Oil markets are being pulled in different directions by a range of forces, with the potential for supply losses stemming from new sanctions on Russia and Iran coming against a backdrop of higher OPEC+ supply and the prospect of increasingly bloated oil balances. China continues to stockpile crude oil, helping keep Brent crude futures in slight backwardation. Prices moved in a narrow band since August and at the time of writing Brent was $67/bbl, largely unchanged from a month earlier.
Toughened sanctions on Iran and Russia have so far had a relatively modest impact on supply and trade flows, even as exports from both countries have been trending lower in recent months. The EU ban on imports of refined products derived from Russian crude oil from the start of 2026 may yet curb output and upend trade patterns in the coming months.
Oil prices were little changed after OPEC+ agreed on 7 September to start unwinding its second tranche of supply cuts, in place since April 2023. The Group of Eight OPEC+ countries plans to raise its output target by 137 kb/d in October. If continued at this pace, lifting the full 1.65 mb/d tranche of cuts would take 12 months, leaving the 22-member alliance with 2 mb/d of supply cuts still in place.
The actual supply boost in October will be less than the target increase, as Iraq, the UAE, Kuwait and Kazakhstan already pump 1.1 mb/d above their quotas, while others, including Russia, are bumping up against capacity constraints, according to our estimates. As of September, OPEC+ will have ramped up actual crude output by 1.5 mb/d since 1Q25, well below the announced target of 2.5 mb/d. The biggest increase has come from Saudi Arabia and other core Middle Eastern producers. However, tanker tracking data indicate that the majority of the additional volumes have been absorbed by regional refinery activity and power generation use rather than exported out of the region.
Non-OPEC+ oil supply growth continues apace, with output from the United States, Brazil, Canada, Guyana and Argentina at or near all-time highs. Non-OPEC+ producers are now on track to boost production by 1.4 mb/d in 2025 and by just over 1 mb/d next year. OPEC+ is currently expected to add 1.3 mb/d in 2025 and 1 mb/d next year, on a par with non-OPEC+.
The global oil demand outlook remains largely unchanged, with growth of around 700 kb/d expected for both 2025 and 2026. Oil demand typically declines by around 1 mb/d from its summer peak through to the end of the year, while refinery activity slumps by 3.5 mb/d from August to October.
Global observed oil inventories rose for the sixth consecutive month in July. The 26.5 mb increase in July puts the cumulative growth since the start of the year at 187 mb. Chinese crude stocks rose by 64 mb over the same period – and by 106 mb from February to August, helping absorb the overhang. Global stocks are forecast to rise by an untenable 2.5 mb/d on average in 2H25 as supply far outstrips demand, but there are a number of potential twists and turns ahead – including geopolitical tensions, trade policies and additional sanctions on Russia and Iran – that could yet alter market balances.