Oil Prices Slip on Weak Demand Outlook, Rising OPEC+ Supply

Oil prices fell Friday as traders anticipated weaker U.S. demand and higher autumn supply from OPEC+, with Brent crude settling at $68.12 for October (-0.73%) and $67.45 for November (-0.78%), while WTI closed at $64.01 (-0.91%). Analysts pointed to OPEC+ accelerating output hikes to regain market share, pressuring prices. U.S. demand is expected to decline after Labor Day, marking the end of the peak driving season. Meanwhile, market sentiment was influenced by geopolitical factors: Ukrainian attacks on Russian oil terminals initially lifted prices, but reports of ceasefire talks pulled them lower. Despite global supply concerns, U.S. crude inventories showed larger-than-expected draws, and India continues to import discounted Russian crude despite U.S. tariff pressure.

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U.S. Oil Output Hits Record 13.58 Million bpd in June

U.S. crude oil production climbed to a record 13.58 million bpd in June, up 133,000 bpd from May, according to the EIA. Texas output rose to 5.72 million bpd, while New Mexico hit 2.24 million bpd, both posting their highest levels in months. Offshore Gulf production reached 1.92 million bpd, the strongest since October 2023. U.S. demand also surged, with total petroleum products supplied at 21 million bpd, gasoline use at 9.23 million bpd, and jet fuel demand reaching 1.85 million bpd, its highest since 2018. Meanwhile, U.S. lower-48 natural gas output hit a record 120.7 bcfd, with Texas producing 36.8 bcfd and Pennsylvania 21.5 bcfd.

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California Delays Refinery Profit Penalties Amid Supply Concerns

California’s Energy Commission voted to delay penalties for excessive refinery profits for five years, easing rules initially proposed after 2022 pump prices spiked above $8 per gallon. The decision comes as Phillips 66 prepares to close its Los Angeles refinery and Valero plans to shut a Bay Area facility in 2026, raising concerns over supply shortages. Officials said supply is falling faster than demand, requiring measures to stabilize refining capacity while continuing the transition toward zero-emission vehicles by 2035. The Western States Petroleum Association supported the delay, while Consumer Watchdog criticized it as opening the door to future price spikes. Alongside the delay, California adopted policies to stabilize refinery capacity, boost fuel imports, and tap in-state oil reserves.

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India Ramps Up US Oil Imports Amid Trade Tensions

Indian refiners have sharply increased purchases of U.S. WTI crude, attracted by competitive pricing and arbitrage opportunities. Indian Oil Corp bought 5 million barrels for October–November delivery, while Bharat Petroleum and Reliance Industries secured 2 million barrels each, totaling nearly 9 million barrels from the U.S. this month. The move comes as the U.S. has doubled tariffs on Indian imports to 50%, pressuring New Delhi over its continued Russian oil purchases. European traders Gunvor and Equinor sold 2 million barrels each to IOC, and Mercuria added another 1 million barrels, diversifying supply channels. Additionally, BPCL purchased Nigerian Utapate crude for the first time, broadening its crude sourcing strategy.

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Russian Crude Freight Rates Climb on Sanctions and Higher Exports

Freight rates for Russian crude shipments to India rose in August, with Baltic-to-India voyages now costing about $6 million, up from $5.3m–$5.5m in July. Suezmax shipments from Novorossiysk also increased to around $5.5m, compared to $5.2m a month earlier. Russia boosted exports from western ports by 200,000 bpd after Ukrainian drone strikes curtailed refinery runs, freeing crude for shipment. The EU’s new sanctions introduced a moving price cap set 15% below market prices (currently about $47.60 per barrel)—stricter than the G7’s $60 cap—further tightening conditions. Despite over 440 sanctioned shadow fleet tankers, Western and especially Greek shipowners have re-entered the trade, though rates remain higher than the $4.7m–$4.9m levels seen in January.

