Brent Crude Falls To Lowest In Five Months — What Led To The Decline
Recently, HSBC warned of a potential downside risk to its 2026 Brent crude forecast of $65 per barrel if oil stockpiles in Western markets continue to build up.
Brent crude oil futures plummeted to a five-month low, falling below $62 per barrel, as concerns over a global oil supply glut and weakening demand gains traction. In the last five months, the commodity has seen a sharp drop of over 7%, and is currently trading slightly over $60.
Several factors converge to explain this slump. First, the International Energy Agency upgraded its forecast for global oil supply while lowering projected demand growth, warning of a potential surplus of up to three to four million barrels per day extending into 2026.
Secondly, major oil producers including OPEC+ and non-OPEC nations are lifting output, stretching inventories despite stagnant consumption, especially in key markets like China. Third, escalating trade tensions between the United States and China have raised fresh red flags over future demand from two of the largest oil consumers.
In addition, China’s recent sharp drop in crude import flows signals weaker incremental demand, undercutting the notion of global restocking. As a result, bearish sentiment has intensified: traders are wary of oil market congestion, with storage constraints rising and futures curve patterns shifting into deeper contango, all telling signs that “now” is less valuable than the future.
At the pump, softer crude means relief for fuels and chemicals in importing nations. But for the energy sector and oil-exporting countries, the pressure is building as profit margins are squeezed and policy risks are rising. With the market already testing $60-ish for Brent, the next decisive move will depend on either a sharp recovery in demand or a meaningful cutback in supply.
Recently, HSBC warned of a potential downside risk to its 2026 Brent crude forecast of $65 per barrel if oil stockpiles in Western markets continue to build up.
Notably, US President Donald Trump urged European Union officials to impose tariffs of up to 100% on China, as part of his broader strategy to pressure Russian President Vladimir Putin.
In a note released on Monday, the bank said that while it does not expect a complete loss of Russian supply, it anticipates challenges for Russia in ramping up production to meet OPEC+ quotas. Consequently, the bank trimmed its end-2026 Russian output forecast by 300,000 barrels per day, projecting only a modest increase in production.
