariffs against India for its purchases of Moscow's oil, even though it doesn't look like the move will have a major impact on oil fundamentals.

The risk is that similar tariffs could be imposed on China--the largest importer of Russian crude--a step that could significantly disrupt global flows, according to market watchers. Adding to the geopolitical risk premium, Ukraine attacked key Russian energy infrastructure this week, sending prices higher.

Meanwhile, the U.K., France and Germany moved to reinstate international sanctions on Iran, hoping to push Tehran back to the negotiating table with the Trump administration.

SUPPLY AND DEMAND: Federal Reserve Chair Jerome Powell's dovish remarks at Jackson Hole lifted risk assets, and expectations for a September U.S. rate cut might have offered some support to Brent crude. Still, investors remain reluctant due to mounting signs of oversupply.

"With global production rising robustly and set to eclipse the growth in demand, the market is on track to tip into surplus in Q4 2025, triggering a further sell-off in Brent," analysts at BMI said.

Meanwhile, WTI net longs stand at their lowest level since the 2008 financial crisis, and major Wall Street banks lowered their crude forecasts for this year and next.

The latest data from the Energy Information Administration showed U.S. crude oil inventories fell by 2.4 million barrels last week, above expectations of a 1.9-million-barrel draw, pointing to strong demand. However, with the end of peak summer driving season after Labor Day in the U.S. and additional supply expected from OPEC+ producers, the demand outlook remains uncertain.

WHAT'S AHEAD: Key OPEC+ members are scheduled to meet on Sept. 7 to discuss production policy. Having already agreed to unwind 2.2 million barrels a day of voluntary cuts, the group is expected to hold off on further increases as it weighs its next steps.

Commerzbank analysts said attention will focus on survey-based estimates of OPEC's August output, which should give a clearer sense of how much crude is actually reaching the market.

In the U.S., markets will be closed Monday for the Labor Day holiday. The week's main economic event will be Friday's jobs data, with further indications on the health of the U.S. labor market expected from JOLTS job openings data on Wednesday, ADP private payrolls for August and weekly jobless claims data on Thursday. Investors will also parse the latest ISM surveys on manufacturing and services.

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

(END) Dow Jones Newswires

August 29, 2025 12:15 ET (16:15 GMT)

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