With the last quarter of 2025 in full swing, the world, as we have known it since February, has not changed; it keeps evolving. Therefore, it is a gnarly undertaking to accurately read or predict it. All investors and market players can do is react to headlines but amid the current imbroglio, what seemed a reasonable call one day might have to be revised, re-evaluated and amended the other.

There was much to digest and deal with in October. Geopolitics is never static; muted concerns about stock market bubbles persist, trade deals are being struck left, right, and centre, yet their sustainability and credibility must be taken with a pinch of salt. Meanwhile, the long-awaited swelling of global oil inventories has yet to materialise, a fact that neither disheartens the bears nor emboldens latent bulls.

Stock markets are buoyant, but should one trust them? The MSCI All-Country Index returned more than 2% in October. Following the appointment of Japan’s first female Prime Minister, the Nikkei 225 Index soared, finishing the month 16% higher. The world’s biggest economy, judging by the performance of its stock indices, also did well. The prevailing view is that the global and the largest economies are humming along convincingly. Inflation has been reined in, and trade tensions have eased considerably.

Doubts, however, linger. Would you wholeheartedly bet on perpetual growth when the S&P 493 Index, the largest 500 US companies excluding the seven pivotal tech corporations, has risen only about 11% this year, compared with 17% for the full index and roughly 23% for the tech giants? Or when, as observed by the Financial Times, last Tuesday’s advance of the S&P 500 index was accompanied by 397 of its constituents ending the day in the red? Would you say that inflation in the US has been beaten when, although both headline and core figures exceeded expectations in September, consumer prices have actually risen by 0.7% in the past six months? The Federal Reserve narrowed the interest rate gap with its European and Japanese peers last month by cutting lending rates by 0.25%, as the labour market showed signs of fragility. However, as insinuated by its chair, a December reduction is anything but a foregone conclusion, for the very reason described above.

During his Far Eastern trip, President Trump did what he does best: negotiating trade deals. In other words, he lowered reciprocal tariffs with several trading partners. It is undeniably a welcome development, and while he managed to ease trade tensions with his greatest adversary, China, by postponing export controls on rare earths and chips for a year, cutting fentanyl-related tariffs, and putting levies on the shipping industry on hold, it is worth noting that the average US import tax on Chinese goods remains 45%, more than double the pre-Trump 2.0 rate of 20%. The world’s biggest consumer and its largest manufacturer must reassure markets that they are willing and able to reach an amicable, long-term trade solution; otherwise, rattling the Damoclean sabre will continue, if one may use this mixed metaphor, and tensions can and will spike. Just think of the US trade deals struck only days prior to the Trump-XI meeting with Asian countries in the sphere of influence of China. Do we really believe that the smile on the Chinese President’s face was honest and genuine?

The geopolitical landscape is equally volatile and ambivalent. On October 8, the US President announced that Israel and Hamas had reached a peace agreement, a truly remarkable achievement meant to bring prosperity to the troubled region. Nonetheless, it took less than two weeks for bullets and missiles to fly again, as the warring parties exchanged mutual accusations of violating the deal, with the Jewish state launching a series of attacks even on Lebanon. The first phase of the truce was broadly accomplished, but the permanent peace envisaged for the region remains as far out of reach as Vladimir Putin being nominated for the Nobel Peace Prize.

President Trump’s discontent with the Russian leader has grown ever since the failed Alaska summit, and it was evident again when the US imposed sanctions on two of Russia’s major oil companies, Rosneft and Lukoil, on October 23. The defiant Russian President maintains that “no self-respecting country ever does anything under pressure.” (By this admission, Ukraine then is a very self-respecting nation, but it fails to please Mother Russia.) Yet he acknowledged that the move could cause severe economic headwinds.

The initial market reaction was a rally, as fears of genuine disruption to Russian crude and product exports grew. The practical consequences of the move, however, were re-evaluated in the following days, and for good reason. Chinese refiner Yulong, based in Shandong, is reportedly planning to import 15 shipments of Russian crude in November. The fact that Chinese purchases of Russian oil were not discussed during the Trump–Xi summit speaks volumes. Germany managed to secure a US exemption for Rosneft’s local operations from the sanctions, while Japan pushed back on a US request to halt Russian natural gas imports. Finally, Russia’s ingenuity in circumventing international sanctions on its oil trade has grown increasingly sophisticated over the years; therefore, any setback in its overseas sales will likely prove temporary.

The confidence that Russian oil, one way or another, will keep flowing is mirrored in the third consecutive monthly drop in oil prices, aided by rising OPEC+ production (although eight members of the group, in a tacit nod to the historically demand weak first quarter, yesterday decided to pause the increase at the beginning of next year) and also embodied in oil majors’ 3Q profits. The M1/M7 Brent spreads, which slipped into contango before the US sanctions on Rosneft and Lukoil, rallied above $2/bbl within four days but have since retreated again. Meanwhile, crack spreads have been reinvigorated, with the Gasoil/Brent differential rising by $8/bbl since mid-October. This indicates temporary tightness, but the tepid flat price reaction implies that no prolonged disruption is expected. On the demand side, although this year’s spectacular stock market performance suggests a robust economy, none of the major forecasters has upgraded its 2025 oil demand projections; quite the opposite. We believe that unchanged or lower demand estimates, coupled with potentially ample and rising supply, will curb any budding enthusiasm to push oil prices higher.

But, as implied in the headline, constant reassessment will be required in this spontaneously ambiguous environment. Take the latest example from Friday: if the US does, in fact, attack Venezuelan military sites, as reported by the Miami Herald via Bloomberg, and immediately denied by Senor Trump, and if the incumbent regime is removed, the country’s economic prospects would brighten, and crude oil production would rise, correct? Well, do we really think that the allies of the Maduro regime, China, Iran, and Russia, et al, would keep schtum? It is impossible to say. After all, we operate under confused and unorthodox conditions where tariffs are doubled and cut within the space of days; where fragile, clumsy trade agreements are sold as unprecedented successes; and where, ignoring international norms and laws, a country can unilaterally attack another with impunity to “de-nazify” or “de-narcotise” it.

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