International oil prices have climbed again in recent days, extending the rebound seen over the past few weeks as concerns over geopolitical risks and tightening supply continue to intensify. Both Brent and WTI crude posted modest gains, last trading at $70 and $67 per barrel, respectively, supported by escalating tensions in the Middle East, shifting expectations around U.S. production policy, and a firmer production-cut stance from OPEC+.

Source: TradingView

At the same time, global crude demand has proven more resilient than previously expected, offering further support to prices. Markets are now closely watching U.S. President Donald Trump’s scheduled “major statement on Russia” on July 14, with Russian officials saying they are awaiting details. The surprise announcement is adding to investor concerns over the stability of global oil supply chains.

Geopolitical Impact

Geopolitical tensions continue to push oil prices higher.
On July 13, former President Donald Trump announced plans to send Patriot air defense systems to Ukraine and said he would deliver a “major statement” on Russia on July 14, raising market concerns over potential new sanctions. A bipartisan bill proposing fresh sanctions on Russia is currently under review in the U.S. Congress and could be signed by Trump. Meanwhile, the European Union is nearing agreement on its 18th round of sanctions, which may include lowering the price cap on Russian oil exports. Markets are increasingly worried that tougher Western measures could further restrict Russian crude shipments and drive global oil prices higher.

According to IEA data, Russia’s oil exports fell to 7.3 million barrels per day in May—the lowest since February 2025—partly due to higher domestic retention of gasoline and diesel to meet agricultural needs. In an effort to stabilize market reactions, Russia has committed to a compensatory cut of 2.5 million barrels per day across August and September.

In the Middle East, Israeli airstrikes on Iran in June temporarily pushed Brent crude above $80 per barrel. While a subsequent ceasefire helped calm markets, geopolitical risk premiums remain elevated. Should stricter sanctions be imposed on Iran, its oil exports could fall by as much as 500,000 barrels per day, further tightening global supply.

Supply and Demand Dynamics

However, the latest supply-side developments from OPEC+ have put some pressure on oil prices. On July 5, OPEC+ decided to increase production by 548,000 barrels per day in August, thawing 80% of the 2.2 million barrels per day voluntary cuts since 2023. This continues the cumulative increase of 1.918 million barrels per day since April, with full restoration of the 2.2 million barrels per day cuts expected by September. This contrasts with geopolitical tensions and may weaken the upward momentum of oil prices.

According to the International Energy Agency (IEA), global oil supply in June reached 105.6 million barrels per day, up 950,000 barrels per day month-on-month, with Saudi Arabia’s overproduction contributing significantly at 9.8 million barrels per day, about 430,000 barrels per day above the OPEC+ quota of 9.37 million barrels per day. However, Saudi Arabia’s Energy Ministry reported June production at 9.352 million barrels per day, in line with the quota, suggesting the data discrepancy may stem from different statistical methods. This adds uncertainty to future market expectations.

Source: IEA

The summer refining peak has pushed US oil demand to an average of 20.863 million barrels per day, with gasoline demand up 5.9% year-on-year, supporting near-month contract prices. However, the IEA has downgraded global oil demand growth in 2025 to 704,000 barrels per day, the lowest since 2009 (excluding the pandemic year), mainly due to trade protectionism slowing economic growth and accelerated renewable energy adoption.

Additionally, China’s crude oil inventories are expected to increase by 82 million barrels in Q2 2025, equivalent to 900,000 barrels per day of strategic reserves, reducing globally available supply. This inventory build could exert downward pressure on prices in the coming months.

Tariffs Add to Volatility

Uncertainty surrounding U.S. tariff policies is further intensifying market volatility. The Trump administration has imposed a 10% tariff on imports from multiple countries, with the original 90-day suspension period set to expire in July now extended to August 1 by a White House executive order issued on July 7. Due to tariffs and other factors, global trade growth is expected to weaken. The International Monetary Fund (IMF) forecasts global trade volume growth to slow to 1.7% in 2025, marking a decade low.

Source: IMF

Meanwhile, U.S. sanctions on Russia may escalate. The Trump administration has resumed supplying Ukraine with the Patriot air defense system and offensive weapons. Additionally, a bipartisan bill supported by 84 senators proposes imposing a 500% tariff on imports from China and India, citing concerns over “China-Russia energy trade links.” The bill has not yet been voted on by Congress. If enacted, crude oil trade costs could rise by 20-30%, pushing oil prices higher in the short term but potentially dampening global growth over the long run.

The U.S. Energy Information Administration (EIA) forecasts Brent crude prices at $69 per barrel in 2025, falling to $58 per barrel in 2026. Moreover, tariff policies could trigger supply chain adjustments and increase transportation costs, indirectly impacting refining margins.

Will Prices Keep Rising?

In the short term, oil prices are supported by geopolitical risk premiums and seasonal demand peaks, with refinery run rates expected to reach 85.4 million barrels per day in July and August. However, rapid production increases from OPEC+ could limit the upside. According to Bloomberg, OPEC+ may pause production increases starting in October, depending on market conditions. If global demand falls short of expectations, OPEC+ might adjust its output cut strategy earlier than planned.

Source: OPEC

Looking further ahead, downward pressure is emerging. While OPEC has raised its 2050 demand forecast to 122.9 million barrels per day, demand projections for 2026-2029 have been revised down by 3% to 5% compared to last year, reflecting concerns over slowing demand growth in Asia.

Notably, the implementation of the “Inflation Reduction Act” could raise U.S. inflation expectations, prompting the Federal Reserve to maintain higher interest rates through 2025. This could weaken capital expenditures in the oil and gas sector, impacting future supply growth. Another view is that the transition to new energy sources—such as electric vehicles, which the IEA projects to reach an 18% penetration rate by 2025—may gradually erode the oil demand base, increasing downside risks for oil prices after 2026.