Global oil trends are realigning as rising production outpaces moderating demand. The International Energy Agency projects a modest increase of 700 kb/d in 2025 and 720 kb/d in 2026, while output—mainly from Organization of the Petroleum Exporting Countries (OPEC)—continues to rise. Refinery activity is picking up, even as Brent crude prices dropped from US$ 79.27 in January to US$ 71.04 in July. OPEC+ is winding down its 2023 voluntary cuts, with a planned output hike of 547,000 bpd in September.
Oil imports in Asia, the leading crude oil import market, declined sharply to 25.0 million barrels per day (bpd) in July 2025, down from 27.88 million bpd in June—marking the lowest monthly level since July 2024. The geopolitical tensions and Trump’s sanction threats on Russian oil buyers, particularly affecting India, are further clouding market outlooks.
As energy transitions progress, the pace of global oil demand growth is expected to decline in the coming years. At the same time, rising global oil output will help alleviate market pressures, pushing spare capacity to heights last observed during the Covid-19 period.
World oil demand, according to Oil Market Report – July 2025 by International Energy Agency (IEA), is expected to grow by 700 kb/d in 2025, marking the slowest annual increase since 2009, apart from the 2020 Covid downturn. Demand growth slowed from 1.1 million barrels per day (mb/d) in the first quarter to just 550 kb/d in the second quarter, with emerging markets showing subdued consumption. For 2026, global demand is projected to increase by 720 kb/d, reaching 104.4 mb/d.
Source: IEA Oil Market Report (OMR)
In June, global oil supply had surged by 950 kb/d month-on-month, reaching 105.6 million barrels per day (mb/d), with Saudi Arabia leading the increase. Year-on-year, output rose by 2.9 mb/d, of which 1.9 mb/d came from OPEC+. As per the report, with OPEC+ raising its production targets for August, global oil supply is expected to grow by 2.1 million barrels per day (mb/d) in 2025, reaching 105.1 mb/d, followed by a further increase of 1.3 mb/d in 2026. Non-OPEC+ producers are expected to contribute 1.4 mb/d of the growth in 2025 and 940,000 bpd in 2026.
The OPEC+ group comprises major oil-producing nations: Russia, Saudi Arabia, Algeria, Iraq, Kazakhstan, Kuwait, Oman, and United Arab Emirates.
The report further noted that global refinery runs grew by 1.7 million barrels per day (mb/d) in June and are expected to increase by another 2 mb/d through July and August, reaching a seasonal high of 85.4 mb/d. In 2025 and 2026, runs are forecast to grow by 500 kb/d and 460 kb/d, averaging 83.3 mb/d and 83.8 mb/d, respectively. The refining margins dipped in June as crude prices surged but recovered to multi-month highs in early July, supported by stronger diesel crack spreads.
Amid escalating geopolitical tensions, the global oil market appears to be increasingly oversupplied.
Recently, the OPEC+ has decided to boost oil production by 547,000 barrels per day in September, citing improved global economic conditions and steady market fundamentals. The alliance reiterated its flexible approach, stating that the pace of unwinding voluntary supply cuts could be paused or reversed depending on how market dynamics evolve. This move completes the phased rollback of 2.2 million bpd in voluntary cuts introduced by eight OPEC+ members in 2023 to stabilize prices during a period of economic uncertainty.
Earlier, the group had implemented gradual monthly increases of 138,000 bpd in April and subsequently adding 411,000 bpd each in May, June, and July, followed by a larger 548,000 bpd increase for August.
Source: Media reports
With the September adjustment, the crude output will rise as:
- Saudi Arabia: 9.97 million bpd,
- Russia: 9.44 million bpd
- Iraq: 4.22 million bpd
- UAE: 3.37 million bpd
- Kuwait: 2.54 million bpd
- Kazakhstan: 1.55 million bpd
- Algeria: 959,000 bpd
- Oman: 801,000 bpd
OPEC+ will continue reviewing market developments through monthly meetings, with the next one scheduled for September 7.
Notably, this year, the Crude price declined from US$ 79.27 per barrel in January to US$ 71.04 per barrel in July.
Source: Statista.com
Long Forecast predicts that during the month of August, the price could peak at US$72.55 and bottom out at US$59.21, with an average price around US$67.30. By the end of August, prices are expected to decline to US$64.88, reflecting a 10.6% drop over the month. For September, Brent is expected to begin at US$64.88 per barrel. Prices may rise to a high of US$70.25 and fall to a low of US$59.08, with an average monthly price of US$64.10. The month is projected to close at US$62.19, indicating a 4.1% decrease from the beginning of the month.
US tariff threat looms over leading Asian oil importers
The leading five importers of crude oil in 2024 were- China, the United States, India, South Korea, and Japan. Together, these nations accounted for more than 60.5% of global spending on imported crude petroleum in that year. By region, Asia dominated the crude oil import market, spending US$757.9 billion—or 57.3% of the global total—on oil purchases. Europe followed with 25.7%, while North America accounted for 14.3% of global crude import expenditures.
However, as per the LSEG Oil Research, oil imports by Asia fell to 25.0 million barrels per day (bpd) in July 2025, a significant drop from 27.88 million bpd in June, and the lowest monthly total since July 2024.
Despite the regional decline, China — the world’s largest crude importer — has been ramping up purchases. This increase is attributed primarily to lower crude prices at the time of contracting June and July deliveries. Additionally, China has likely been rapidly stockpiling crude. Even though it does not officially report inventory levels, an analysis of the supply-demand gap shows a surplus of 1.06 million bpd in the first half of 2025, indicating significant reserves being built.
On the other hand, the OPEC+ alliance has been increasing oil production, taking advantage of a period marked by geopolitical tensions, notably the brief conflict between Israel and Iran in June, which was later joined by the United States. This event triggered a temporary spike in crude prices, pushing Brent futures to a six-month high of US$81.40 per barrel on June 23. However, prices have since retreated, falling back to around US$70, with a recent low of US$69.35 observed in Asian trading.
Apart from regional tensions, U.S. President Donald Trump’s threats of sweeping sanctions on buyers of Russian crude—unless Russia agrees to a ceasefire in its war with Ukraine—have also influenced market sentiment. Although President Trump’s policy unpredictability makes the outcome uncertain, even partial enforcement of sanctions could significantly impact crude oil flows, particularly for India, which is more vulnerable than China.
India and China are the only major buyers of Russian crude, with India importing 2.1 million bpd in June, the second-highest monthly total after May 2023, as per Kpler data. Russian oil accounts for about 40% of India’s crude imports, and a sudden withdrawal would disrupt supply chains. Although countries in the Middle East, Africa, and the Americas could potentially step in, the shift would likely tighten global supply and support higher prices.
As the oil market remains volatile, OPEC+ continues to gradually restore production, aiming to regain market share during this period of flux. However, the durability of this strategy is uncertain, especially if global demand weakens in the second half of 2025 due to trade tensions and slowing economic growth triggered by a possible escalation in Trump’s trade war.
Conclusion
The global oil market is entering a period of heightened uncertainty, marked by slowing demand growth, rising supply, and geopolitical tensions. While OPEC+ is reclaiming market share through phased production increases, falling prices and surplus conditions challenge long-term stability. As geopolitical tensions persist, future market stability will hinge on demand recovery, trade policy shifts, and coordinated producer responses.
