Oil Supply Curbs Continue: Why the Energy Market’s Power Move Could Reshape Inflation and Central Bank Strategy

EBC Financial Group on how supply discipline is fuelling a ‘higher-for-longer’ oil regime, reshaping inflation, rate forecasts, and global capital flows.

DC, UNITED STATES, July 24, 2025 /EINPresswire.com/ -- As global central banks begin to loosen monetary policy, another force is working in reverse: constrained oil supply. Key energy producers are maintaining voluntary cuts through the end of 2025, even as demand builds and inventories remain lean.

This disciplined supply strategy has set a price floor, with Brent crude trading near US $68.39 per barrel, down 1.2% after the latest EU sanctions, indicating that markets don’t expect significant disruptions to supply. While recent volatility reflects short-term profit-taking and trade jitters, forecasts from Goldman Sachs and the IEA point to a potential rebound in oil prices as demand recovers later in 2025.

“We’re in a world where commodity supply decisions can rival, or even override, central bank influence,” said David Barrett, CEO of EBC Financial Group (UK) Ltd. “Overlooking these dynamics risks mispricing entire asset classes—from FX and bonds to inflation-linked securities.”

Recent demand analysis indicates that OPEC and the IEA forecasts for 2025 may be too pessimistic: despite projecting growth of 700,000–1.29 million bpd—the slowest since 2009—Asia’s crude imports have actually jumped by around 510,000 bpd in H1 2025. Meanwhile, the IEA warns that current projections could understate real demand as global travel and industrial activity pick up.

Fuel, Food and Financial Fallout

Even small shifts in oil prices matter. Transport and food costs are rising across import-dependent economies. In Europe, where the ECB just began its first rate cut cycle since 2019, persistent energy inflation threatens to delay future easing. In the U.S., continued fuel strength could complicate policy decisions tied to CPI and trade concerns.

Central banks in countries like India, Thailand, and the Philippines, with cooled but fragile inflation, may hold off on rate cuts as imported energy costs remain elevated.

Winners, Losers and Market Signals

Oil-exporting countries with strong fiscal buffers have seen an upside from elevated crude prices, improving their terms of trade and boosting revenue streams. Meanwhile, oil-importing economies are grappling with weakening currencies, widened current-account deficits, and renewed inflation volatility.

In global financial markets, breakeven inflation expectations in U.S. Treasury markets have firmed, with 5-year breakevens rising to around 2.5%—their highest in months. Currency markets are also reacting, with petro-currencies such as the Canadian dollar (up 0.3% in June) and the Norwegian krone outperforming peers. Investors are increasingly rotating back into energy-linked equities, driven by shifting demand forecasts and improved sentiment in oil markets.

Positioning Amid Oil-Driven Inflation: A Trader’s Guide

For traders, these dynamics present both opportunity and urgency. As oil remains a central driver of inflation expectations, sharp movements in crude prices can ripple across FX, bond, and equity markets. Monitoring petro-currencies like the CAD and NOK can offer directional cues for energy sentiment, while inflation-linked assets—such as TIPS or commodity ETFs—become more attractive hedging tools.

The firming of breakeven rates suggests markets are reassessing long-term inflation risks, making positioning around rate-sensitive assets and duration trades even more critical. With central banks walking a tightrope between growth and inflation, traders who track both commodity flows and policy divergence can better anticipate market pivots—and avoid being caught on the wrong side of a "higher-for-longer" energy regime.

For more insights on commodity markets visit www.ebc.com.

Disclaimer: This article reflects the observations of EBC Financial Group and all its global entities. It is not financial or investment advice. Trading in commodities and foreign exchange (FX) involves significant risk of loss, potentially exceeding your initial investment. Consult a qualified financial advisor before making any trading or investment decisions, as EBC Financial Group and its entities are not liable for any damages arising from reliance on this information.

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About EBC Financial Group  

Founded in London’s esteemed financial district, EBC Financial Group (EBC) is a global brand known for its expertise in financial brokerage and asset management. Through its regulated entities operating across major financial jurisdictions—including the UK, Australia, the Cayman Islands, Mauritius, and others—EBC enables retail, professional, and institutional investors to access a wide range of global markets and trading opportunities, including currencies, commodities, shares, and indices. 

Recognised with multiple awards, EBC is committed to upholding ethical standards and these subsidiaries are licensed and regulated within their respective jurisdictions. EBC Financial Group (UK) Limited is regulated by the UK's Financial Conduct Authority (FCA); EBC Financial Group (Cayman) Limited is regulated by the Cayman Islands Monetary Authority (CIMA); EBC Financial Group (Australia) Pty Ltd, and EBC Asset Management Pty Ltd are regulated by Australia's Securities and Investments Commission (ASIC); EBC Financial (MU) Ltd is authorised and regulated by the Financial Services Commission Mauritius (FSC).   

At the core of EBC are a team of industry veterans with over 40 years of experience in major financial institutions. Having navigated key economic cycles from the Plaza Accord and 2015 Swiss franc crisis to the market upheavals of the COVID-19 pandemic. We foster a culture where integrity, respect, and client asset security are paramount, ensuring that every investor relationship is handled with the utmost seriousness it deserves.    

As the Official Foreign Exchange Partner of FC Barcelona, EBC provides specialised services across Asia, LATAM, the Middle East, Africa, and Oceania. Through its partnership with United to Beat Malaria, the company contributes to global health initiatives. EBC also supports the 'What Economists Really Do' public engagement series by Oxford University's Department of Economics, helping to demystify economics and its application to major societal challenges, fostering greater public understanding and dialogue.   

https://www.ebc.com/

Michelle Siow
EBC Financial Group
michelle.siow@ebc.com
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