Highlights:

– Brent and WTI crude slipped ahead of an anticipated OPEC+ production policy update.
– Investors weigh supply-demand balance amid slowing global growth and resilient U.S. fuel demand.
– OPEC+ faces pressure to maintain stability as geopolitical risks add volatility.

Oil prices softened on Friday, September 5, as traders shifted focus to the upcoming OPEC+ meeting that could set the tone for global supply into the final quarter of 2025. Brent crude hovered around \$86 per barrel while West Texas Intermediate (WTI) traded near \$82, both retreating slightly after recent gains fueled by resilient U.S. demand and ongoing geopolitical tensions. The cautious pullback reflects investor anticipation of whether the producers’ group will extend or adjust its current output policy.

OPEC+ Holds the Market’s Attention

The OPEC+ alliance, led by Saudi Arabia and Russia, is expected to review its supply strategy in the coming days. Current production cuts, amounting to more than 2 million barrels per day, have been instrumental in stabilizing prices amid uneven demand growth. Analysts note that while oil has remained within a relatively stable range this summer, uncertainty around China’s economic recovery and European industrial demand could weigh on the group’s decision-making. A more accommodative stance by OPEC+ could support prices, but any hint of higher output may trigger downside pressure.

Macro Factors Shape Energy Demand

Global demand indicators remain mixed. U.S. consumption has held firm, supported by strong summer driving activity and still-robust industrial usage. By contrast, China’s recent economic data suggests slower-than-expected recovery in manufacturing, which has capped demand growth in Asia’s largest economy. Europe, meanwhile, continues to struggle with subdued energy use tied to industrial contraction and high interest rates. These divergent trends complicate the supply-demand balance, leaving OPEC+ with limited room for error in calibrating output levels.

Market Reaction and Investor Positioning

Financial markets remain cautious, with oil futures showing reduced volatility compared with earlier this year. Hedge funds and money managers have trimmed net long positions in crude futures, a sign that investors are waiting for clarity before taking directional bets. Beyond fundamentals, geopolitical factors—from U.S.–Iran tensions to disruptions in West African output—remain a source of potential price spikes. Israeli institutional investors with global energy exposure are closely monitoring developments, particularly given the shekel’s recent fluctuations against the dollar, which can amplify oil’s impact on local energy costs.

Looking ahead, the key question for markets is whether OPEC+ will prioritize price stability over market share. If cuts are extended into early 2026, oil prices could maintain support near current levels, but an easing of restrictions may quickly test downside thresholds. With central banks signaling potential policy shifts and global growth forecasts still under review, oil will remain highly sensitive to both supply decisions and macroeconomic signals. Traders and investors alike are bracing for a decisive few weeks in the energy markets.