Oil Market Report - July 2025

Both Brent and WTI crude oil futures finished July 2025 higher than end-June levels, with Brent up roughly 4.3% month-to-date and WTI about 1.7%. Front-month Brent settled at $69.62 on July 25, gaining nearly $2.9 from the June 30 close of $66.74.

EXECUTIVE SUMMARY

Both Brent and WTI crude oil futures finished July 2025 higher than end-June levels, with Brent up roughly 4.3% month-to-date and WTI about 1.7%. Front-month Brent settled at $69.62 on July 25, gaining nearly $2.9 from the June 30 close of $66.74. WTI ended around $66.26, about $1.15 above the prior month’s settle price of $65.11. The month’s trade largely kept prices in the upper-$60s – a far more stable range compared to June’s wild swings (when Brent spiked above $78 and plunged back to mid-$60s). Brent averaged about $69.1 for the month, roughly unchanged from June’s average of $69.7, while WTI averaged at $66.8, slightly below June’s mean of $67.3. Brent crude outperformed, reflecting slightly tighter fundamentals and strong Asian demand as evidenced by China’s crude imports hitting 12.14 million bpd in June, the highest since 2023. WTI lagged behind, weighed in part by swelling U.S. product inventories and the contract’s expiry dynamics mid-month. Still, both benchmarks spent most of July well above the lows seen in May and early June, signaling a recovery in market sentiment. Overall, July saw an early rally, a mid-month pullback on tariff fears, and a late-month rebound – with news on OPEC+ supply, geopolitical risks, and global trade policy driving the day-to-day volatility. The major price drivers – tightening inventories, OPEC+ policy signals, geopolitics (Russia, Middle East), and the on-again/off-again trade war news – often offset each other over the month, keeping prices range-bound after the early rally. Brent and WTI each logged several mini-trends in July: a strong upswing through the first week, a roughly week-long slide around mid-month amid tariff angst, and then a recovery in the final week as supply worries and trade hopes returned. Each reversal was driven by a clear shift in the headlines. Notably, more supply – whether from OPEC+ unwinding cuts or potentially Venezuela – tended to weigh on prices, while signs of tighter supply (inventory draws, output disruptions) or stronger demand (trade truces, summer fuel use) boosted prices, all else equal, in classic fundamental fashion. By month’s end, oil market sentiment was considerably more upbeat than a month earlier: Brent nearly $70 and WTI $66–67 represented a solid rebound from late-June, underpinned by the narrative that global oil demand was proving resilient even as producers cautiously brought back barrels. Traders remained vigilant heading into August – the U.S. tariff deadline and OPEC+’s September supply boost were immediate focal points – but July’s performance showed that the worst of the early-summer selloff had been overcome.

The key to August lies in Brent’s ability to break and hold above $71.50 and WTI above $69.00. Until then, expect range-bound trade, anchored by support at $66–$68 (Brent) and $64.70–$65.30 (WTI), and constrained by resistance at the upper ends of their summer trading bands. A breakout will require clear bullish catalysts—either on the supply side (disruptions or lesser unwinding of cuts) or demand side (trade resolution or surprising consumption strength). Without those, technical indicators suggest that crude markets may remain trapped in a sideways drift for much of August, digesting the volatile fundamental signals of the prior months. Moreover, seasonally, August is typically a transition month for crude, with peak driving demand beginning to fade in the Northern Hemisphere but still supported by elevated air-conditioning demand in key markets. Historically, U.S. inventory draws tend to persist through mid-August, offering some tailwinds. Technically, as long as Brent holds above $68.30 and WTI above $65.00, dips are likely to be viewed as buying opportunities. A push above the aforementioned resistance levels would likely attract momentum traders and algorithmic strategies, adding fuel to upside breakouts. However, failure to break above July highs by mid-August could lead to consolidation or even renewed pressure, particularly if macro headwinds—such as a breakdown in U.S. trade negotiations or unexpected OPEC+ supply increases—materialize.

