n August 2025, the international crude oil market experienced a renewed downturn. After a brief rebound in July, WTI crude oil prices on the New York Mercantile Exchange (NYMEX) fell to $65 per barrel on August 5, marking a cumulative decline of 7.3% from July’s peak. Similarly, ICE Brent crude prices dropped more than 6.8%.
The July price rebound was driven by three main factors: support from geopolitical risk premiums, increased consumption during the U.S. summer travel season, and a decline in U.S. oil production.
However, with OPEC+ fully withdrawing voluntary production cuts, the introduction of high tariffs by the U.S. on major trading partners impacting economic growth, and the end of the U.S. summer travel season, the global crude oil market is again facing oversupply pressure. The outlook for oil prices in the near to medium term shows a clear downside risk.
Strong Rebound in Global Oil Supply Likely Irreversible
On August 3, 2025, OPEC+ decided via video conference to raise production by 548,000 barrels per day, effectively ending the large-scale production cuts originally planned for 2023, a year ahead of schedule. This increase will reverse the 2.2 million barrels per day of cuts collectively made by OPEC+ member countries in 2023, including the phased-in additional quota allocated to the United Arab Emirates.
The reason OPEC+ abandoned production cuts lies in a strategic shift from supporting oil prices to competing over market share. While voluntary cuts throughout 2023 and 2024 helped stabilize prices, they provided limited benefit to fiscal revenues. This was due to significant production and export increases in the U.S., Africa, and other regions, which intensified competition in the global oil market and eroded OPEC+’s market share.
According to OPEC’s July monthly report, OPEC+ output in June 2025 reached 34.69 million barrels per day, up 451,000 barrels per day from May but still slightly below the target of 34.81 million barrels per day. Of this increase, eight countries subject to voluntary cuts collectively raised production by 394,000 barrels per day in June, slightly below the targeted 411,000 barrels per day but a clear acceleration compared to May.
The International Energy Agency (IEA) notes that with the upward revision of OPEC+ production targets for August, global average oil supply in 2025 is expected to rise by 2.1 million barrels per day, reaching 105.1 million barrels per day. In 2026, supply could increase by a further 1.3 million barrels per day. Non-OPEC+ producers are also forecasted to boost output by 1.4 million barrels per day in 2025 and 940,000 barrels per day in 2026. This demonstrates that the global supply growth trend is unlikely to be reversed.
Oil Demand Growth Outlook Weakens
On the demand side, global economic activity is being restrained by tariff barriers, which are inhibiting growth in oil consumption. On July 31, 2025, the U.S. president signed an executive order imposing tariffs ranging from 10% to 41% on imports from dozens of economies, including major trade partners such as Canada and India. Since these countries failed to reach trade agreements by the August 1 deadline, trade tensions have intensified.
The International Monetary Fund’s (IMF) updated global economic outlook expects world GDP growth to slow from 3.3% last year to 3.0% in 2025 as a result of these U.S. trade policies. This deceleration will directly suppress energy demand growth.
The International Energy Agency’s July Oil Market Report projects that global oil demand growth will be just 700,000 barrels per day in 2025, the slowest pace since 2009. During the first quarter of 2025, demand actually rose by an average of 1.1 million barrels per day but sharply fell to only 550,000 barrels per day in the second quarter, with emerging markets notably weak.
Looking ahead to 2026, demand growth is expected to modestly recover to 720,000 barrels per day, pushing total consumption to approximately 104.4 million barrels per day; nevertheless, overall growth remains moderate.
Summary:
The international oil market currently faces dual pressures from OPEC+’s production increase and escalating global trade tensions. On the supply side, production is rising substantially; meanwhile, demand growth remains subdued.
Consequently, oil prices face continued downward stress. Strategically, the focus has shifted from price support toward market share battles, underscoring a complex supply-demand landscape.
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