Oil Market Report - September 2025

Arbat Capital
Sep 29
11 min read

In September 2025, crude oil markets traded in a tight range, with ICE Brent front-month future oscillating between $65–70 per barrel bbl and NYMEX WTI active contract swinging at a $61.5–66.5 range. The balance of the month reflected a tug of war: OPEC+ and non-OPEC supply growth (U.S., Brazil, Canada, Kurdistan resumption) and bearish EIA projections pulled prices down, while geopolitical disruptions (Russian refinery strikes, diesel export ban, U.S. inventory draws) provided a floor.

EXECUTIVE SUMMARY

In September 2025, crude oil markets traded in a tight range, with ICE Brent front-month future oscillating between $65–70 per barrel bbl and NYMEX WTI active contract swinging at a $61.5–66.5 range. The balance of the month reflected a tug of war: OPEC+ and non-OPEC supply growth (U.S., Brazil, Canada, Kurdistan resumption) and bearish EIA projections pulled prices down, while geopolitical disruptions (Russian refinery strikes, diesel export ban, U.S. inventory draws) provided a floor. The IEA projected 0.7 mbd demand growth in 2025–26 but warned of oversupply; OPEC was more bullish; EIA saw inventories building. Corporate strategy also entered the picture: BP pushed its “peak demand” call back to 2030 and sanctioned a major Gulf of Mexico project, signaling renewed upstream confidence. Throughout the first four weeks of September, the oil market exhibited a “smile” pattern: early September saw prices slide on OPEC+ supply plans and weak demand signals; mid-month stabilized on structural decline risk warnings; late September spiked on Russian disruptions before easing as Kurdistan exports resumed and further OPEC+ output hike chatter resurfaced. The net outcome was modest month-on-month loss but no breakout, with traders stuck between short-term oversupply and medium-term underinvestment/geopolitical risks. Market action was range-bound with volatility spikes, rather than trend moves, and this pattern is likely to persist into Q4. As of September 29, Brent traded at $66.9 (-0.8% MoM) and WTI at $63.3 (-1.1% MoM).

Brent and WTI head into October 2025 under renewed selling pressure after a late-month reversal erased much of September’s rally. From a technical standpoint, September now reads as a failed breakout attempt. Brent’s rejection just below $70 leaves a clear double-top formation, with $66.5–66.9 acting as pivotal near-term support; a break below would expose $65.5 (the September low). For WTI, the $66.4 peak on 26 September marks strong resistance, and the reversal toward $63.2 puts the $62.0–61.8 support zone back in play. Momentum has turned negative, and the late-month slide wiped out the bullish higher-high pattern that had been forming earlier in the month. For October, the outlook shifts more defensive. Base case (50% probability) is continued range trading but with a bearish bias: Brent between $65–69 and WTI between $61.5–65.5, with rallies toward $69/65 meeting selling pressure. Downside case (30% probability) is a decisive break of September lows, particularly if OPEC+ formally confirms another output hike and OECD demand data disappoint, which could take Brent toward $64–65 and WTI back into the low $61s. Upside case (20% probability) requires a major disruption escalation—further Russian outages or Middle East risk—to break Brent above $70 and WTI above $66.5.

According to the International Energy Agency, global oil supply inched up in August 2025 to a record 106.9 mbd as OPEC+ continued unwinding output cuts and non-OPEC+ supply hovered near all-time highs. Non-OPEC+ oil supply growth continues apace, with output from the United States, Brazil, Canada, Guyana and Argentina at or near all-time highs. Non-OPEC+ producers are now on track to boost production by 1.4 mbd in 2025 and by just over 1 mbd next year. OPEC+ is currently expected to add 1.3 mbd in 2025 and 1 mbd next year, on a par with non-OPEC+. Taking these parts together, world oil production is now projected by the IEA to rise by 2.7 mbd to 105.8 mbd this year and 2.1 mbd to 107.9 mbd next year.

Along with the IEA, the U.S. Energy Information Administration (EIA) reported that global oil production surged in August to a fresh historic high, marking the culmination of four consecutive months of steady growth. The total world oil output rose by 1.17 mbd from July to 106.7 mbd, equating to a 1.1% MoM increase. This robust expansion continued a longer-term uptrend as well, with year-over-year production growing by 3.90 mbd, translating to a 3.8% YoY gain compared to August 2024. The persistent upward trajectory has now extended for eleven straight months on an annual basis. Importantly, the current global production level also stands 8.17 mbd above the five-year seasonal average, representing an 8.3% deviation above trend, highlighting the exceptional momentum underpinning supply-side dynamics in recent quarters. The gains were broadly based, with both OPEC and non-OPEC contributors ramping up production, though non-OPEC countries, particularly in the NGL segment, exhibited a sharper trajectory of growth.

