WTI and Brent Hold Near $70 as OPEC+ Lifts Output and Supply Pressures Mount

WTI (CL=F) and Brent (BZ=F) Show Resilience Near $70

Oil prices remain elevated, with WTI (CL=F) trading at $68.04 and Brent (BZ=F) at $69.87 as of July 8, 2025, resisting downward pressure from OPEC+ production hikes and geopolitical instability. Both benchmarks are testing two-week highs despite a surprise 548,000 bpd production increase from OPEC+ for August and an expected 550,000 bpd hike in September. These increases will fully unwind the group’s prior 2.2 million bpd voluntary output cuts well ahead of schedule.

OPEC+ Aggressive Output Strategy vs Seasonal Demand

Analysts from HSBC warn of downside price risks heading into autumn, forecasting Brent (BZ=F) to potentially drop to $65 on emerging oversupply. However, tightness in middle distillates and strong seasonal demand are acting as counterweights. Rystad Energy highlights that Houthi attacks in the Red Sea and European refinery outages are also supporting prices.

Saudi Arabia Expands Production, April Exports at 6.17M bpd

Saudi Arabia ramped up April exports by 412,000 bpd to 6.17 million bpd, while production edged up by 48,000 bpd, reflecting OPEC+’s gradual unwind of cuts. Yet summer demand within the kingdom for power generation may limit additional export volumes. The ongoing replacement of voluntary cuts from April through July—411,000 bpd monthly increments—has set the stage for sharp supply growth.

Nigerian Expansion: Shell and TotalEnergies Target 2027 Output

In Nigeria, Shell and TotalEnergies are expanding production. Shell’s $5 billion Bonga North deepwater development and TotalEnergies’ $550 million Ubeta gas project are both slated for first output in 2027, adding significant volumes to African supply. Additionally, Shell is planning a final investment decision (FID) on the $8 billion Bonga Southwest-Aparo project, and TotalEnergies is aiming for FID on the IMA field by 2026.

Diesel Defies Tariffs: Europe Struggles with Refinery Outages

Diesel markets are tightening, particularly in Europe. The East-West diesel spread surged to $73/mt, the highest since December 2023, while the ICE gasoil crack soared to $23 per barrel. European supply disruption from BP’s Rotterdam and the bankruptcy of the 113,000 bpd Lindsey refinery is creating upside pressure on prices. Meanwhile, Asian diesel remains stable, and Middle Eastern refiners are shipping to Europe to capitalize on arbitrage opportunities.

Shell, Glencore, and BP Face Operational and Earnings Pressures

Shell (LON:SHEL) issued weak guidance, citing underperformance in its gas and chemicals division. Meanwhile, Glencore (LON:GLEN) agreed to supply the struggling Lindsey refinery, preventing near-term shutdowns of its 1.8 million barrels of crude in storage. BP (NYSE:BP) is preparing to reopen its Tripoli office and resume deepwater drilling in Libya, with drilling of the Matsola well expected by Q4 2025.

Libya’s Comeback: Supermajors Return to Exploration

Libya’s NOC signed new MOUs with BP and Shell, reigniting activity in key fields like Messla, Sarir, and al-Atshan. These deals are part of Libya’s first oil exploration tender since 2007. More than 37 international companies, including ExxonMobil, Chevron, and TotalEnergies, have expressed interest in the 22 blocks on offer. After years of civil war, Libya is aggressively rebuilding its oil sector.

U.S. Inventory Trends: 6th Draw in 7 Weeks

The API and EIA report a drawdown of 2.6 million barrels in U.S. inventories for the week ending July 4, marking the sixth draw in seven weeks. Last year’s draw was 3.4 million barrels, while the five-year average is a 1.9 million barrel build. These consistent withdrawals point to firm domestic demand.

LNG Dynamics: Venture Global's Spot Arbitrage Raises Eyebrows

Venture Global continues to prioritize spot LNG sales over fulfilling long-term contracts. Its Plaquemines facility generated $7.09/MMBtu in liquefaction fees across 51 cargoes, compared to just $2.66/MMBtu from the commissioned Calcasieu Pass facility. European buyers, left out of deliveries, are pressing legal claims, while the U.S. firm benefits from arbitrage against strong Asian demand.

China’s Gas Imports Slump Amid Price Sensitivity

China’s LNG imports for January–April 2025 dropped to 20 million tons, down from 29 million tons in 2024. With domestic pipeline imports up 25% and weak macroeconomic sentiment, Chinese buyers are avoiding spot cargoes. The IEA expects a rebound ahead of winter, but current softness is easing pressure on European gas markets.

Outlook: Brent Eyes $75 if Demand Holds, but Autumn Risk Looms

Technically, WTI needs to clear its 200-day EMA to initiate a push toward $75, with $65 acting as a major support. Brent is holding near $69.50, with upside capped by the 200-day EMA, while support rests at $67. Short-term fundamentals show strength, but oversupply risks grow as we approach fall.

Verdict: Hold. With WTI at $68.04 and Brent at $69.87, oil is range-bound. Geopolitical threats and distillate tightness support prices, but OPEC+ supply pressure and Trump’s tariffs temper bullish momentum. Until Brent clears $70.50 or dips below $67, the path remains neutral with high volatility risk.

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