Saudi Arabia has decided to keep the selling price for its popular Arab Light crude oil to Asia at $2.20 per barrel above the benchmark for November shipments. This comes even though OPEC+ agreed to increase oil production by 137,000 barrels per day in November. The Brent prompt timespread slightly increased, now showing a backwardation of $0.42 per barrel, up from $0.37 at the end of last week. Prices for all grades sold to the US and Europe were reduced by $0.50 and $1.20 per barrel, respectively, as demand in these regions is expected to slow down.

Early Trading Session Dynamics

In early trading, Ice Brent and NYMEX WTI saw a price increase. This was due to concerns about Russian oil supplies and a modest output increase by OPEC+. The FXStreet Insights Team, including journalists and analysts, provides market observations. Their insights come from both commercial sources and various analysts, reflecting the current state of global oil markets. Looking back to October 7, 2025, an earlier analysis highlights a market pattern that is still relevant. We see a significant gap between strong demand in Asia and weaker economies in the West. Traders should seek opportunities that take advantage of this ongoing difference in energy consumption. The Saudis holding prices steady for Asia while cutting them for the West was a telling sign. We see a similar trend now. The latest IEA data from the third quarter of 2025 shows Asian demand increased by nearly 1.2 million barrels per day year-over-year, while demand from OECD countries remained mostly flat. This supports the idea that maintaining long positions in oil, especially the Brent benchmark, is a wise choice.

Market Signals and Trading Strategies

The backwardation noted in the previous analysis is an important signal for today’s market. It indicates a tight supply in the short term. The front-month spread for Brent is trading at about $0.50 per barrel premium, suggesting that the physical market is willing to pay more for immediate barrels due to controlled OPEC+ supplies. This trend indicates strong support for the front end of the futures curve in the coming weeks. With ongoing economic challenges in Europe and the US, taking outright long positions can be risky. A more cautious strategy for traders would be to buy near-term call options on Brent to benefit from any potential supply tightness, while also considering bear put spreads on WTI to protect against signs of a slowdown in US industry. This approach allows traders to engage in a rising market while managing their risks. We also acknowledge the ongoing risks with Russian oil supplies, which have changed but still affect the market. The initial disruptions from 2022 may have settled, but continuing sanctions and logistical issues keep a risk premium on prices. This underlying tension could lead to price spikes if any unexpected disruptions occur, making long volatility positions through options an appealing addition to portfolios. Create your live VT Markets account and start trading now.

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