Oil Starts Summer on Borrowed Time as OPEC+ Fuels Surplus Threat
Minyak Memulai Musim Panas dengan Waktu Pinjaman karena OPEC+ Memicu Ancaman Surplus
The oil market is racing toward a reckoning as a Saudi-led production surge only adds to market expectations that it will be in surplus later this year. The crucial question is when?
For months, the biggest news story in the market was OPEC+’s seismic decision to stop supporting oil prices instead unleashing a flood of barrels. It came just as President Donald Trump’s trade wars threatened to sap demand.
As the clock ticks down, there’s little sign of a price collapse in the here and now. In fact, the oil market despite its decline this year is barely holding on.
Data from oil major BP Plc which operates refineries from Illinois to Rotterdam — showed that the second quarter was its most profitable fuel-making quarter in a year. Refiners have been busy buying cargoes in the U.S. and North Sea, rushing to turn crude into products like gasoline and jet fuel as demand surges during the peak of the Northern Hemisphere’s summer season.
“It’s usually not a good idea to short the market on the eve of a seasonal demand increase,” said Frederic Lasserre, global head of market research and analysis at Gunvor Group, one of the world’s leading oil traders. “But after that, the consensus for the fourth quarter and 2026 is quite bearish.”
The global oil market was widely expected to be facing a supply glut by the end of this year, even before the OPEC+ pivot. The unexpected addition of the group only adds to the chances of that changing.
The fate of the market is critical for oil-producing countries and central banks in consuming nations. A downturn would reduce the flow of petrodollars on the one hand while lowering fuel costs on the other, which would have an impact on broader inflation expectations.
In Riyadh, Saudi Arabia is betting that rising demand will give the kingdom the flexibility to boost its own production and recover market share lost to U.S. shale producers and others outside the OPEC+ group, sources familiar with the matter said earlier this month.
Brent oil was trading around $67.40 a barrel in London on Tuesday. Oil has mostly traded between $60 and $67.50 since the OPEC+ changes were announced. The average for the previous three months was $75.
Source: Bloomberg
