OPEC said the global economy may perform better than expected in the second half of the year despite trade conflicts and that refineries’ crude intake would remain elevated to meet the uptick in summer travel, helping to support the demand outlook.
In a monthly report yesterday, Opec left its forecasts for global oil demand growth unchanged in 2025 and 2026 after reductions in April, saying the economic outlook was robust.
“India, China, and Brazil are outperforming expectations so far, while the United States and the Eurozone are experiencing a continued rebound from last year,” Opec said in the report.
“With this, the second-half 2025 economic growth may turn out better than currently expected.”
The Opec+ producer group, comprising the 12 Opec members plus allies including Russia, is pumping more barrels to regain market share after years of cuts to support the market.
The report also showed that in June, Opec+ pumped 41.56 million bpd, up 349,000 bpd from May. This is slightly less than the 411,000 bpd hike called for by the group’s increase in its June quotas.
Meanwhile, oil prices were little changed yesterday after US President Donald Trump’s lengthy 50-day deadline for Russia to end the Ukraine war and avoid sanctions eased immediate supply concerns.
Brent crude futures were up a marginal 3 cents at $69.24 a barrel by yesterday afternoon. US West Texas Intermediate crude futures were down 7 cents at $66.90.
“The focus has been on Donald Trump. There was some fear he might target Russia with sanctions immediately and now he has given another 50 days,” said UBS commodities analyst Giovanni Staunovo. “Those fears about an imminent additional tightness in the market have dissipated. That’s the main story.”
Oil prices had climbed on the potential sanctions but later gave up gains as the 50-day deadline raised hopes that sanctions could be avoided.
If Trump does follow through and the proposed sanctions are implemented, “it would drastically change the outlook for the oil market,” analysts at ING said in a note yesterday.
“China, India and Turkiye are the largest buyers of Russian crude oil. They would need to weigh the benefits of buying discounted Russian crude oil against the cost of their exports to the US,” the ING note said.
Trump announced new weapons for Ukraine on Monday and had said on Saturday that he would impose a 30 percent tariff on most imports from the European Union and Mexico from August 1, adding to similar warnings for other countries.
Tariffs raise the risk of slower economic growth, which could reduce global fuel demand and drag oil prices lower.
China’s economy slowed in the second quarter, data showed on Tuesday, with markets bracing for a weaker second half as exports lose momentum, prices continue to fall and consumer confidence remains low.
Tony Sycamore, an analyst at IG, said economic growth in China came in above consensus, largely because of strong fiscal support and the front-loading of production and exports to beat US tariffs.
“Today’s tepid Chinese data has direct implications for commodities including iron ore and crude oil,” he said.
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