In this article, we examine the outlook for energy markets in the final quarter of 2025, considering the impact of supply growth and rising inventories are weighing on prices, whilst taking into account the overhang of recurrent geopolitical shocks, sanctions pressure, and potential weather risks that continue to inject fresh volatility. We will explore how these dynamics converge to shape the trajectory of Q4 for crude oil, natural gas and refined products. Here, our Trading Co-Pilot forecasts highlight where energy markets are most likely to break (or not) from current ranges and transition into new trends.

Energy markets approach Q4 in a fragile yet balanced equilibrium. The apparent stability reflects a much broader tug of war between abundant supply, recurring geopolitical shocks and policy uncertainty. For now these forces modestly offset one another. The question is how long will this balance in energy markets last?

Supply: A Growing Surplus

Supply remains the heaviest drag on prices. OPEC+ has another 137,000 bpd increase for October, reinforcing the steady flow of additional barrels. In the United States, output is running hot, at record level of 13.4 million bpd, with inventories rising and refineries running close to full tilt. Gas markets show a similar pattern. 

European storage sits comfortably above the five-year average, new LNG capacity is coming online, and robust US production is further reinforced by Canadian flows. Renewables are somewhat softening demand in key regions, which leave LNG firmly in surplus with an even larger capacity wave expected in 2026. The message is clear, energy markets are well supplied, keeping a ceiling on rallies with shocks being absorbed.

Geopolitics: Persistent Risks, Constrained Momentum

Mounting geopolitical risks have been the defining swing factor in energy markets in recent quarters, and they show no sign of easing. The recent drone strikes on the Primorsk export hub and the Kirishi refinery highlighted the exposure of Russia’s infrastructure. Additional pressure has come from Houthi activity in the Red Sea and recurring port disruptions across Europe, each sparking price spikes in energy commodities.

These shocks are no longer treated as isolated incidents but as part of a broader pattern of recurring tension. The result has been a lingering layer of risk premia that provide a branch of support for Brent, WTI and LNG. Yet, while these events trigger sharp moves, most rallies have proved fleeting, quickly overwhelmed by the structural weight of abundant supply.

Overlaying this is the policy dimension. Washington has dug its heels in, pressing NATO and G7 partners to harden restrictions on Russian energy flows and trade partners, keeping the sanctions debate at the forefront. Taken together, these factors have heightened uncertainty, pushed up freight and insurance costs, and reinforced a persistent sense of fragility. For now, geopolitical risk premia offer support at the edges but have yet to alter the underlying structure of energy markets.

Weather: The Wildcard 

Weather risk remains the great unknown for energy markets as the northern hemisphere heads into winter. Forecasts now place the probability of La Niña emerging in Q4 at between 55% to 71%. While most models point to a moderate event, even a mild La Niña can prove a weighty blow given the knock-on effects across supply chains and demand.

A colder winter in Europe and Asia would tighten gas balances, drive LNG imports higher and add pressure to shipping capacity. In the United States, La Niña is often associated with sharper cold snaps in the north and a more active hurricane season in the Gulf, both of which raise risks to infrastructure as well as heating demand. For now, September has been calm, but the onset of colder months to come in October to December, we could see weather patterns reshape sentiment almost overnight, plunging energy markets into sudden volatility.

China: Demand Buffer, But For How Long?

China’s crude imports remain strong, with October flows from Saudi Arabia set to climb further. Yet much of this buying is funnelled into storage rather than fuelling immediate consumption. That makes China a stabiliser in the oil market, not a demand engine. By soaking up surplus barrels, it cushions volatility and helps steady energy markets. But stockpiling has limits. Once tanks fill, demand swiftly fades, leaving China unable to offset the broader oversupply expected into Q4 and beyond. In short, China acts as a cushion for demand, but how long will this last?

Outlook: When Drivers Converge

Energy markets remain finely balanced, with oversupply capping rallies while geopolitics and sanctions hold the floor. Weather risk has yet to bite, leaving prices without clear direction. What matters is not just the drivers themselves, but how sentiment responds when they converge.

Our Trading Co-Pilot tracks these shifts in real time, distinguishing between noise and true signal. It identifies when market sentiment flips, for example, a La Niña winter aligning with shipping congestion to drive gas higher, or lifting of sanctions coinciding with increased OPEC+ output to weigh on oil. By mapping sentiment to macroeconomic and fundamental topics, our Trading Co-Pilot shows when balance tips into momentum, giving clients a clear signal before the market moves.

Trading Co-Pilot: Scenario Analysis  

Our Trading Co-Pilot generates scenario analysis across 1D, 1M, 3M and 6M horizons, generating weighted scenarios based on analyst insights, recent events and current pricing. Base, bullish and bearish cases are probability assigned, providing a clear view of possible trajectories and sentiment-driven inflection points. This framework shows clients not only where markets stand today, but also where they might head under different scenarios, shaped by how sentiment alignment shifts the path of energy prices over time.

Brent Crude: Risk Premiums vs Rising Stockpiles

Brent crude held in the mid-$60s through summer rising to $68 September, lifted by fresh risk premia/supply shocks but capped by rising output and inventories. Key drivers remain U.S. data, OPEC+ policy path and sanction headlines. Our Trading Co-Pilot tracks how sentiment swings with these events, signalling when rebounds are durable and when they fade.

• Base case: $67-$70 range consolidation.

• Bullish: High-$70s if OPEC+ tightens or sanctions bite.

• Bearish: Low-$60s on sustained builds and weak macro backdrop.