The Commodities Feed: OPEC+ nearing the end of supply hikes

Oil prices came under pressure yesterday with ICE Brent settling more than 2.2% lower, taking it back below US$70/bbl. This morning, prices have recouped some of this decline after President Trump said he plans to make a “major” statement on Russia on Monday. This could leave the market nervous over the potential for further sanctions on Russia.

Yesterday’s sell-off came despite reports suggesting that OPEC+ is near the end of its supply hikes. Potentially, there might be one more increase for September before the group takes a pause. This doesn’t change our outlook for the market, as we had assumed OPEC+ would hike supply all the way through until the end of September. These increases should move the global market into a large surplus in the fourth quarter, intensifying downward pressure on prices. For now, though, the market remains relatively tight through the northern hemisphere summer.

Meanwhile, the International Energy Agency (IEA) is scheduled to release its latest monthly oil market report. It will include supply and demand outlooks. Last month, the IEA forecasted that global oil demand would grow by 720k b/d YoY in 2025, and then by a further 740k b/d in 2026. The agency thought the global oil supply would grow by 1.8m b/d this year and 1.1m b/d in 2026. The IEA believed these increases would be largely driven by non-OPEC+ supply. Given pressures on US drilling activity, non-OPEC supply growth could potentially play a smaller role moving forward.

US natural gas futures rallied yesterday, with front-month Henry Hub settling 3.8% higher on the day after the Energy Information Administration (EIA) reported a smaller-than-expected storage increase over the last week. The market was expecting an increase of around 62bcf. The EIA reported an increase of 53bcf. Total US natural gas storage stands at a little over 3tcf, up 6.1% from the 5-year average, but still down 5.8% year on year.