Oil Market Report - August 2025

Brent and WTI crude futures both ended August 2025 notably weaker, pressured by rising supply expectations and softening demand outlooks, despite bouts of geopolitical support. Brent fell from $71.70 at the end of July to $67.44 on August 27, recording a decline of $4.26 or -5.9%, while WTI dropped from $69.26 to $64.15, down $5.11 or -7.4%.

EXECUTIVE SUMMARY

Brent and WTI crude futures both ended August 2025 notably weaker, pressured by rising supply expectations and softening demand outlooks, despite bouts of geopolitical support. Brent fell from $71.70 at the end of July to $67.44 on August 27, recording a decline of $4.26 or -5.9%, while WTI dropped from $69.26 to $64.15, down $5.11 or -7.4%. Both benchmarks touched their intra-month lows mid-August, with Brent hitting $65.01 on August 13 and WTI dropping to $61.45 on August 18, before staging only modest rebounds. The major drivers of this downward trend were OPEC+ decision to further raise output quotas by more than half a million barrels per day from September, the International Energy Agency’s forecast of robust supply growth well above demand, and U.S. Energy Information Administration’s projections of Brent falling below $60 per barrel by year-end. U.S. inventory dynamics provided mixed signals: an early build weighed on prices, while a late-month draw offered temporary support. Meanwhile, geopolitical tensions—including Ukrainian drone strikes that disrupted 17% of Russia’s refining capacity and subsequent Russian moves to raise crude exports—added volatility but did not fundamentally alter the oversupply narrative. On average, Brent traded around $67.0 in August, down from about $69.5 in July, while WTI averaged near $63.5 compared with $67.0 previously, showing that both benchmarks experienced not only lower closing levels but also weaker average pricing. Overall, the month’s price action reflected the tug of war between temporary disruptions that lent support and a structural outlook dominated by growing supply and forecasts of weaker global demand growth.

Brent and WTI head into September with a neutral-to-bearish technical tone. Both finished August under their medium-term trend markers and close to short-term averages, which points to a range-bound tape with a slight downside skew unless prices can reclaim and hold above late-August resistance. The base case is chop: Brent broadly oscillating between the mid-60s and low-70s, WTI between the low-60s and high-60s, with volatility moderate rather than extreme. The macro setup nudges the risk lower—OPEC+ adds new barrels in September, Russia is proving able to redirect crude exports despite refinery outages, and the end of the U.S. summer driving season typically softens product demand. Counter-trend rallies are still plausible if U.S. inventory draws surprise to the downside, if Ukrainian strikes further tighten Russian products, or if sanctions trigger logistical snarls in Asia; a sustained push back above late-August ceilings would flip the tone toward neutral-to-constructive. Absent that confirmation, rallies are more likely to be sold than chased, and a retest of mid-August lows (mid-60s Brent, low-60s WTI) remains on the table.

The International Energy Agency stated in its most recent monthly report that global oil supply was largely unchanged in July 2025 at 105.6 mbd, with a 230 kbd fall in OPEC+ output offset by an equal increase in non-OPEC+. Meantime, the agency has revised global oil supply growth up by 370 kbd to 2.5 mbd this year and by 620 kbd to 1.9 mbd in 2026, after the eight OPEC+ members subject to voluntary output reductions agreed on August 3 to raise production by another 547 kbd in September, fully unwinding the 2.2 mbd cuts agreed to in November 2023 since April. According to the IEA, OPEC+ crude and NGLs will now account for 1.1 mbd of supply growth this year and 890 kbd in 2026. Despite the significant OPEC+ gains, non-OPEC+ producers will continue to lead growth, adding 1.3 mbd in 2025 and 1.0 mbd in 2026, bolstered by rising output of US NGLs, Canadian crude and US, Brazilian and Guyanese offshore oil.

On the other hand, the U.S. Energy Information Administration reported global oil production to register another firm monthly advance in July 2025, with world output rising by 620 kbd from June, a 0.6% month-on-month increase that pushed volumes to the new highest level on records. This was the third consecutive monthly gain, extending a steady MoM uptrend. On a year-over-year basis, global supply expanded by 2.67 mbd, up 2.6% YoY, marking a tenth straight annual increase. Relative to seasonal norms, the output stands notably above trend: production was 7.13 mbd higher than the five-year average for July, a 7.2% uplift that underlines how firmly the recovery has outpaced historical baselines. Along with the month prior, July 2025 again presented a picture of synchronized oil production growth across the OPEC and the non-OPEC camp with both groups delivering comparative percentage increase on a monthly basis.

The OPEC recorded a notable increase in crude oil production in July 2025, pushing its total output to the highest level observed in the past 20 months. The group’s collective crude supply rose by 308 kbd compared to June, according to OPEC own data, representing a 1.1% month-on-month gain. This marked the third consecutive monthly increase, reflecting cartel’s decision to unwind its voluntary output cuts at an accelerated pace. Nevertheless, the real supply growth in July was again lower comparing to the announced one of 411 kbd as several OPEC-participating states still continue to compensate for earlier over-production. As for the whole period of May-July during which the cartel has been implementing its accelerated cut-unwinding strategy, a real increase of OPEC crude production was equal to 833 kbd which is roughly 400 kbd less than the announced numbers. On a year-on-year basis, the bloc boosted its crude output in July 2025 by 797 kbd, a 3.0% expansion versus July 2024, which now stands as the sharpest annual growth rate recorded in the last 31 months. When measured against the five-year seasonal average for July, OPEC crude production exceeded the norm by 958 kbd, equivalent to a 3.6% surplus, underlining the sustained uptrend in supply momentum across key members.

