Tight Oil Market Shrugs Off Supply Surge
Crude oil markets have turned out to be tighter than most analysts appeared to expect, and are ready to absorb OPEC+’s higher-than-forecast supply boost next month. For proof, look no further than oil prices after the latest OPEC+ announcement that took traders and analysts by surprise. On Monday, after OPEC+ said it would add more than half a million barrels daily to its combined output, Brent crude was trading at around $68 per barrel. Later in the week, it spiked to over $70 per barrel before retreating to end the week with a modest gain. By all accounts, oil prices should have fallen after OPEC+ said it would be returning more barrels to the market. Yet they did not. They rose, revealing, once again, a divorce between market perceptions and physical realities. “You can see that even with the increase in several months, we haven’t seen a major buildup in the inventories, which means the market needed those barrels,” said the energy minister of the United Arab Emirates, Suhail al Mazrouei, on Wednesday during OPEC’s seminar in Vienna, as quoted by Bloomberg. Indeed, global oil inventories are not exactly bursting at the seams, according to none other than the International Energy Agency. In its June oil market report, the IEA said that while non-OECD crude oil inventories had gained earlier in the year, inventories in the OECD were 97 million barrels below their level from the same time last year, driving total global inventories down. There is also the matter of demand, which is currently in its peak season in the northern hemisphere—and there is a risk of fuel shortages. More specifically, the market could swing into a diesel shortage, the Wall Street Journal reported this week, citing analysts. The reason for the shortage, to be fair, is not so much crude oil prices but low refining margins. Yet it has to do with demand, which so many presumably reputable sources insist is weakening. “Because of those run cuts, we started this year with not enough diesel in storage, and saw increased demand because of the cold winter,” Sparta Commodities analyst James Noel-Beswick told the WSJ, referring to refiners’ decisions to reduce run rates in response to the lower refining margins in late 2024. “I think they’re going to be a little bit behind the curve, and there’s some catching up to do,” Dennis Kissler, BOK Financial senior vice president of trading, told the publication. When inventories recover, “I think it’s going to be at higher prices.” It seems, then, that OPEC is not just talking up its own book when it says oil markets are tight. If the OECD inventory situation is not proof enough, U.S. inventories at Cushing, Oklahoma, are at the lowest in 11 years, per Bloomberg, and U.S. diesel inventories are a solid 23% below the five-year average for this time of the year. The tightness of oil supply globally was highlighted on several occasions earlier in the year as well, with the flare-ups in Middle Eastern violence. Each flare-up automatically led to spikes in prices even though no oil fields or infrastructure have been targeted by any party involved. Had the market been as oversupplied as many claimed, only a direct missile hit on an oil field would have led to price spikes, although some noted that the oil price spike would have been more pronounced had the market been tighter. Still, many commodity analysts are holding on to the view of a potential surplus later in the year. That is at least some change from earlier forecasts that said the market was already oversupplied and OPEC+ was only going to make a bad supply situation worse. Now, forecasts are being revised in recognition of physical realities, but still expect a surplus. ING commodity analysts, for instance, wrote this week that OPEC’s supply boost was expected, reiterated its prediction that it would agree to one more boost for September, and then take a break. “These increases should move the global market into a large surplus in the fourth quarter, intensifying downward pressure on prices. For now, though, the market remains relatively tight through the northern hemisphere summer,” Warren Patterson and Ewa Manthey wrote. OPEC, meanwhile, revised its demand outlook for oil, lowering the 2026 projection to 106.3 million barrels daily from 108 million bpd that it exapected last year. The reason: slowing Chinese demand growth. That would be the same slowing demand growth that every analyst has been noting as a driver of demand weakening and eventual destruction. “Right now, if you look out the window, the market is pretty tight,” Rapidan Energy Group’s Bob McNally told Bloomberg, adding that the balance between demand and supply would begin changing after peak demand season ends—which will coincide with the end of OPEC+’s unwinding of production cuts.