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Suezmax Tanker Loads Naphtha After Ukrainian Drone Strike on Russian Baltic Port

Following a Ukrainian drone attack on Novatek’s Ust-Luga fuel terminal in the Baltic Sea, operations were briefly halted, but Russia managed to ship out a refined cargo. The Panama-flagged Suezmax Star Energy, arriving on 23 August, loaded approximately 120,000 tonnes of naphtha and departed Thursday bound for Suez. The tanker is operated by Arab Maritime Petroleum Transport Co, based in Kuwait with management in Egypt. Ust-Luga has a refining capacity of 9 million tonnes per year, producing naphtha, jet fuel, gasoil, and bunkers, and also serves as a major crude export hub. Drone footage and reports suggest significant damage to the facility, though no injuries were reported, and AIS data indicated multiple vessels were in the port at the time of the attack.

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Frontline CEO Notes Short-Term Traders for Artificial VLCC Rate Ceiling

Frontline CEO Lars Barstad said that short-term trading is keeping VLCC spot rates artificially capped around $50,000 per day, despite expectations for a fourth-quarter demand surge. He explained that sanctioned Russian and Iranian oil supplies backing up temporarily pushed rates higher, but compliant cargo replacements and short-term charter strategies have limited further gains. Barstad noted traders who book ships at lower rates, lock in quick profits, and divert their earnings to personal incentives. Barstad remains optimistic that the market can establish a new, higher floor for VLCC rates as charterers gradually secure the vessels they need.

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Frontline Books $6M Profit from Sale of Oldest Suezmax

Frontline sold its oldest suezmax, the 156,500-dwt Front Brage (built 2011), for $36.4 million, generating a net profit of $6 million after debt repayment. The sale will provide net proceeds of $23.7 million in Q3, with the scrubber-fitted vessel delivered during the same period. The buyer was identified as Anil Sharma, either via Lila Global or cash buyer GMS. Following this disposal, Frontline’s oldest vessel becomes the 156,800-dwt Front Ull (built 2014), with its fleet also including VLCCs and suezmaxes built from 2015 and 2016. The transaction marks Frontline’s first vessel sale of 2025, after selling three 2010-built suezmaxes in 2024, while the company reported a Q2 net profit of $77.5 million on revenue of $480.1 million.

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Suez Canal Traffic to Weigh on Product Tankers, Bimco Says

Bimco expects product tankers transiting the Suez Canal to face pressure for the next 18 months due to rising regional traffic and shorter average sailing distances. The ratio of deadweight transiting the Suez Canal versus the Cape of Good Hope has risen to 1.44 in 2025 from 1.09 in 2024, a 33% relative increase. Fleet supply is growing, with product tanker capacity expected to rise 3.5% this year and 6.5% in 2026, while demand growth remains weak at -0.5% to 0.5% in 2025 and 0.5% to 1.5% in 2026. Despite this, current rates are slightly above year-to-date averages, with LR2 tankers at $33,300/day, LR1 at $24,800/day, and MR tankers rising 14.8% week-on-week to $35,600/day. Bimco forecasts that overall rates will lag behind 2024 levels as the sector adjusts to higher Suez Canal transits.

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Pirates Attempt Tanker Boarding Off West Africa; Crew Safe in Citadel

A Malta-flagged tanker was targeted by pirates off West Africa, 58 nautical miles south of Lome, Togo, prompting the crew to retreat into the ship’s citadel, according to Maritime Domain Awareness for Trade. The vessel, underway from Lome to the Democratic Republic of the Congo, temporarily stopped transmitting AIS signals as it began drifting, suggesting a probable act of piracy. Naval authorities, including the Togolese Navy, intervened and confirmed that all crew members remained safe. Maritime security firms advised vessels with low freeboards and no armed protection to reroute closer to Ghanaian and Togolese territorial waters. This incident follows recent pirate activity in the region, highlighting ongoing threats to shipping in West African waters.