OPEC crude oil supply surged in August 2025, climbing by 405 kbd from the prior month—a robust month-on-month expansion of 1.5%, according to cartel’s own data. This increase marked the highest production level in over two years, specifically in the past 26 months. August's gain also extended a sustained four-month streak of monthly growth, underlining the bloc’s consistent production momentum due to unwinding of earlier output cuts. Notably, this was the sharpest monthly uptick observed in the last 10 months, a reflection of increasing output from key producers within the group. The annual figures paint an even more compelling picture. Compared to August 2024, OPEC total crude production was up by a striking 1.36 mbd, implying a year-on-year rise of 5.1%. This continuation of a nine-month-long upward annual trend confirms structural shifts in output strategy among member states. More significantly, the August data represents the fastest annual expansion recorded in 34 months. Against the five-year seasonal norm for August, output was higher by 1.01 mbd, equivalent to a 3.8% increase—pointing to a notable divergence from recent historical baselines.

On September 7, OPEC+ agreed to start gradually unwinding its second tranche of “additional voluntary” cuts of 1.65 mbd made by eight core members in April 2023. The Group plans to raise its output target by 137 kbd in October. If continued at this pace, lifting the full 1.65 mbd tranche of cuts would take 12 months, leaving the 22-member alliance with 2 mbd of supply cuts still in place. The actual supply boost in October will be less than the target increase, as Iraq, the UAE, Kuwait and Kazakhstan already pump 1.1 mbd above their quotas, while others, including Russia, are bumping up against capacity constraints. As of September, OPEC+ will have ramped up actual crude output by 1.5 mbd since 1Q25, well below the announced target of 2.5 mbd. The biggest increase has come from Saudi Arabia and other core Middle Eastern producers. However, tanker tracking data indicate that the majority of the additional volumes have been absorbed by regional refinery activity and power generation use rather than exported out of the region.

Non-OPEC total oil production surged to a new historic peak in August 2025, marking a significant milestone in the global energy landscape. According to the EIA’s data, total supply from producers outside the OPEC bloc expanded by 970 kbd compared to the previous month—a robust 1.3% MoM increase, representing the fastest monthly acceleration in the past 18 months. August was the fifth consecutive month of sequential growth, reaffirming a clear short-term expansionary trend in oil supply from non-OPEC countries. In annual terms, the increase was even more pronounced. Non-OPEC total output rose by 2.21 mbd year-on-year, reflecting a 3.1% growth compared to August 2024. This marks the eighth straight month of annual gains and the sharpest yearly increase in nearly two years, specifically since late 2023. The August figure also significantly overshot historical baselines: it exceeded the five-year average for this month by a formidable 5.78 mbd, translating to an 8.6% gain, a testament to the rapid scaling of production capabilities and efficiency among non-OPEC nations. The recent month’s data depict a non-OPEC oil supply landscape firing on all cylinders. The breadth of monthly and annual growth across all producing regions—ranging from the Americas to the CIS, and from Europe to Asia-Pacific—signals a coordinated and resilient expansion in upstream activity.

August 2025 marked a defining month for the United States oil sector, as total oil output climbed sharply to reach its new highest level of 23.63 mbd on records. In monthly terms, production rose by an impressive 413 kbd, reflecting a robust 1.8% increase from July’s figures. This marks the second consecutive monthly growth and notably, the fastest month-over-month acceleration seen in the past half-year. The year-over-year data paints an equally bullish picture. Compared with August 2024, U.S. total oil output expanded by 891 kbd, registering a 3.9% annual gain. This continued a nearly year-long upward trajectory in year-on-year growth, with August extending the positive streak to eleven consecutive months. Importantly, this pace of yearly growth is the swiftest observed in any of the past six months, signaling strong momentum in the sector. When benchmarked against the five-year seasonal average, August 2025 output stood out dramatically — exceeding the historical norm by 3.10 mbd, a substantial 15.1% margin. The month was characterized by vigorous expansion in NGLs and steady growth in crude oil, both of which outweighed the declines seen in renewables and the minor moderation in processing gains.

The shale oil production in the United States displayed steady, albeit markedly slower growth. Shale supply in August increased by a tiny 4 kbd, effectively rounding to a 0.0% monthly change. Technically, this marginal gain extended a three-month positive trend and pushed shale oil volumes to their new highest level in history. Nevertheless, the month’s growth rate was the slowest seen in the last three months, indicating a potential plateauing of short-term output gains. Year-over-year, shale oil painted a considerably more dynamic picture. Supply from this segment surged by 249 kbd, marking a 2.4% annual rise. August thus became the 52^nd consecutive month of year-on-year growth in the shale patch, a remarkable four-year streak. That said, the annual growth rate in August was the slowest of the past three months, hinting at a possible moderation in expansion despite the sustained uptrend. Relative to historical patterns, shale production remained firmly ahead of long-term averages. August output exceeded the five-year seasonal mean by 1.40 mbd, translating to a 15.4% increase — further reinforcing shale’s role as the primary growth engine of the U.S. crude portfolio.

The International Energy Agency revised up its projection of world oil demand growth in 2025 marginally by 40 kbd relative to the last month forecast and now expects it to increase by 740 kbd, with resilient deliveries in advanced economies contrasting with relatively muted consumption in emerging economies. OECD oil demand growth of 80 kbd year-over-year in 1H25 has exceeded expectations, supported by lower oil prices, but is forecast to move into contraction in the remainder of the year, leaving 2025 annual oil use broadly flat. According to the agency, oil demand typically declines by around 1 mbd from its summer peak through to the end of the year, while refinery activity slumps by 3.5 mbd from August to October.

