Oil Prices Rise Over 2% Amid Market Tightness, Tariffs, and Sanctions Concerns

Oil prices surged over 2% on Friday, with Brent crude closing at $70.36 per barrel and WTI at $68.45, as the IEA indicated the market is tighter than it appears due to strong summer refinery demand. Despite the IEA’s forecast of increased supply growth and reduced demand growth for the year, short-term supply constraints and seasonal demand support prices. U.S. energy firms reduced active oil and gas rigs for the 11th consecutive week, adding to market tightness. Russian Deputy Prime Minister confirmed Russia will compensate for OPEC+ overproduction later this year, while Saudi Arabia plans a significant shipment of about 51 million barrels of crude oil to China in August. Market concerns also revolve around U.S. tariffs and potential new sanctions on Russia, including a proposed EU floating price cap on Russian oil.

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EU Set to Finalize New Russian Oil Price Cap in 18th Sanctions Package

EU envoys are close to approving the 18th round of sanctions on Russia, featuring a lower, floating price cap on Russian oil pegged at 15% below the average crude price over the past three months — initially around $47 per barrel. The dynamic cap will now be revised every six months instead of quarterly, and the package may be finalized on Monday, just before a scheduled foreign ministers' meeting in Brussels. Slovakia, which had delayed approval, has tentatively agreed but still seeks reassurances about future Russian gas supply. The G7 price cap, first set at $60 in 2022, has become ineffective due to lower oil prices, prompting EU and UK efforts to lower it. The new sanctions also target a Russian-owned Indian refinery, two Chinese banks, and a flag registry used by Russia’s shadow fleet to bypass restrictions.

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Trump Raises Tariff on Canada to 35%, Eyes Global Tariff Expansion

U.S. President Donald Trump announced a 35% tariff on Canadian imports effective August 1, up from 25%, with threats of further increases if Canada retaliates. While USMCA-covered goods and existing 10% tariffs on energy and fertilizer remain unchanged for now, Trump cited fentanyl concerns and trade imbalances as reasons for the hike. He also revealed plans to impose 15%-20% blanket tariffs on most other trade partners, sparking global market jitters. Canada, the largest buyer of U.S. exports and second-largest trading partner, exported $412.7 billion in goods to the U.S. last year. European and Asian markets remain on edge as Trump prepares to announce tariffs on the EU, Japan, and South Korea, signaling an aggressive expansion of his trade war agenda.

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Chevron Traces Mars Crude Contamination to Offshore Well Start-Up, Tightening Gulf Coast Supply

Chevron confirmed that the start-up of an offshore well led to zinc contamination in Mars crude, a key medium sour grade for Gulf Coast refiners, prompting ExxonMobil to stop buying the crude and request 1 million barrels from the Strategic Petroleum Reserve (SPR). The U.S. Department of Energy authorized the SPR release to maintain fuel supply stability, with Exxon set to replenish the reserve afterward. Mars crude, typically flowing at 575,000 bpd, traded at a 15-cent premium to WTI on Friday, down from a $1 premium in late June, reflecting market disruption. Zinc is not naturally present in crude and poses a threat to refinery catalysts, risking operational and margin challenges. The disruption comes amid already tight supply conditions caused by Venezuelan import restrictions, Mexican production declines, and Canadian wildfire impacts, while U.S. refined product demand reached 20.9 million bpd, a five-year seasonal high.

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IEA Warns Global Oil Market Tighter Than It Appears Despite Surplus Outlook

The IEA expects global oil supply to rise by 2.1 million bpd in 2025, outpacing demand growth of 700,000 bpd, suggesting a surplus. However, strong refinery processing, boosted by Northern Hemisphere summer travel and increased crude burning for power generation (up to 900,000 bpd), is tightening physical market conditions. Price signals such as steep backwardation and healthy refining margins indicate the market is tighter than official balances show. Despite OPEC+ accelerating output hikes, these increases have had little impact on inventories or prices, which remain near $70 per barrel. The IEA forecasts slower demand growth this year than OPEC, reflecting a faster energy transition, with 2026 demand growth expected at around 720,000 bpd.

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Saudi Arabia Affirms Full Compliance with OPEC+ Output Targets

Saudi Arabia’s energy ministry stated the kingdom fully complied with its voluntary OPEC+ output target in June, marketing 9.352 million bpd, aligned with its quota. This contrasts with the IEA report claiming Saudi output exceeded the target by 430,000 bpd to 9.8 million bpd, which Saudi Arabia says was redirected to domestic inventories and offshore storage rather than marketed. Saudi Arabia has reported both production and supply data transparently to the OPEC secretariat and secondary sources. OPEC+ recently agreed to raise oil production by 548,000 bpd in August, exceeding previous monthly hikes of 411,000 bpd, as part of efforts to regain market share. The production increase involves eight key OPEC+ members, including Saudi Arabia, Russia, and the UAE, who began unwinding cuts of 2.2 million bpd starting in April.

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Russia to Offset Oil Overproduction by September, Considers Full Gasoline Export Ban

Russia plans to fully compensate in August–September for exceeding its OPEC+ oil output quota by 691,000 bpd since April, according to Deputy Prime Minister Alexander Novak. The move aligns with OPEC+ efforts to stabilize markets as the group gradually increases production after prolonged cuts. Novak also said the government is considering a full gasoline export ban, pending domestic market evaluations in the coming days. While only reseller exports are currently restricted, oil companies are still allowed to export fuel until August 31. Russia produced 44 million metric tons of gasoline annually, and exports surged by 1.5 times year-on-year to 2.4 million tons in Q1 2025, mainly to Egypt and Türkiye.

