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Daily Economic Update
29.09.2025Oil: Brent rises to $70/bbl on Russian supply risks and better-than-expected US economic data. Brent futures surged 5.2% last week, posting their best weekly gain since mid-June to break through $70/bbl (-6.0% ytd) on Friday. Prices were buoyed by continued Ukrainian attacks on Russian energy infrastructure, pressure by US President Trump on buyers of Russian oil, and better-than-expected US GDP data in Q2. President Trump’s comments were particularly aggressive last week, stating that Kyiv can “win all Ukraine back in its original form”, which marked a major shift in his stance on the Russia-Ukraine war, while upping the pressure on Turkey, which imports roughly 400 kb/d of Russian Urals crude, to reduce its reliance on Russian energy in exchange for a defense-equipment related deal. Meanwhile, Ukrainian strikes on Russian energy facilities escalated last week with an attack on the country’s largest oil terminal on the Baltic Sea. Also adding to the more bullish end-of-week tone was the US weekly oil data, which revealed a decline in both commercial crude oil and gasoline stocks (-0.6 mb and -1.1 mb, respectively) – the latter dropping to the lowest level since last November. With demand proving more resilient than expected and OPEC+ raising output at a slower rate than called for by its schedule, the market continues to price in a higher risk of supply disruptions. The reimposition of UN sanctions on Iran’s energy exports over the weekend after the latter failed to cooperate over the state of its enriched uranium stockpiles will also likely affect the mood, though without more stringent application of these sanctions and/or US pressure on China to curtail its imports, this move is more symbolic rather than meaningful. Imparting a more bearish spin on the outlook, however, could be the news that the Iraq-Turkey pipeline that transports about 180 kb/d of Kurdish crude has restarted after nearly two and a half years and the increasing likelihood of another round of OPEC+ supply increases for November. In the former, the actual impact on market supply balances may not be so acute, however, given that a large portion of this oil had been making its way to markets via trucks for some time and given Iraq’s quota and compensatory cut obligations to the OPEC+ group. But in the latter, markets are anticipating an increase of 137 kb/d as per October’s gain when the Group meets next week. Indeed, Brent slipped back below $70/bbl this morning in Asian trading on this prospect.
Saudi: Trade surplus widens in July on surging non-oil exports and reduced imports. The Saudi trade surplus increased in July to its highest in almost two years, climbing 53.4% y/y to SR26.9 billion ($7.2 billion), thanks to exports increasing at a much faster pace than imports, by 7.8% y/y and -2.5% y/y, respectively, according to official data. The main contributor to the increase was non-oil exports, whose 30.4% y/y increase in July was the sharpest since April 2022. This helped offset continued declines in oil exports (-0.7%) amid lower oil prices and, during the summer months, a rerouting of crude oil flows towards domestic refineries rather than exports to satisfy increased electricity generation. Double-digit annual growth in non-oil exports has been fairly sustained over the last two years, as the kingdom’s diversification efforts increasingly bear fruit, especially with higher exports of machinery, chemicals and electrical equipment (accounting for 29.7% of total exports in July). Non-oil exports covered an impressive 45% of the kingdom’s imports in July.
Global: September’s jobs report and a possible US government shutdown key matters this week. In the US, Tuesday midnight is the deadline for Congress to approve a continuing resolution to keep the government open as President Trump will be meeting the top four congressional leaders later today, giving some hope for a last-minute deal that will avert a shutdown. Trump is threatening wide-scale firings in case of a shutdown, which is also part of his tactic to put pressure on Democratic lawmakers. In terms of data releases, September’s non-farm payrolls report is due on Friday (which is at risk of not being released in case of a government shutdown), with the consensus forecast pointing to a slight increase in job growth to a still-limited 39K (22K in August), with a steady unemployment rate of 4.3%. The ISM manufacturing PMI is due on Wednesday, with the street projecting an improvement to 49.2 in September (48.7 in August), while the services PMI (on Friday) is seen unchanged at 52. In the Eurozone, CPI inflation for September is due on Wednesday, with the headline rate seen increasing to 2.3% y/y (2% in August), while the core rate is expected to remain steady at 2.3%. In the UK, the annual Labor Party conference started this week and will continue through October 1, with Chancellor Reeves later today expected to share some of her thoughts on the upcoming Autum budget. On the data front, revised Q2 GDP growth will be released on Tuesday, confirming or not the previous estimate (0.3% q/q). In China, September’s official PMI figures are due on Tuesday, with the consensus expecting the non-manufacturing PMI to remain unchanged at 50.3, but the manufacturing PMI to inch up slightly to 49.6. In Japan, August’s retail sales are due on Tuesday, with growth seen improving to 1% y/y (0.3% in July), while August’s industrial production (also on Tuesday) is expected to drop 0.8% m/m following a steeper 1.2% fall in July.