Global oil supply increased by a steep 950 kbd month-over-month to 105.6 mbd in June 2025, led by Saudi Arabia, according to the data released by the International Energy Agency. Output was up by 2.9 mbd year-over-year, of which OPEC+ accounted for 1.9 mbd. With higher OPEC+ targets for August, world oil supply is projected by the IEA to rise by 2.1 mbd to 105.1 mbd this year and by an additional 1.3 mbd in 2026, with non-OPEC+ adding 1.4 mbd and 940 kbd, respectively.

Along with the IEA, the U.S. Energy Information Administration also reported that global oil supply in June 2025 reached a historic milestone, marking a new all-time high. The total global output increased by 660 kbd from May, translating to a robust month-on-month rise of 0.6%. This uptick not only extended the upward trend for a second consecutive month but also registered as the sharpest monthly increase in the past four months. Compared to June 2024, global oil supply surged by 2.92 mbd, representing a 2.9% YoY expansion—the fastest annual growth rate seen in two years. The reported figure also stands 7.48 mbd higher than the five-year average for June, a notable 7.7% premium, underscoring the strength and resilience of global upstream activity in the face of a complex economic backdrop. Both OPEC and non-OPEC producers contributed to lift global oil supply to a new historic high, driven by both traditional crude and increasingly influential NGL segments.

OPEC total oil supply in June 2025 surged by another 213 kbd compared to May, marking a 0.8% month-on-month increase, according to OPEC’s own data. This figure represented the highest monthly output recorded by the cartel in the past 19 months, reinforcing a short-term upward trend that has now extended into its second consecutive month. Albeit it was the second straight month of voluntary production cuts unwinding by 411 kbd per month, the cartel estimated the combined production growth in May-June at just 525 kbd, almost 300 kbd less than the announced numbers. On a year-over-year basis, the bloc’s production rose by 669 kbd, or +2.5% YoY, reflecting a robust and accelerating pace of recovery. Notably, this was the steepest annual rate of growth observed over the last 30 months. Against its 5-year seasonal average for June, OPEC total oil output was up by 337 kbd, equivalent to a 1.3% increase, further underlining the organization's growing production momentum. OPEC oil supply landscape in June 2025 was shaped by strong gains in Saudi Arabia, the UAE, and Nigeria, with additional contributions from Venezuela and Algeria, which offset declines from Iran and Libya.

On 5 July, the OPEC+ alliance announced a larger-than-expected ramp-up in targets for August, citing robust global demand indicators, firm oil inventories, and a favorable macroeconomic backdrop as main reasons to accelerate its phased unwind of voluntary output cuts. Specifically, OPEC+ decided to raise collective production by 548 kbd in August, marking a significant acceleration from the previous monthly increases of 411 kbd. This marks a notable shift toward reclaiming market share, effectively reversing about 80% of the 2.2 mbd voluntary reduction being in place since 2023. OPEC+ also reaffirmed its commitment to compliance with the broader Declaration of Cooperation and pledged to continue full compensation for any prior overproduction. The group will reconvene on 3 August 2025, to determine September output levels. Reports suggest the group may follow-up with the same outsized increase in September, which will complete the planned return of supply a full year ahead of the original schedule.

Total non-OPEC oil supply grew by 480 kbd on a month-over-month basis, representing a 0.7% increase from May. This monthly expansion, the fastest in four months, pushed the overall group’s output to the new highest level observed ever, reflecting a robust recovery trajectory. Notably, this marked the third consecutive month of rising output, indicating a sustained upswing. On a year-over-year basis, non-OPEC producers added 1.26 mbd to the global oil supply, translating into a 1.8% YoY gain compared to June 2024. This was also the strongest annual rate of growth in four months. When benchmarked against the five-year seasonal norm, the reported figure exceeds the historical average by 4.85 mbd—equivalent to a 7.3% uplift, underscoring the resilience and competitiveness of supply outside the OPEC bloc. Non-OPEC oil production in June 2025 not only set a new all-time high but also displayed impressive breadth in its recovery. The overall month-over-month gain was distributed across multiple regions, with the Americas, CIS, and Africa & Middle East showing particularly solid momentum. On a single-country basis, Brazil, Canada, Kazakhstan, and Norway emerged as leading contributors to the global supply momentum within the month.

