Topic 4: CRUDE OIL: CALMING BEAM

In August 2025, global crude oil prices moved within a relatively narrow range, reflecting a delicate balance between supply-driven pressures and demand-side uncertainties. Brent crude traded mostly between $67 and $69 per barrel indicating modest stability despite underlying volatility. The month’s price movements were shaped by a combination of OPEC+ output policies, geopolitical risk premiums, U.S. trade actions, seasonal demand dynamics, and regional consumption patterns. On the supply side, OPEC+ remained the key stabilizing force. While the alliance had previously announced moderate output hikes, actual production levels stayed around 100–102 million barrels per day, as several member states struggled to raise output further due to capacity and investment constraints. This supply discipline prevented a deeper slide in prices, countering the oversupply narrative that had emerged with OPEC+’s plan to ramp up production by nearly 548,000 barrels per day. The market thus found support from the perception that OPEC+ was still willing to defend a price floor, even as its strategy leaned more toward maintaining volumes than aggressively protecting prices. Adding to supply-side firmness was the geopolitical risk premium stemming from the Russia–Ukraine conflict. Ukrainian drone attacks on Russian oil infrastructure in August raised concerns about potential disruptions in crude supply, particularly from Black Sea terminals. These developments introduced a modest upward bias in prices, as traders priced in the possibility of temporary shortages or logistical bottlenecks. At the same time, U.S. trade policies added headwinds. The announcement of 50% tariffs on Indian exports, combined with broader trade tensions, dampened global market sentiment and injected uncertainty into the outlook for oil demand. These tariffs also indirectly influenced crude flows, as India, one of the world’s largest oil importers, faced currency depreciation and trade imbalances that weighed on its import capacity, although domestic refiners continued securing supplies from the Middle East at discounted rates. Seasonal and demand-related factors also played a crucial role. Toward the end of August, the end of the summer driving season in the U.S. typically leads to a decline in gasoline demand, and this seasonal effect contributed to softer sentiment. However, Asian demand helped counterbalance this trend. Both India and China increased crude imports in August, with total Asian purchases rising from 24.91 million barrels per day in July to 27.18 million bpd. Analysts suggested this surge was partly linked to low-price restocking rather than a clear sign of accelerating consumption, yet it nonetheless provided tangible demand support that helped keep Brent anchored in the high $60s. Broader macroeconomic and structural factors also influenced the market. Global growth concerns, especially slowing demand in advanced economies due to persistent inflation and elevated interest rates, curtailed expectations of a robust rebound in crude consumption. By the end of August, crude prices essentially consolidated within their established bands, with Brent closing near $68.5 per barrel and WTI around $64.5 per barrel. The month reinforced the theme of cautious equilibrium: supply discipline from OPEC+ and Asian buying provided floors, while U.S. tariffs, seasonal demand tapering, and slowing global growth capped the upside. Overall, crude oil in August 2025 embodied a market in balance, with geopolitical uncertainty and structural headwinds keeping volatility contained but preventing any major breakout.