U.S. and Brazil Become Key Oil Suppliers to India
India has sharply increased its crude oil imports from the United States and Brazil in the first half of 2025, marking a strategic deepening of ties with non-OPEC suppliers amid heightened global volatility and supply risk recalibrations. According to new data from S&P Global Commodity Insights cited by Indian media outlets, US crude shipments to India rose 51% year-on-year to 271,000 barrels per day between January and June, up from 180,000 bpd a year earlier. Imports from Brazil surged 80% to 73,000 bpd, compared to 41,000 bpd during the same period in 2024. These were the highest growth rates across India’s import portfolio, underscoring a decisive pivot toward Western Hemisphere barrels. The increase follows multiple converging developments. India’s state-run refiners have sought to insulate procurement from OPEC+ volatility and disruptions in the Middle East. Reduced Chinese liftings of US crude opened spot-market opportunities, while freight rates from the Atlantic Basin fell, improving arbitrage economics. Diplomatic engagement also played a role. Petroleum Minister Hardeep Singh Puri met with Brazilian energy officials earlier this year, and Prime Minister Narendra Modi’s Washington visit in April included energy cooperation as a key agenda item. Russia retained its top position with 1.67 million bpd in H1 2025, though growth plateaued. Iraqi and Saudi volumes declined marginally, while Nigerian shipments rose 26% to 158,000 bpd. India doubled US crude liftings in Q1 partly as a signal to US policymakers amid trade pressures. Broader tariff negotiations are still underway. A temporary 90-day suspension on select US-India duties enacted in April is set to expire in August, and energy trade is now a central bargaining chip as talks enter a sensitive phase.
PNGRB wants GST on CNG vehicles to be lowered, no excise on CBG
From pegging Goods and Services Tax rate on a par with that on electric vehicles to waiving excise duty on compression of natural gas and on the compressed biogas component in the fuel, India’s Petroleum and Natural Gas Regulatory Board (PNGRB) wants for a clutch of changes to accelerate compressed natural gas (CNG) vehicle usage. It also wants maintaining a delta between CNG and petrol prices to keep the interest in the former going, primarily by tweaking excise duty rates. Reduction in allocation of CNG at administered prices or under the APM remains a concern and could upset the calculations, a document prepared by the oil regulator earlier but made public now showed. Listing the policy interventions required, PNGRB said the transport segment will be a key driver to push up the share of natural gas in India’s energy mix to 15% by 2030 from the existing around 6%. Towards this, it wanted GST on CNG vehicles to be reduced, from 28% to the 5% that levied on EVs. On changes to excise duty, the regulator said compression of natural gas, which is undertaken to fill more fuel in the tank and consequently increase vehicle range, is considered as deemed manufacturing. No excise duty would translate into lower CNG prices for consumers and consequent benefits to the environment from use of the eco-friendly fuel. Also with APM allocation headed towards zero in future, reduction in excise duty is necessary to keep CNG competitive compared to other alternate fuels. Full excise duty waiver will have an immediate impact of ₹65-70 billion a year for the exchequer, but bring multiple benefits, including reduction in healthcare costs. On CBG blending, the regulator said the additional excise and VAT that CBG attracts impacts the final price of CNG.
