Crude oil market experiences a price drop due to supply worries, irrespective of Trump's tariff warnings towards India.
In recent developments, the global oil market is facing downward pressure due to significant supply increases by OPEC+ and ongoing U.S.-India trade tensions. Despite strong seasonal demand and geopolitical risks, analysts warn that the oversupply created by OPEC+ could push Brent crude prices down to around $58 per barrel by December 2025.
OPEC+ has been aggressively increasing output since April 2025, with a confirmed 547,000 barrels per day (bpd) hike set for September and the planned unwinding of a 2.2 million bpd production cut. Some members, like the UAE, have added an extra 300,000 bpd to the mix. This production increase aims to reclaim global market share and has cushioned prices against various geopolitical and demand pressures.
However, this increased supply comes amid risk premiums from geopolitical conflicts (e.g., Israel-Iran) and trade developments, including U.S.-India trade tensions. The U.S. tariff plans and their impact on global trade have led organizations like the International Energy Agency to reduce their 2025 global oil demand growth outlook by about 30%.
Despite these tensions, they have not offset the dominant effect of the OPEC+ supply hikes and the anticipated oversupply. In summary, OPEC+ production hikes have increased supply substantially, eroding price support and likely driving oil prices down in the near term. U.S.-India trade tensions, reflected in tariffs and slower trade growth, have reduced demand expectations but are overshadowed by the supply-driven dynamics.
This supply boost follows a series of increases as OPEC+ attempts to regain market share. India, targeted by the European Union and the U.S. for buying Russian oil, continues to trade with Moscow despite the sanctions. The actual supply boost from the eight OPEC+ countries stands at about 1.7 million bpd.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, announced a production increase of 547,000 bpd for September compared to August. This decision has led to a dip in oil prices, with Brent crude prices slipping by 0.3% to $68.59 per barrel and U.S. West Texas Intermediate crude prices falling by 0.6% to $65.87 per barrel.
Other OPEC+ members have looked to cut capacity to compensate for overproducing earlier. Global inventories have tracked higher, confirming a physical surplus has already arrived. Oversupply concerns following another large hike in OPEC+ production continue to outweigh concerns over Trump's actions against India.
In a separate development, U.S. President Donald Trump accused India of profiting from Russian oil sales while ignoring the ongoing war in Ukraine. However, these actions did not significantly impact the oil prices in the discussed timeframe. Retail sentiment on the United States Oil Fund (USO) was in the 'neutral' territory at the time of writing.
As the market navigates these challenges, it remains to be seen how prices will evolve in the coming months. Tim Evans, author of Evans on Energy, stated that global inventories have tracked higher in confirmation that a physical surplus has already arrived, indicating a potential trend of continued downward pressure on oil prices.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies are increasing oil production, with OPEC+ announcing a production increase of 547,000 barrels per day for September. This increase, aimed at reclaiming global market share, has been said to erode price support and drive oil prices down. Additionally, the U.S.-India trade tensions, while reducing demand expectations, are overshadowed by the supply-driven dynamics in the oil-and-gas industry, as well as the impact of geopolitical conflicts on finance.