Total oil production in the United States experienced a marked monthly contraction in June 2025, declining by 216 kbd, equivalent to a 0.9% MoM drop compared to May. This sharp monthly decrease represented not only the largest absolute fall in output over the past five months, but also the fastest rate of monthly decline within that timeframe. The June figure also marked the lowest production level observed since January. Nonetheless, when viewed on a year-over-year basis, the picture remains one of moderate expansion. Compared to June 2024, national oil production rose by 460 kbd, providing a 2.0% YoY increase. This positive annual trajectory has now persisted for nine consecutive months. That said, the pace of annual growth has cooled—June posted the slowest annual growth rate in the last seven months. Relative to its five-year average for the month, U.S. oil production was higher by 2.59 mbd, reflecting a substantial 12.7% increase that underscores the long-term structural upswing in domestic output capacity. Breaking the headline number into its key components reveals distinct patterns across crude oil, natural gas liquids (NGLs), renewable fuels, and processing gains. Both crude oil and NGLs showed signs of softening on a monthly horizon but continued to run significantly above their historical averages. Meanwhile, renewable fuels gained momentum and helped to cushion the broader decline, while processing gains offered marginal support, but their contribution was offset by longer-term declines.

Shale oil was the bright spot in an otherwise subdued month for the U.S. oil industry. Total output from U.S. shale formations rose by 31 kbd in June, providing an increase of 0.3% MoM from the prior month. Although this may appear modest at first glance, the uptick marked a reversal from two consecutive months of declines and therefore represented the fastest monthly growth in the past three months. In annual terms, shale production advanced by 110 kbd—a 1.1% year-over-year gain—extending its remarkable streak of uninterrupted growth to 50 months. The segment's resilience continues to define the U.S. oil supply narrative. Against the five-year seasonal average, shale output in June was 1.35 mbd higher, translating to a 15.3% increase. This long-term outperformance reflects continued efficiency gains and scale advantages across key basins, notably the Permian. Shale oil’s share in total U.S. crude output climbed to 76.03% in June, up by 131.6 basis points on a monthly basis and 9.2 points over the past year.

The International Energy Agency further reduced its projections of global oil demand growth for 2025, albeit again by insignificant 20 kbd from the prior month’s estimate. Now world oil demand growth is forecast to increase by 700 kbd in 2025, its lowest rate since 2009, with the exception of the 2020 COVID year. Annual growth eased from 1.1 mbd in 1Q25 to just 550 kbd in 2Q25, with emerging market consumption particularly lackluster. Meantime, the IEA kept its previous forecast of oil demand growth in 2026 unchanged with global oil demand is projected to expand by 720 kbd to reach 104.4 mbd in 2026.

Meantime, according to the U.S. Energy Information Administration, global oil consumption registered a pronounced acceleration in June 2025, marking the most robust monthly performance in four months. Total worldwide demand surged by 1.83 mbd compared to May, translating to a 1.8% MoM increase. This strong showing not only reversed the sluggishness seen earlier in the year but also delivered the swiftest pace of monthly growth since February. Notably, this uptick marked the second consecutive monthly gain, reaffirming a short-term upward momentum in global energy appetite. From a broader temporal perspective, consumption was up by 0.63 mbd year-over-year, only a moderate 0.6% YoY gain versus June 2024, continuing a remarkable streak of annual growth that has now extended for thirteen consecutive months. Even more striking, the reported global oil usage exceeded the five-year average for June by a margin of 4.86 mbd, a notable 4.9% uplift, signaling sustained structural demand strength beyond cyclical fluctuations.

Observed global oil inventories surged by 73.9 mb to 7 818 mb in May 2025, according to the most recent data of the International Energy Agency (IEA), led by OECD commercial product inventories and crude in non-OECD countries. However, observed builds were heavily concentrated in Chinese crude oil and US gas liquids stocks, masking draws elsewhere. US gas liquids inventories rose by 79 mb in 2Q25, buoyed by robust US NGL supply and lower exports due to a temporary export license requirement for ethane. China’s crude oil stocks surged by 82 mb in 2Q25, or almost 900 kbd. China’s new policies aimed at improving its energy security are positioning oil companies as long-term strategic storage partners for the government, effectively removing these volumes from the global market. Chinese companies are expected to continue driving the expansion of inventories, with the pace of stock building over coming months key to the market balance. In result, crude, NGLs and feedstocks were up for the fourth month in a row, by 49.7 mb, while oil products increased for the first time this year, by 24.2 mb.  Preliminary data for June showed global oil stocks rose further, mainly in oil on water and the non-OECD.