Saudi Oil Exports to China Set to Hit Two-Year High in August
Crude oil exports from Saudi Arabia to China are seen reaching the highest level in two years in August, Reuters reported today, citing half a dozen unnamed trade sources. The daily average, according to refiner allocation data seen by the publication, stands at 1.56 million barrels, for a total monthly volume of 51 million barrels. That’s despite the Saudis’ recent price hike for Asian buyers of their crude in August. Asian buyers will have to pay between $0.90 and $1.30 more per barrel of Saudi crude next month, while buyers in North America will enjoy the most modest price hike, by between $0.20 and $0.40 per barrel. The August average is just shy of the 1.57 million barrels daily in average Saudi oil exports to China for 2024. That number, in turn, was a sharp drop from the 2023 average, which stood at 1.72 million bpd. It was also an increase on July, when Saudi oil exports to China were estimated at a total of 47 million barrels, down from some 48 million barrels shipped in June. Appetite for Middle Eastern crude jumped among Asian buyers following the Israeli-Iran conflict from June, which pushed spot price premiums higher, making buyers bet more heavily on term deliveries from Middle Eastern producers, whose official selling prices became more attractive than spot market ones. China is a critical market for Saudi Arabia but it is just as critical for Russia and Iran, Saudi Arabia’s fellow OPEC+ members that have become the largest suppliers of crude to Chinese refiners, mostly thanks to the discount prices they are offering and the flexible terms. Russia and Iran supply oil mostly to independent refiners—the so-called teapots—while Saudi Arabia supplies state-owned refiners CNPC and Sinopec. Now, however, OPEC itself expects oil demand growth to weaken globally on the back of weakening in China, meaning the competition among oil exporters will likely intensify—unless the weaker demand forecast fails to materialize.
Oil Prices Set to End the Week Flat Amid Conflicting Signals
Crude oil prices recouped some of the losses they booked on Thursday today but looked set to end the week with little change, amid tariff worries, OPEC+’s decision to boost supply, and a threat of a diesel shortage in key markets, and the prospect of fresh U.S. sanctions on Russian energy. At the time of writing, Brent crude was trading at $69.16 per barrel, with West Texas Intermediate at $67.16 per barrel, both slightly up from opening, after they shed about 2% on Thursday, pressured by the latest tariff announcements from the White House. Earlier this week, President Trump declared he would impose a 50% tariff on imports from Brazil, saying President Lula da Silva’s government was mistreating former president Jair Bolsonaro, who is on trial on allegations of a coup against Lula da Silva. In a social media post, Trump said the tariffs were imposed in response “in part to Brazil’s insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans.” Lula da Silva has threatened reciprocal measures in response to the tariffs, after earlier in the week he referred to Trump as an “emperor” that the world does not need. The reference came in response to a media question about Trump’s threat to impose additional tariffs on all BRICS members if they engaged in what he called anti-American policies. On Thursday, Trump deepened tariff anxiety on markets by announcing a 35% tariff on imports from Canada, starting from next month. He added that the rest of the United States’ trade partners would be hit with blanket tariffs of between 15% and 20%. Meanwhile, OPEC revised down its oil demand forecast for next year, now seeing the total at 106.3 million bpd, down from 108 million barrels daily forecast earlier. The group attributed the revision to slowing demand growth in China. Meanwhile, the European Union, which is in the process of preparing yet another sanction package against Russia, is discussing the option of a “floating” price cap for Russian crude in light of volatile oil prices.
GAIL pipeline tariffs may see a 20% increase: Exclusive
India’s state-owned natural gas major, GAIL (India) Ltd., is poised for a significant boost in its pipeline tariffs, with sources indicating a potential increase of nearly 20%. The Petroleum and Natural Gas Regulatory Board (PNGRB) is expected to approve a revised tariff in the range of ₹70 per mmBtu, up from the current rate of ₹58.59 per mmBtu. According to exclusive information, the tariff order could be finalized within the next one to two months. AK Tiwari, the PNGRB board member who spoke to CNBC-TV18 on Tuesday, stated that the board would adopt a “balanced approach” and give due consideration to GAIL’s official submissions. GAIL has submitted a proposal for a tariff of ₹78 per mmBtu but has signaled to CNBC-TV18 that a revision of ₹70 – ₹71 per mmBtu would still be viewed as a positive outcome.