Eight OPEC+ members agreed to raise their collective crude production target by 547 kbd for September 2025 relative to the August required level, the same increase as the one was agreed for the previous month. This move fully complete the gradual unwinding of 2.2 mbd in voluntary cuts that began returning from April 2025, under a December 5, 2024 framework. The decision reflects what the OPEC+ described as a steady global economic outlook, healthy market fundamentals, and low oil inventories, while maintaining a commitment to market stability. As usual, the group stressed flexibility to pause or reverse the unwind if market conditions warrant. The next OPEC+ meeting is scheduled on September 7, 2025.

Total non-OPEC oil supply set a fresh high-water mark in July 2025. Its volumes rose by 440 kbd on the month, a 0.6% MoM sequential increase that pushed production to the new highest level on records. The month-on-month rise extended a four-month climbing streak. Versus a year earlier, supply was up by 1.30 mbd, or +1.8% YoY, locking in a seventh straight year-over-year gain and, notably, the fastest annual growth rate in six months. On a longer-term basis, July output stood 4.60 mbd above the five-year average for the month, a 6.8% uplift, underscoring the breadth of the expansion. July’s record-setting profile of non-OPEC total oil production was underpinned primarily by the Americas, with a 460 kbd monthly increment, offset by modest sequential pullbacks in Asia-Pacific (-43 kbd), Africa & Middle East (-48 kbd), and the CIS (-70 kbd). Europe’s 145 kbd rebound helped cushion those declines but did not erase its year-over-year shortfall.

Total U.S. oil production surged in July 2025, reaching a fresh high over the history of 23.22 mbd. Overall oil output rose by 258 kbd from the previous month, equating to a robust 1.1% month-over-month increase. This latest expansion represents not only the fastest monthly pace of growth in five months, but also underscores the strength and resilience of the U.S. energy sector. Year-on-year, total oil production in the United States climbed by 616 kbd, translating to a 2.7% increase versus July 2024. This gain extends the ongoing upward annual trend into its tenth month, further solidifying a positive medium-term momentum. The production level in July also stood 2.63 mbd above the five-year seasonal average for this month—an impressive 12.8% margin that highlights how significantly current output outpaces the historical norm. The dynamics across sub-segments weren’t uniform within the month. While crude oil maintains its dominance, its share continues to erode in the face of faster-growing components like NGLs. The renewables sector faced a rare month of stagnation, even as long-term trends remain supportive. Processing gains, though less headline-grabbing, also made a positive contribution to the overall oil production in the country.

Shale oil production in the United States posted a minor setback in July. The output fell by 26 kbd compared to June, a 0.2% MoM decline, bringing production to its lowest level in the past five months. Yet, this monthly retreat did little to dent the segment’s long-term momentum. On a yearly basis, shale output rose by 317 kbd—an increase of 3.2% YoY compared to July 2024. This figure not only extended shale’s uninterrupted year-over-year growth streak to an impressive 51 consecutive months, but also marked the fastest annual expansion in the past four months. Measured against its own seasonal averages, shale oil output remained firmly ahead. July’s production stood 1.42 mbd above the five-year average, a striking 15.9% uplift. These figures continue to highlight the role of shale as the dominant growth engine in U.S. crude supply. Shale's share in national crude output stood at 77.14% in July. While this figure slipped by 41.1 basis points from June due to the monthly decline in production, it still represented a strong 190.9 basis point increase compared to July 2024.

As global oil demand growth for 2025 has been repeatedly downgraded since the start of the year, by a combined 350 kbd, the International Energy Agency now projects global oil demand to increase by 680 kbd in 2025 and 700 kbd in 2026, to reach 104.4 mbd. Despite weaker-than-expected demand in China, India and Brazil in recent months, annual growth of 600 kbd in 2Q25 occurred entirely in the non-OECD. Consumption in the OECD was flat, with Japan at multi-decade lows. According to the agency, the latest data show lackluster demand across the major economies and, with consumer confidence still depressed, a sharp rebound appears remote. Consumption in emerging and developing economies has been weaker than expected, with China, Brazil, Egypt and India all revised down compared with last month’s figures. Aviation has been an exception, with robust summer travel propelling jet fuel demand to all-time highs in both the United States and Europe. Global jet/kerosene demand is on track to increase by 2.1% this year, the strongest of any product. However, at 7.7 mbd in 2025, it will still be 180 kbd below the 2019 pre-pandemic level.