Detailed statistics on OECD oil stocks in April 2025 confirmed earlier IEA’s estimates, as total inventories experienced a notable reversal in momentum, falling by 1.5 million tons from the previous month—a contraction of 0.3% MoM. This decline ended a persistent five-month streak of monthly gains, effectively delivering the sharpest month-on-month drop observed over the past six months. With this reduction, total OECD oil stocks fell to their lowest level in four months. On an annual basis, the overall inventory dynamic also weakened. Total oil stocks posted a year-over-year decrease of 5.1 million tons, falling down 1.1% from April 2024. The pace of this yearly decline was the most rapid in over a year, snapping a parallel five-month stretch of annual growth. The magnitude of the drawdown adds a layer of concern as total OECD oil stock levels slid 25.9 million tons below the five-year average for the month—a stark 5.2% deficit compared to historical norms.

Total U.S. oil inventories experienced their steepest contraction in several months in June 2025, falling by 7.34 mb from May levels, a monthly contraction of 0.4% MoM. This marked the sharpest month-over-month decline since March. On a year-over-year basis, total U.S. inventories dropped by 9.44 mb, or -0.6% YoY, bringing an end to a 13-month streak of rising annual comparisons. The pace of this annual decline was the fastest recorded in the past 16 months. Against the seasonal benchmark, total inventories came in 158.82 mb below the five-year average for June, a sizeable gap amounting to an 8.9% shortfall, emphasizing the cumulative tightening of the oil inventory landscape in the United States. While the SPR continues its slow replenishment and NGLs show strength, nearly all other oil inventory categories—especially distillates and heavy fuels—reflect accelerated drawdowns, falling below recent trends.

Crude oil inventories at the Cushing hub plummeted sharply in June 2025, reinforcing the perception of mounting tightness across the U.S. crude storage network. The month closed with Cushing stockpiles falling by 3.35 mb compared to May, marking a significant month-over-month contraction of 13.9%. This drawdown pushed total holdings at the hub to their lowest level in more than a decade — precisely, a 129-month low — underscoring the severity of the current depletion cycle. Notably, June’s rate of drawdown was the steepest month-over-month contraction observed at Cushing in the last 17 months, reflecting both the pace and depth of the ongoing erosion in on-site inventories. On a year-over-year basis, the declines appear even more striking. Compared to June 2024, inventories at Cushing were down by a massive 13.51 mb, representing a staggering 39.5% YoY collapse. This marks the eighth consecutive month of annual inventory declines at the facility, and it stands as the most accelerated yearly rate of decrease in the past 36 months. From a longer historical perspective, the situation becomes even more acute when benchmarked against seasonal norms. As of June 2025, Cushing inventories were 16.11 mb below the five-year average for the month — a deficit amounting to a 43.7% shortfall. This significant divergence from historical patterns is particularly notable given that June typically sits within a period of relatively balanced storage dynamics, positioned between the high-demand months of spring refinery maintenance and summer driving season peaks.

Floating oil inventories across the globe posted a modest month-on-month increase in June 2025, reversing part of the recent declining trend. Global offshore stockpiles rose by 2.56 mb, marking a 3.4% MoM uptick compared to May. This modest recovery, however, does little to offset the longer-term depletion of floating storage. Year-over-year, the global tally was still down by a substantial 10.84 mb, translating to a 12.3% YoY decline relative to June 2024. Against the five-year seasonal norm, the drawdown appears even more pronounced. Reported levels fell short of the five-year average for this month of a year by 38.18 mb, representing a steep 33.0% deficit. While the headline figure suggested a modest monthly rebound in June, the underlying regional dynamics revealed widespread and, in many cases, accelerating depletion. Most major storage hubs experienced sustained downward pressure, both sequentially and annually, with inventories falling well below long-term averages.

AC - Oil Market Report - Jul-2025.pdf

Download PDF • 1.57MB