Petroleum ministry invites suggestions on draft PNG rules
Union minister of petroleum and natural gas Hardeep Singh Puri urged industry leaders, experts, and citizens to share their feedback on the Draft Petroleum & Natural Gas Rules, the revised Model Revenue Sharing Contract (MRSC), and the updated Petroleum Lease format by July 17, 2025. “We are bringing in a series of pathbreaking policy reforms to promote exploration and production,” said Puri. These reforms, including the Draft Petroleum & Natural Gas Rules, 2025, will significantly enhance the ease of doing business for our E&P (exploration and production) operators, Puri added. The consultation process for the draft rules will culminate at Urja Varta 2025 scheduled at Bharat Mandapam, New Delhi on July 17. The Draft Petroleum & Natural Gas Rules, 2025, aim to modernise India’s upstream oil and gas framework with several major reforms.
Top Indian Refiner Sees Oil Prices Stabilizing in the $65-70 Range
State-owned Indian Oil Corporation, the biggest refiner in India, expects international crude oil prices to stabilize in the $65 to $70 per barrel range for the rest of the fiscal year, with potential dips below $65 a barrel, IndianOil chairman AS Sahney told the NDTV Profit outlet on Monday. “There is still some room for it to go downwards. What I see is very much near to $65, plus or minus one or two dollars, is the right place where we will be comfortable,” Sahney told NDTV Profit. The market is oversupplied today and there is also a view that “there is much more supply which is still expected to come,” the executive added. The current oil price, with Brent Crude in the high $60s per barrel, is the “right place” for crude prices, according to Sahney. Indian Oil’s view on oil prices is echoed by many analysts, who don’t see much room for oil topping $70 per barrel for a sustained period of time in view of OPEC+ aggressively unwinding the oil production cuts and uncertain macroeconomic and trade developments in the near term. The strong and unique price advantage of discounted Russian crude has diminished for India compared to other crude grades now that the international benchmark prices are in the $65 to $70 a barrel range, the executive told NDTV Profit. The share of IndianOil’s imports from Russia at 20-24% of all crude purchases is lower than the average for India, which is up to 35% now, IndianOil’s chairman noted. “We are more open to crudes from newer sources also because that gives me a better energy security paradigm,” Sahney said. Once spending on refinery expansions is completed, IndianOil will invest in petrochemicals capacities as it has the cost advantage of using naphtha and natural gas from its refinery outputs as feedstock, according to the executive.
LNG Boom Hits a Snag in Louisiana’s Crowded Waterways
As U.S. LNG exporters expand plants and propose new facilities along the Texas and Louisiana coasts, an unlikely domestic bottleneck could delay capacity expansions and growth in America’s LNG exports. Crowded waterways along the Louisiana coast, where many new projects will be located, could create constraints to shipping LNG cargoes out of the U.S. Gulf Coast, potentially undermining the Trump Administration’s strong support for boosting LNG exports. Six LNG export projects in total are either operational or proposed along or near the Calcasieu Ship Channel, a waterway that connects the city of Lake Charles, Louisiana, with the Gulf of Mexico. One LNG exporter, Venture Global, has an operational plant, Calcasieu Pass, on the east bank of the waterway, and plans another project, CP2 just north of it. On the west bank of the waterway, directly across Venture Global’s facilities will be another proposed export plant, Commonwealth LNG. North of these projects is the Sempra Infrastructure-led operational Cameron LNG, 18 miles north of the Gulf of Mexico on the Calcasieu Ship Channel. Woodside’s proposed Louisiana LNG and Energy Transfer’s Lake Charles LNG projects are planned not too far north of Cameron LNG. The waterway is becoming crowded and has already raised concerns among operators about how they would share and prioritize access and shipping along the channel to the Gulf. Venture Global has called on the Federal Energy Regulatory Commission (FERC) in a letter to review the proposed waterway suitability assessment of the Commonwealth LNG project. The FERC “should ensure that the construction and planned operations of Commonwealth do not adversely impact existing LNG export terminals like Calcasieu Pass or other facilities utilizing the same or overlapping waterways,” Venture Global said in the letter carried by Bloomberg. Venture