The U.S. Energy Information Administration also reported that global oil use in July 2025 eased on the month, albeit marginally, and the agency stressed that it still has remained firmly higher versus last year and well above medium-term norms. The worldwide figure declined by 86 kbd from June, a 0.1% month-over-month slip that interrupted a two-month run of sequential gains. July’s print was the fastest monthly decline over the last 3 months, underscoring how modest the downtick was in the context of recent history even as it broke the short-lived upswing. On a year-over-year basis, however, the picture stayed unequivocally positive: global oil consumption increased by 990 kbd, a 1.0% YoY rise from July 2024, extending a 14-month streak of annual expansion and marking the quickest yearly pace in the last three months. Relative to the five-year seasonal baseline, July’s world consumption stood 4.96 mbd higher, a 5.0% premium to the average for this month.

Global observed oil inventories rose for the fifth consecutive month in June 2025, up 28.1 mb month-over-month, or almost 900 kbd, to reach a 46-month high of 7 836 mb, according to the most recent data of the International Energy Agency. The increase was underpinned by swelling volumes of oil on water, and rising stocks of both Chinese crude and US gas liquids, while other inventories mostly declined. OECD commercial oil stocks fell by 28.8 mb in June to hover near decade-lows of 2 758 mb, 88 mb below a year ago. Overall, global observed oil inventories built by 1.5 mbd in 2Q25, with Chinese crude stocks rising by 900 kbd and US gas liquids another 900 kbd. Nonetheless, crude and product stocks in major pricing hubs remain well below historical averages.

As for May 2025, detailed statistics on which was released by the IEA, OECD total commercial oil inventories registered a modest increase on a month-over-month basis, rising by 1.2 million tons, a 0.3% uptick compared to April. This seemingly moderate advance marks the sharpest monthly growth rate observed in the past four months, hinting at a tentative rebound in stockpiling activity. Nonetheless, this uptick is overshadowed by the longer-term trajectory: the headline figure still reflects a pronounced contraction when measured against the previous year. Total inventories are down by 7.9 million tons year-over-year, corresponding to a 1.7% annual decrease. This rate of decline is notably the steepest in the last 15 months, highlighting a persistent drawdown trend in underlying fundamentals. When viewed in the context of historical norms, OECD total commercial oil inventories for the month stood 40.2 million tons below the five-year average for May, equating to a 7.9% deficit.

Total U.S. oil inventories posted a formidable build of 35.86 mb in July 2025, translating to a 2.2% MoM increase from June. This monthly acceleration not only marks the highest stock level in the last three years but also represents the fastest monthly growth in more than five years. Compared to July 2024, total stocks also were 22.16 mb higher, providing an annual increase of 1.3%, the strongest year-over-year expansion observed in the past five months. Nevertheless, the total figure still landed 125.78 mb below the 5-year average for July—a 7.0% shortfall, underscoring long-term structural tightness despite the recent bulge. An exceptional monthly surge in total U.S. oil inventories was driven primarily by a massive buildup in commercial NGL stocks. However, this surface-level abundance belies deeper structural imbalances. Crude oil remains well below its multi-year average, SPR reserves—despite a slow recovery—are historically low, and most refined product categories continue to exhibit substantial deficits, particularly distillates and heavy fuel. The sharpest inventory rebounds were seen in upstream segments, while downstream components struggled to maintain pace.

Crude oil inventories at Cushing, Oklahoma, saw a modest rebound in July 2025, along with the overall crude stocks in the United States, rising by 1.82 mb, an 8.8% MoM increase from June. This build broke a two-month streak of monthly declines and marked the fastest pace of growth in five months, suggesting a short-term easing in the hub’s supply tightness. Despite this month-on-month recovery, inventories at Cushing remain historically low. Stockpiles were 7.30 mb lower than in July 2024, a 24.4% year-over-year drop, extending a downward annual trend for the ninth consecutive month. Though the rate of annual decline has slightly moderated, the broader pattern of structural tightness persists. Relative to the 5-year seasonal norm, the situation remains stark. Reported inventories sit 12.58 mb below the average for July, a 35.8% deficit, underscoring Cushing’s continued vulnerability. While July’s increase offers a temporary reprieve, the hub remains well below levels typically seen during this part of the year.

Global offshore oil inventories recorded a marked increase in July 2025, according to the data provided by cargo-tracking company Vortexa Ltd., climbing by 16.59 mb from the previous month—a robust 21.4% MoM expansion. This gain not only marked the fastest monthly rate of growth observed in the past three months but also elevated the global stockpile to its highest level over that same period. The rise also extended a two-month upward trend. On a year-over-year basis, the increase stood at 11.09 mb, or +13.4% YoY, also the most rapid annual growth seen in the last three months. Yet, despite the sharp gains in both monthly and yearly terms, the total volume remained below long-term norms. Specifically, compared to the five-year average for July, the global tally was 13.11 mb lower, representing a 12.2% shortfall. The July 2025 data on floating oil inventories paints a picture of sharp regional divergence within a context of global expansion. Asia and Europe posted monthly rebounds that broke recent declines but remained well below historical norms. The Middle East Gulf’s year-on-year recovery stood in contrast to its month-to-month weakening. Meanwhile, West Africa emerged as the clear outlier, with explosive growth both on a monthly and annual basis.

AC - Oil Market Report - Aug-2025.pdf

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