Some market participants were positioned for more than the 411, 000 b/d that OPEC+ announced, triggering some short covering. Geopolitics also re-entered the spotlight. There's been limited progress on both the Russia-Ukraine peace talks and the U.S.-Iran negotiations. On the supply side, we also had potential risks emerging from wildfires in Canada and renewed turmoil in Libya, threatening export stability. On fundamentals, prompt inventories are tight, which is why we’ve seen sustained backwardation in the crude market despite it being peak refinery turnaround season. The consensus is that in Q4 and into 2026, we’ll start seeing large stock builds, but until then, the market can absorb more barrels, even if there's another increase by OPEC+ in August.
How much inventory rebuild might OPEC+ allow before reversing course on adding supply?
Our base case is that they will continue increasing production at the current 3x accelerated rate, eventually bringing the full 2.2 million b/d back, unless we see some dramatic deterioration in the market balance or demand outlook. Our balances show an average build of around 1 million b/d in 2H 2025. It’s also important to note that in H1 2025, inventories built up much less than the seasonal average, so we’re starting from a low base, and that's part of why the market remains in backwardation. But that doesn’t mean there’s no downside risk in the months ahead.
Has the confused rhetoric around US tariffs peaked?
We disagree with the idea that the worst is behind us there. Tariffs are a central policy theme for the Trump administration. The sectoral tariffs haven’t gone away and while the reciprocal tariffs might be lifted, Trump has other mechanisms to implement them even if the ruling from the International Trade Court - which has been appealed - were to proceed. So, there is still a downside risk to oil demand, and eventually OPEC+’s added supply will also put downward pressure on prices.