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Russian Oil Moves Under the Radar via China and Venezuela

The Chinese-owned tanker Arina is likely en route to Venezuela with Russian naphtha, part of a pattern where Russia and China use ship-to-ship transfers and deceptive AIS tracking to bypass Western oil sanctions. The Arina, previously involved in Venezuelan oil shipments, was seen loading Russian cargo off Malaysia and falsely signaling a destination in Trinidad & Tobago. Other vessels, such as the VLCCs Norns and Crystal, have also used AIS spoofing to mask stops in Venezuela while carrying mixed Russian and Chinese crude. These tankers have histories of frequent name and flag changes, illustrating the sophistication of these covert logistics networks.

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Venezuela’s PDVSA Reports $17.5 Billion in 2024 Oil Sales Amid Export Growth

Venezuela’s state oil company PDVSA reported $17.52 billion in oil sales abroad in 2024, driven by a rise in exports enabled by U.S. licenses for foreign operators, including Chevron. Crude and fuel exports averaged 805,500 bpd in 2024, up over 15% from nearly 700,000 bpd in 2023, while crude production increased to 952,000 bpd from 783,000 bpd. Despite Washington revoking licenses for Venezuelan crude shipments to the U.S. and Europe in May, exports continued, with June shipments reaching 844,000 bpd primarily to China. Production reportedly exceeded 1 million bpd in early 2025, signaling ongoing recovery amid sustained sanctions and economic challenges. Venezuelan President Maduro denounced sanctions as an “economic war,” emphasizing national resilience despite ongoing difficulties.

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Reliance Urges India to Boost Petrochemicals to Counter China’s Industry Lead

India must significantly ramp up its petrochemical production capacity to curb China's dominance and meet rising domestic and global demand, according to Reliance Industries executive Vikram Sampat. China has expanded capacity to the point that 40%–50% of some refineries’ output is petrochemicals, while India lags with only about 20% capacity. As India’s economy grows faster than any major economy, demand for petrochemicals is expected to surge, even as fossil fuel usage plateaus. Sampat warned that if India doesn’t act, China will continue consolidating its global leadership in the sector. He also projected that 30%–70% of gasoline and diesel yield may be redirected into petrochemicals as transport fuel demand peaks.

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Brazil-China Oil Trade Boosts VLCC Demand, Adds 1 Billion Tonne-Miles

Brazilian crude exports to China hit a record 93.6 million barrels in Q2 2025, a 53% increase from Q1, with 40% of Brazil’s oil now heading to China, mostly via VLCCs. Signal Ocean reported that dirty tonne-miles for Brazil–China voyages have surged past 2 billion, up 1 billion from recent years, tightening VLCC supply in the Atlantic basin due to long round trips of about 100 days. Petrobras is expanding term and spot deals with Chinese buyers like Unipec and Sinochem, while also courting Chinese investment for building 25 new vessels by 2030. This trend is driving upward pressure on VLCC freight rates, particularly in the Atlantic, and shifting global tanker trade patterns. However, S&P Global Platts warns of softening rates in Q3 amid weak summer demand and geopolitical uncertainties, noting the US Gulf–China route dropped from $8.6m in April to $5.9m in June.

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Vista Energy Triples Vaca Muerta Oil Exports as Q2 Profit Surges 184%

Vista Energy tripled its oil exports in Q2 2025 to 5.6 million barrels, largely due to full control of the La Amarga Chica oilfield after acquiring Petronas’s 50% stake. The company posted a $235 million profit, up 184% year-on-year, and reported $359 million in oil export revenue for the quarter, more than double the $160 million from Q2 2024. First-half revenue rose to $596 million from $289 million in the same period last year. Vista is also a partner in the $2 billion VMOS pipeline and VLCC export terminal project led by YPF, aimed at transporting more Vaca Muerta oil to global markets. CEO Miguel Galuccio expects the pipeline’s first 550,000 bpd phase to be operational by mid-2027.

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Europe’s Refining Gap Spurs Jet Fuel Imports and LR2 Tanker Demand

Europe’s shrinking refinery capacity — marked by the closure of the Grangemouth plant and Lindsey Refinery’s administration — has deepened the continent's reliance on imported refined products. The current supply deficit between European refinery throughput and demand is approximately 2.4 million bpd, prompting a surge in long-haul imports. In June, North-east Asia exported nearly 5.5 million barrels of jet fuel and kerosene to Europe, the highest monthly volume in almost a year, driven by a $60–$80 per tonne price advantage in Europe. Newly delivered LR2 tankers, offering $200,000 to $300,000 cheaper freight rates than older ships, are increasingly being used to support these flows. Despite a decline in long-term refined product demand due to Europe’s green energy transition, clean product imports — particularly from Asia and the Middle East — are expected to remain vital due to persistent structural imbalances in refining capacity.

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UK to Launch New Incentives and Charging Investments to Accelerate EV Adoption

The UK government plans to introduce up to £700 million ($948 million) in new subsidies and grants to make EVs more affordable, Transport Secretary Heidi Alexander said Sunday. Additionally, £63 million will be allocated for EV charging infrastructure at homes and logistics hubs, including locations without private driveways. A broader £2.5 billion program will support the auto industry’s shift to zero-emission vehicle production. These efforts aim to help meet the UK’s targets to end petrol and diesel car sales by 2030 and phase out hybrids by 2035, as EVs remain over twice as expensive as petrol vehicles on average. Automakers have struggled to meet government EV sales mandates due to high costs and insufficient charging infrastructure, contributing to sluggish adoption.