Oil Prices Correct After a Sharp Rally, But Supply Risks Keep the Market Sensitive

However, the latest price action shows that buying momentum has started to slow, with Brent currently trading around USD 112 - 113 and WTI around USD 100 - 101. This comes particularly after the market digested news that OPEC+ would continue to raise production quotas, while Saudi Arabia cut its official selling prices for Asian customers.

The most important factor at the moment remains supply risk related to the Middle East and the Strait of Hormuz. This is a critical energy shipping route for global oil flows, meaning that any sign of disruption could quickly bring the geopolitical risk premium back into the market. Therefore, although oil prices are currently correcting, the market has not yet shifted into a sustained bearish phase, as physical supply remains vulnerable to transportation risks and regional instability.

On the other hand, downside pressure is coming from the prospect of higher supply and signs of weaker demand. OPEC+ has agreed to raise production quotas by around 188,000 barrels per day in June, marking the third consecutive monthly increase. In addition, Saudi Arabia’s decision to cut the official selling price of Arab Light crude for Asia from a premium of USD 19.50 per barrel to USD 15.50 per barrel against the Oman/Dubai benchmark suggests that Asian demand may be softening after the sharp rise in prices.

The IEA’s April report showed that global oil demand in 2026 is now expected to decline slightly by 80,000 barrels per day, compared with its previous forecast of a 730,000-barrel-per-day increase. This suggests that high prices, geopolitical risks, and weaker economic growth are beginning to weigh on oil consumption. If supply risks do not escalate further, the market may gradually shift its focus from “supply shortage concerns” to “weaker demand concerns.”

Overall, the near-term outlook for oil prices is likely to remain highly sensitive to geopolitical news. The base case is that oil prices may not fall sharply as long as risks in the Middle East and the Strait of Hormuz persist. However, further upside is also being capped by OPEC+ production increases, Saudi Arabia’s price cuts, and a softer demand outlook. As a result, oil prices may enter a broad consolidation phase in the near term, trading within the USD 98 - 110 range.