The U.S. Energy Information Administration reported that global oil consumption in August 2025 edged higher on a monthly basis, with world demand rising by 0.23 mbd, a 0.2% month-on-month gain. That modest sequential increase nonetheless placed the August reading at the highest level in the last 6 months. On a year-over-year basis, the overall demand for oil around the world expanded by 1.47 mbd, up 1.4% from the same month a year earlier, extending an upward run that has now persisted for 15 months. August also marked the fastest year-on-year growth in 7 months, underscoring that the pace of annual expansion quickened compared with recent prints. Against its seasonal benchmark, the August global figure stood well above history. Relative to the 5-year average for this month, world demand was higher by 5.15 mbd, a 5.2% increase.

Global observed oil inventories rose for the sixth consecutive month in July 2025, according to the data, provided by the International Energy Agency. The 26.5 mb increase in July puts the cumulative growth since the start of the year at 187 mb. Chinese crude stocks rose by 64 mb over the same period, and by 106 mb from February to August, helping absorb the overhang. OECD commercial oil stocks were up by 6.9 mb, in line with the seasonal trend. According to preliminary data for August, global oil stocks were largely unchanged as lower oil on water was offset by OECD builds. Global oil stocks are forecast to rise by an untenable 2.5 mbd on average in 2H25 as supply far outstrips demand, but there are a number of potential twists and turns ahead, including geopolitical tensions, trade policies and additional sanctions on Russia and Iran, that could yet alter market balances.

Detailed statistics on June 2025 confirmed IEA’s earlier estimates that commercial oil inventories across OECD registered a notable contraction within the month, both on a monthly and annual basis, underscoring a tightening trend in global stockpiles. The total stocks declined by 2.4 million metric tons compared to May, marking a 0.5% MoM drop. This drawdown drove inventories to their lowest level in half a year and signaled the sharpest month-over-month decline observed in the last eight months. On a year-on-year basis, the contraction was even more pronounced. Total OECD oil stocks dropped by 7.9 million tons relative to June 2024 — a 1.7% YoY decrease — reinforcing a downward trend that has now extended for three consecutive months. This annual rate of decline was the steepest recorded in over 16 months. Relative to the five-year seasonal norm for June, inventories were down a considerable 38.6 million tons, representing a 7.6% deficit.

Total U.S. oil inventories posted a noticeable upswing in August 2025, marking a significant moment in the domestic energy landscape. The stockpiles climbed by 14.53 mb over the month, a 0.9% increase from May, bringing the cumulative level to its highest reading in over three years — specifically, the highest in 37 months. This second consecutive month of gains further cemented the short-term upward trajectory in inventory accumulation. On a year-over-year basis, the total stockpiles rose by 28.43 mb, or 1.7% YoY, which also marked the fastest annual expansion seen in half a year. However, despite these headline increases, total inventories remain materially below historical norms: the reported volume lagged the five-year seasonal average by a substantial 95.09 mb, equating to a 5.4% deficit. Despite a notable monthly build in the overall stocks, the month presented more complex inventory dynamics. While SPR and commercial upstream categories posted notable increases, commercial refined products experienced widespread declines, most of which extended across multiple months and were sharper than usual.

Cushing crude inventories in August 2025 rose by 1.67 mb from July, equating to a 7.4% month-on-month increase. That single-month gain lifted the hub’s crude stocks to their highest level in the last 4 months, marking a notable inflection within the summer storage profile. The sequential rise was not a one-off. August extended an upward trend for 2 months. Year-on-year, the picture remains softer. Versus August 2024, Cushing holdings were down by 2.17 mb, an 8.2% YoY decline. That negative comparison keeps intact a downward annual trend that has persisted for 10 months, although the speed of contraction eased with the August print being the slowest annual rate of decline over this 10-month period. Relative to the five-year average for August, reported stocks sat 9.35 mb lower, a 27.8% drop. This shortfall to the 5-year benchmark situates current levels firmly below typical late-summer balances, despite the latest monthly build.

Global floating oil inventories recorded a sharp contraction in August 2025, marking a turning point in what had been a tentative upward movement over the previous two months. Total worldwide offshore oil stocks dropped by 26.61 million barrels (mb) compared to July, according to the data provided by cargo-tracking company Vortexa Ltd., representing a steep month-on-month plunge of 28.3%. This cut brought global inventories to their lowest level in five months, and the velocity of the drawdown was the fastest seen in over six years — specifically, the most significant monthly drop in the last 82 months. On an annual basis, global stockpiles rose by 5.29 mb compared to August 2024, translating to an 8.5% YoY increase. Despite this year-on-year rise, the reported level remains considerably below longer-term norms. In fact, when measured against the five-year seasonal average for August, global offshore inventories were lower by 25.39 mb, or -27.3%, highlighting a structural tightening of floating storage capacity.