Oil Prices Dip as Market Awaits EIA Report Amid Seasonal Demand Slowdown

Oil prices fell on Tuesday with Brent crude down 51 cents to $66.12 per barrel and WTI down 79 cents to $63.17, as traders anticipated the U.S. Energy Information Administration (EIA) inventory report and a seasonal demand slowdown after summer driving. Diesel demand, a key driver of oil consumption, appears to be weakening, while inflation data and stock market trends provided little support for prices. Both OPEC and the EIA expect U.S. crude production to peak at a record 13.41 million bpd in 2025 before declining to 13.28 million bpd in 2026, amid increased global output and falling prices forecasted to average $51 per barrel next year. The U.S.-China tariff truce extended to November 10 and an upcoming meeting between Presidents Trump and Putin on Ukraine could further influence market dynamics. A potential peace deal might ease sanctions on Indian imports, while failure could tighten restrictions on other Russian oil buyers like China.

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U.S. Crude Production to Reach Record 13.41 Million BPD in 2025 Before Declining in 2026

The U.S. Energy Information Administration (EIA) forecasts U.S. crude oil production will peak at 13.41 million bpd in 2025, driven by improved well productivity, before declining to 13.28 million bpd in 2026 due to lower oil prices. Brent crude prices are expected to average $51 per barrel in 2026, down from earlier forecasts, reflecting accelerated production increases by OPEC+. U.S. gasoline prices are projected to fall to under $2.90 per gallon next year, about 20 cents less than this year. Distillate fuel inventories are set to drop 14% in 2025 to the lowest year-end level since 2000, pressured by strong exports and demand. U.S. oil demand is expected to rise slightly to 20.5 million bpd in 2026, maintaining steady growth.

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OPEC Predicts Tighter Oil Market in 2026 Amid Rising Demand and Slower Supply Growth

OPEC raised its forecast for global oil demand growth in 2026 by 100,000 bpd to 1.4 million, citing stronger economic expectations, while trimming non-OPEC supply growth by the same amount. OPEC warns that global oil inventories could decline by nearly 1.2 million bpd next year unless halted production of 2.2 million barrels per day is revived sooner. Saudi Arabia and its partners accelerated this supply restart, increasing output by 335,000 bpd in July, though data discrepancies complicate exact production figures. Oil prices have fallen 11% this year to about $66 per barrel amid trade tensions and economic uncertainty. OPEC+ will meet on September 7 to decide on potential production adjustments amid this evolving outlook.

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Chevron Resumes Venezuelan Oil Exports to U.S. Under New Sanctions License

A Chevron-chartered tanker, Canopus Voyager, docked at Venezuela’s PDVSA Jose terminal to load Hamaca heavy crude, marking the first export to the U.S. under a new restricted license granted to Chevron in July. The U.S. Treasury Department authorized Chevron to operate in Venezuela again but prohibits payments to the Venezuelan government. Chevron had suspended Venezuelan crude loading in April after its previous license expired in May. At least five other Chevron-chartered vessels were en route or waiting to load crude from Venezuelan ports or nearby Aruba, a common ship-to-ship transfer hub. Chevron confirmed it operates in compliance with applicable laws and sanctions but did not comment further, while PDVSA did not respond to inquiries.

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Switzerland Implements EU’s 18th Sanctions Package Targeting Russia

Switzerland has adopted the European Union’s 18th sanctions package against Russia, including lowering the price cap on Russian crude oil to $47.60 per barrel. The sanctions target 14 new individuals and 41 legal entities, imposing asset freezes and travel bans within Switzerland. Affected parties include Russian and international companies involved in managing shadow fleet vessels and trading Russian crude oil, as well as contributors to Russia’s war efforts. Additionally, the sanctions extend to 8 Belarusian arms companies and 10 entities and individuals from Moldova. This marks Switzerland’s continued alignment with EU efforts to pressure Russia amid ongoing conflict.

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EU Sanctions Severely Disrupt Crude Supplies and Operations at India’s Nayara Energy

Indian refiner Nayara Energy, partly owned by Russia’s Rosneft, faces its lowest crude intake this month at under 94,000 bpd, down sharply from nearly 366,000 bpd last year due to EU sanctions imposed in July. The refinery operated at about 70% capacity in late July but risks further cuts amid feedstock shortages and payment challenges, as banks including State Bank of India halt transactions. Nayara relies on sanctioned “dark-fleet” tankers for exports, with two blacklisted vessels docked at its Vadinar terminal, while domestic shippers have withdrawn support, forcing the refiner to use trucks and rail for fuel distribution. The sanctions have forced Nayara to seek upfront payments or letters of credit, complicating its trade operations and prompting engagement with Indian government ministries for assistance. Nayara’s 400,000-bpd refinery is India’s third largest, with nearly 7,000 fuel outlets nationwide and ongoing petrochemical plant development.