Global expressed concerns about vessel traffic and what would happen if the channel needs to be closed to allow vessels to and from the Commonwealth LNG project. Representatives for Commonwealth LNG told Bloomberg that its waterway suitability assessment and its Coast Guard letter of recommendations “comply with all applicable regulations.” No changes to the waterway suitability assessment are required, the company behind the project added. Commonwealth LNG targets a final investment decision (FID) in the third quarter of this year and production start-up in the first quarter of 2029. Yet, bottlenecks on the Calcasieu Ship Channel, with several projects competing for access and cargo shipping lanes, could constrain U.S. LNG exports later this decade if all projects begin commercial operations as planned. Supply from America is growing with the start-up of Venture Global’s second facility, Plaquemines LNG, in Louisiana, and the commissioning of Cheniere’s Corpus Christi Stage 3 project. Both Plaquemines LNG and Corpus Christi Stage 3 achieved first gas in late December 2024 and are ramping up operations and exports throughout this year. LNG exports from the United States have increased every year since 2016, rising from 0.5 billion cubic feet per day (Bcf/d) in 2016 to 11.9 Bcf/d in 2024, making the United States the world’s largest LNG exporter in both 2023 and 2024. U.S. LNG gross exports are expected to further increase by 19% to 14.2 Bcf/d in 2025, and by 15% to 16.4 Bcf/d in 2026, according to estimates from the U.S. Energy Information Administration (EIA). Developers of U.S. LNG export projects have started taking final investment decisions on new facilities this year, with several plants expected to add in 2025 to Woodside’s Louisiana LNG approval, despite rising construction costs due to President Trump’s steel and aluminum tariffs. Developers of at least seven U.S. LNG projects have recently said that they are targeting FID on these this year. If these projects go ahead, they could triple U.S. LNG export capacity by the end of the decade, adding to projects already under construction after FIDs taken in previous years.
Goldman Sachs Expects Another OPEC+ Superhike in September
The OPEC+ producers are expected in August to agree on another superhike in production for September that would complete the unwinding of the 2.2 million barrels per day (bpd) output cuts, Goldman Sachs said after the alliance surprised the market with a larger-than-forecast boost for August. The OPEC+ group is set to unwind the last 550,000 bpd of the 2.2-million-bpd cut in September, the investment bank said in a weekend note. On Saturday, the eight OPEC+ producers withholding supply to the market decided to ramp up oil production more aggressively than anticipated in August. At the virtual meeting Saturday, the eight core members led by Saudi Arabia agreed to add 548,000 bpd to global supply—exceeding earlier expectations of a 411,000 bpd hike. The move sets the bloc on track to fully unwind 2.2 million bpd of prior cuts nearly a year ahead of schedule. “Saturday’s announcement to accelerate supply hikes increases our confidence that the shift, which we started flagging last summer, to a more long-run equilibrium focused on normalizing spare capacity and market share, supporting internal cohesion, and strategically disciplining US shale supply, is continuing,” Goldman Sachs analysts wrote in a note carried by Reuters. Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman cited “current healthy oil market fundamentals and steady global economic outlook”, as well as “low oil inventories”, for their decision to boost August production by more than previously expected. The decision reflects short-term bullish fundamentals for this summer. The superhike also reaffirms OPEC’s major pivot from defending oil prices to boosting output and market share for producers such as Saudi Arabia that have stuck to their quotas, and punishing producers that have overproduced and now have to forego most of their share of the production hike. Of these overproducers, Iraq and Russia appear to be trying to fall in line, but Kazakhstan continues to defy OPEC+ and pumps hundreds of thousands of barrels per day above its output ceiling, citing its inability to force foreign oil majors to cut production from new projects. The actual production increase from OPEC+ will be lower than the headline figure suggests, due to compensations for previous overproduction. Nevertheless, the superhike in August – and possibly in September – would accelerate the market glut after peak summer demand starts to wane in the autumn and winter, analysts say.