Oil Falls to Two-Month Low on Bearish Supply Outlook

Oil prices fell to over two-month lows, with Brent settling at $65.63 per barrel and WTI at $62.65, following bearish supply guidance from the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA). EIA data showed U.S. crude inventories rose by 3 million barrels to 426.7 million, while net crude imports increased by 699,000 bpd, pressuring prices. The IEA raised its 2025 supply growth forecast but lowered demand expectations, contrasting with OPEC+, which raised demand forecasts and trimmed non-OPEC supply estimates. Political tensions added uncertainty as U.S. President Donald Trump warned of “very severe consequences” if Russia’s Vladimir Putin refused to end the war in Ukraine ahead of their Alaska meeting. Analysts said that current non-OPEC supply growth could meet even moderate demand scenarios, limiting the near-term bullish case for oil.

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IEA Warns of Oversupply as OPEC+ Output Surge Outpaces Weak Demand

The International Energy Agency (IEA) projects global oil supply to rise by 2.5 million bpd in 2025 and another 1.9 million bpd in 2026, driven by faster-than-expected OPEC+ production hikes and increased output from non-OPEC producers such as the U.S., Canada, Brazil, and Guyana. Demand growth is forecast at just 680,000 bpd this year and 700,000 bpd next year—well below supply growth—leaving the market potentially oversupplied by nearly 3 million bpd in 2026. The IEA noted "lacklustre demand" across major economies and warned that a sharp rebound is unlikely, contrasting with OPEC’s more optimistic forecast of 1.29 million bpd demand growth this year. Despite the surplus risk, global refinery runs are expected to hit a record 85.6 million bpd in August, supported by OECD and Chinese demand. Additional sanctions on Russia and Iran could limit supplies, while Chinese stockpiling may help absorb some of the excess.

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Shadow Tanker Fleet Growth Slows Under Tougher Sanctions

The global “shadow fleet” of tankers used by Russia, Iran, and Venezuela to bypass Western sanctions has grown more slowly in 2025, with only dozens of new vessels added this year compared with hundreds in prior years. Tougher EU, UK, and U.S. measures now sanction more than 440 tankers crucial to Russia’s exports to China and India, contributing to the slowdown. The fleet, estimated at 1,200–1,600 ships—about 20% of the world’s tanker capacity—remains far larger than the few hundred operating before the Ukraine war. Increased regulatory scrutiny and restrictions on second-hand ship sales have made acquiring suitable vessels harder, though high profits still attract inexperienced operators using older, uninsured ships. Analysts say “regulators are closing the net,” but risky operations persist due to the potential financial gains.

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Trump Reiterates Threats Over IMO Net-Zero Shipping Rules

US President Trump criticized the IMO’s proposed net-zero framework, calling it a “global carbon tax on Americans” and warning it would raise shipping, energy, and leisure costs. He argued the rules favor foreign competitors like China while burdening US consumers and businesses. Trump threatened retaliatory measures against countries supporting the framework, framing it as protecting American economic interests. White House officials reinforced this stance, emphasizing defense of the US economy and energy sector. The IMO approved the framework in April, with member-state adoption expected at the October 14–17 MEPC session, while the World Shipping Council supports implementation. The framework introduces CO2 pricing to fund renewable fuels and advance net-zero goals by 2050, but delayed US participation could disrupt global implementation.

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Okeanis Eco Tankers Gains Competitive Edge by Cleaning VLCCs for Fuel Trades

Greece’s Okeanis Eco Tankers has leveraged its ability to clean VLCCs to gain an edge in fuel trades, allowing charterers to avoid the cost and risk of cleaning ships themselves. CEO Aristidis Alafouzos explained that by fixing vessels on a spot basis and loading directly from terminals, the company reduces ship-to-ship operations and lowers costs, making it more competitive. This strategy works best when the clean market is high and VLCC rates are low, providing profitable arbitrage opportunities. Despite attempts to use cleaned VLCCs for refined products, the ships almost always end up loading crude cargoes from regions like the US Gulf or North Sea. Okeanis reported a $26.9 million Q2 profit, below last year’s $39.6 million, but its adjusted earnings per share of $0.83 exceeded analyst expectations.