Geopolitical risk premium pushes Brent to $70—Rystad Energy oil market note

Energy markets enter the week on a strong note. Brent remains anchored above $70 per barrel, supported by a sizeable geopolitical risk premium after Ukrainian strikes on Russian energy infrastructure, tighter Venezuelan exports, and US pressure on Europe to accelerate the phaseout of Russian barrels. Yet, fundamentals look softer: OPEC+ continues to pivot toward market share, and balances for 4Q25 and 1H26 appear unusually long as production rises.

Financial conditions reflect the same tension. Yields edged higher on firmer data, equities slipped modestly, and gold extended gains on safe haven flows after fresh tariff announcements.

The coming week offers key tests. In the US, the September jobs report (3 October) will help determine whether labor softness is deepening enough to tilt the Fed toward a November cut; a modest payroll gain of about 40,000 is expected. Increasing signs of resilient spending and growth sit uneasily alongside mounting evidence of labor-market deterioration. In 2Q, the US added an average of 54,000 jobs per month, with June posting a net loss of 13,000. Job openings, a gauge of labor demand, fell to a 10-month low in July, and for the first time since the pandemic, unemployed workers outnumbered available positions. As Fed Chair Jerome Powell noted last week, recent data point to “a marked slowdown” in both labor supply and demand. The widening contrast – solid spending alongside softer hiring – indicates risks are skewed to the supply side.

Meanwhile, ISM manufacturing (1 October) will give an early read on corporate sentiment. In Europe, flash inflation prints (1 October) will test whether easing momentum holds, with potential spillovers for the European Central Bank’s (ECB) rate-cut pricing. And in Asia, China’s Purchasing Managers' Index (PMI) (29 September) is likely to stay below 50, underscoring persistent domestic weakness despite resilient exports. Together, these releases will shape market expectations into the 5 October OPEC+ meeting, where rhetoric will matter as much as volumes. Lower oil prices, supplier price concessions, front-loaded inventories, and productivity gains (including artificial intelligence-enabled efficiencies) may be limiting damage to corporate margins even as businesses struggle to fully pass on costs.