After a highly volatile June, Brent oil prices are now trading in a tight range, stabilising around $70 per barrel.
Seasonal demand highs are currently bolstering prices, with the International Energy Agency projecting a 3.7 million barrel increase in daily refinery processing from May to August.
Additionally, demand for power generation is expected to double to 900,000 barrels per day during the same period.
“Low inventories in some regions of the world are also supporting prices,” Barbara Lambrecht, commodity analyst at Commerzbank AG (ETR:CBKG), said.
Concerns about supply disruptions have temporarily eased, leading to lower prices, as Russia faces a 50-day deadline to end its invasion and avoid tariffs.
Despite this, global balances remain fragile.
Significant stock builds are anticipated, averaging 1.5 million barrels per day (bpd) in Q4 2025 and 1.7 million bpd in Q1 2026, according to Rystad Energy. These expected builds will likely necessitate policy adjustments to maintain backwardation.
However, the significant increase in supply from the Organization of the Petroleum Exporting Countries and allies will coincide with slowing oil demand.
OPEC’s task cut out
September is expected to see a prolonged period of crude builds, a trend not observed since the first quarter of 2023.
Global demand is projected to decrease by 230,000 barrels per day quarter-on-quarter into Q4 2025, according to Rystad Energy.
This anticipated decline, attributed to the conclusion of the Northern Hemisphere’s summer travel season, is expected to exert pressure on refinery margins as product cracks experience a fall.