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Indian State Refiners Use Term Contracts to Hedge Amid Uncertainty Over Russian Oil

India’s state oil refiners plan to maintain annual term contracts to secure crude supplies and mitigate risks amid uncertainty over continued discounted Russian oil imports, according to a government report to parliament. India, the world’s third-largest oil importer, currently sources over one-third of its crude from Russia, but narrowing price discounts and U.S. tariffs threaten the longevity of these purchases. State refiners, controlling over 60% of India’s 5.2 million bpd refining capacity, have paused Russian imports, while private players like Reliance, Nayara Energy, and HPCL-Mittal continue buying. The report emphasizes balancing energy security with procurement value, factoring in geopolitical and trade considerations.

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China Reduces Saudi Oil Purchases as Demand for Russian Urals Grows

Chinese refiners, led by Unipec, have reduced term nominations for Saudi Aramco crude in September, signaling a shift toward greater use of Russian Urals crude amid ample stockpiles and competitive pricing. Saudi Aramco plans to sell 43 million barrels of September-loading crude to China, down from 51 million barrels the previous month and below the 45 million barrel monthly average this year. Meanwhile, India has increased its nominations for September as it seeks alternatives to Russian crude under Western pressure. Energy Aspects notes China’s Russian imports currently account for 17% of its overseas supplies, approaching a likely 20% cap.

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India Ships Rare Diesel Cargo to China Amid Nayara Sanctions

India’s Nayara Energy shipped approximately 496,000 barrels of ultra-low sulfur diesel to China on July 18, marking the first such export since April 2021. The EM Zenith tanker, originally destined for Malaysia, redirected to Zhoushan, China, following EU sanctions targeting Nayara’s Rosneft-backed Vadinar refinery. These sanctions have disrupted Nayara’s operations, forcing the company to demand upfront payments and cut crude shipments, complicating fuel exports. The shipment comes amid easing tensions between India and China, signaling potential new trade routes despite geopolitical challenges. Nayara has yet to publicly comment on the situation.

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Trump Extends China Tariff Pause 90 Days and VLCCs Move U.S. Crude to China

President Trump approved a last-minute 90-day extension to pause steep tariffs on China, avoiding an increase from 30% to 64% on imports amid ongoing trade tensions. The tanker market responded with at least four VLCCs fixed to transport U.S. crude oil to China, reflecting market confidence in the tariff truce. Greece’s Kyklades Maritime earned $6.95 million for the 313,500-dwt VLCC Nissos Heraclea on a U.S. Gulf Coast-China voyage, slightly more lucrative on a daily basis ($36,300/day) than Bahri’s 298,900-dwt Qamran, which earned $7.7 million in July. The Nissos Heraclea is equipped with a scrubber allowing use of cheaper high-sulfur fuel oil, influencing charter rates. This extension stabilizes the trade outlook and supports tanker demand amid fluctuating U.S.-China relations.

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Sanctions Hit 25% of Aframax Fleet as Russia-Linked Geopolitics Dominate Market Outlook

Gibson Shipbrokers reports that 25% of the global aframax/LR2 fleet is currently sanctioned, with another 7% at risk due to questionable trading. While Urals crude prices often fall below the G7 price cap, prompting more mainstream aframaxes to enter Russian trade, the EU’s lower price cap is expected to push them back to conventional routes. Kazakh oil exports from the Black Sea surged in early 2025—mainly benefiting suezmaxes—while Libyan aframax exports hit a 12-year high; meanwhile, Kurdish crude flows via Ceyhan remain stalled. Structural declines loom, with European crude production projected to drop by over 500,000 bpd between 2026 and 2030, though short-term boosts may come from Norwegian output and Middle East exports in Q4, primarily supporting VLCCs. Sentosa Ship Brokers notes tighter prompt-loading lists and improved sentiment as Middle East Gulf fixing activity increases under the radar.

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Panama Canal Ventures into Port Operations Amid U.S.-China Dispute

The Panama Canal Authority plans to tender two new terminals on the Atlantic and Pacific coasts as part of an $8.5 billion investment over seven years, including an LPG pipeline and infrastructure upgrades. Current ports operated by Hong Kong’s CK Hutchison Holdings are outside the canal’s jurisdiction and face legal challenges amid U.S. concerns over Chinese influence. Canal revenues surged to nearly $5 billion this year due to pre-tariff cargo shipments but are forecasted to fall to $4.4 billion next year. Improved rainfall has allowed the canal to maintain a 50-foot (15-meter) draft after severe droughts limited traffic in prior years. The authority aims to use modern crane technology to compete with Colombia’s Port of Cartagena.