Brent crude futures have risen above the US$70 per barrel mark after fluctuating between US$66 and US$69, buoyed by stronger indicators of demand despite ongoing uncertainties surrounding the Russia-Ukraine crisis and potential supply disruptions.
This milestone comes amid a delicate global oil market balance and looming geopolitical risks.
A 50-day deadline set for Russia to cease its invasion and avoid tariffs has temporarily eased immediate concerns over supply shocks, resulting in a short-lived dip in prices.
However, the global supply-demand outlook remains fragile, with significant crude stock builds forecasted — averaging 1.5 million barrels per day (bpd) in Q4 2025 and increasing to 1.7 million bpd in Q1 2026 — likely prompting OPEC+ to adjust policies to sustain backwardation in the market.
Janiv Shah, Vice President of Commodity Markets Analysis – Oil at Rystad Energy, provided insights in the latest oil market update: “If summer demand doesn’t turn out to be as robust as projections and Russian situations do not get resolved, prices, balances and flows will force OPEC+ to navigate another challenge whilst keeping price stability and backwardation — the existing methodology of production and export cuts is unlikely to be the answer.
“Early European demand indicators relative to 2024 have come in strong.”
According to Shah, the market is currently searching for clear direction amid multiple influencing factors. Russia remains the largest potential shock: “The market is looking for direction.
“Many factors affect the immediate future, but Russia is currently the biggest potential shock in the oil market.
“Previous attempts to tame Russian exports and revenue through price caps are being revisited.
“However, choking Russian flows through primary or secondary tariffs has anticipatory impacts.”
September is expected to witness an extended period of crude inventory builds not seen since Q1 2023.
While global demand is predicted to decline by 230,000 bpd quarter-on-quarter into Q4 2025 — following the Northern Hemisphere’s summer travel season — the supply growth trajectory diverges.
Rystad projects global supply to increase by 1.1 million bpd within this period, primarily driven by non-OPEC+ countries contributing 800,000 bpd.
OPEC+ faces considerable challenges in its primary goal of maintaining a backwardated crude market structure and preventing crude storage accumulation.
Shah outlined a probable scenario: “A very real scenario exists in which OPEC+ begins to cut production and exports and extends a new policy throughout the end of the year to tame supply growth.”
Backwardation — the premium for near-term delivery over future delivery — has intensified marginally in recent days, mainly due to immediate threats to Russian supply volumes, but remains within the US$1–US$2 per barrel range.
Shah cautioned that a shift to contango (where future prices exceed spot prices) would incentivise traders to store crude volumes, undermining OPEC+’s efforts.
Despite OPEC+’s recent decision 10 days ago to accelerate the rollback of production cuts, lifting output by 548,000 bpd (exceeding expectations of a 411,000 bpd increase), prices have only softened modestly.
Most of the crude production increase remains within regional markets and is not being exported significantly, limiting its impact on global market share.
Demand growth across Europe and North America has largely been met by alternative crude sources and stock draws.
Conversely, the Middle East is experiencing a sharp surge in demand throughout summer, fuelled by direct crude burn surpassing 1 million bpd in July and August, plus increased fuel oil use for power generation amid scorching heat—temperatures in Riyadh have reached an extreme 50 degrees Celsius.
Refinery utilisation is nearing August peaks of 85.2 million bpd, predominantly in the Atlantic Basin. Concurrently, geopolitical dynamics continue to shape the market.
The US administration’s efforts to end the Russia-Ukraine war may create transient market shocks due to possible interruptions in Russian crude and product flows before a resolution is reached.
India and China jointly import and rely on over 3.5 million bpd of Russian crude, making secondary sanctions on Russia a potentially disruptive factor, as Shah stated:”Secondary tariffs imposed on Russia could flip market balances as India and China currently import and consume more than 3.5 million bpd of Russian crude.
“Russian oil has become an important piece of both India’s and China’s supply security, particularly as it helps balance costs amid volatile global markets.
“A loss of 3.5 million bpd would push demand for medium sour Middle Eastern volumes higher, pushing benchmark and grade prices up.
“The market simply cannot afford to lose the 4-5 million bpd of crude exports and 2-2.5 million bpd of product exports from Russia.”
Discussions on tariffs waivers and revised EU price caps on Russian oil continue, potentially affecting future flows and revenues.
China exhibited strong refinery run growth in June to 15.15 million bpd, driven by state refiners amid favourable margins.
Despite this, Chinese crude imports remained robust, with continued stock builds of approximately 1 million barrels per day.
Looking ahead, Brent crude prices are expected to remain in the mid-US$60s for the remainder of 2025, with a Q3 average forecast of US$66 and Q4 at around US$63.
The price holds a risk premium due to geopolitical uncertainties, including the Russia-Ukraine conflict’s critical phase, persistent Middle East tensions, and potential sanctions on Iran and Venezuela.
Brent’s crossing above US$70 per barrel signals a market balancing complex demand dynamics and geopolitical risks, with industry watchers closely monitoring OPEC+ policy adaptations and developments on Russia-related sanctions.