After trading between $66 and $69, Brent futures have surpassed $70 per barrel, supported by stronger demand indicators amid ongoing uncertainty regarding Russia.

The 50-day deadline for Russia to end its invasion and avoid tariffs has eased some concerns about supply disruptions, temporarily lowering prices.

Global balances remain fragile, with significant stock builds expected, averaging 1.5 million barrels per day (bpd) in the fourth quarter of 2025 and 1.7 million bpd in the first quarter of 2026, likely prompting policy adjustments to maintain backwardation.

September brings an elongated period of projected crude builds, not seen since 1Q23.

Rystad Energy projects global demand to fall by 230,000 barrels per day quarter-on-quarter into 4Q25 as the Northern Hemisphere’s summer travel period ends, putting pressure on refinery margins as product cracks fall.

However, supply doesn’t follow the same trajectory, as global growth of 1.1 million bpd into 4Q25 extends mostly within non-OPEC+ nations (800,000 bpd).

Challenges exist for the OPEC+ group as their primary goal of maintaining a backwardated crude market structure and preventing crude storage could be threatened.

A very real scenario exists in which OPEC+ begins to cut production and exports and extends a new policy throughout the end of the year to tame supply growth.

Backwardation has strengthened in the last few days due to immediate threats to Russian supply volumes.

Yet, it remains in the $1-$2 per barrel range.

A flip to contango would activate traders to store volumes and negate much of OPEC+’s hard work.

OPEC+’s decision 10 days ago to accelerate the unwinding of production cuts had largely been priced in, with many expecting a 411,000 bpd hike.

However, the announced 548,000 bpd increase only partially dented prices.

Most of the excess crude being produced is not being exported, and as such, minimal impacts on overall market share considering barrels on the water, due to regional effects.

Growth in demand across Europe and North America has mostly been met by alternative crude sources and stock draws.

The Middle East is experiencing a significant demand increase throughout the summer due to the call for crude barrels for direct crude burn in excess of 1 million barrels per day in July and August, as well as fuel oil usage for power generation as sweltering heat scorches the region and temperatures in Riyadh touch 50 °C (degrees Celsius).

Refinery runs growth is nearing its August peak of 85.2 million bpd, driven mostly by the Atlantic Basin.

The US administration's push for an end to the Russia-Ukraine war could have some short-term market reverberations.

Challenges in agreeing on suitable terms may push the market through a cycle of reduced oil and product flow from Russia, impacting revenues, before a return.

Secondary tariffs imposed on Russia could flip market balances as India and China currently import and consume more than 3.5 million bpd of Russian crude.

Russian oil has become an important piece of both India’s and China’s supply security, particularly as it helps balance costs amid volatile global markets.

A loss of 3.5 million bpd would push demand for medium sour Middle Eastern volumes higher, pushing benchmark and grade prices up.

The market simply cannot afford to lose the 4-5 million bpd of crude exports and 2-2.5 million bpd of product exports from Russia.

Waivers are also being discussed on these secondary tariffs, which could render many challenges ineffective.

The EU is discussing final stages of a revised price cap, which could also impact flows and revenues.

China’s tremendous month-on-month growth in refinery runs in June to 15.15 million bpd was driven by state-owned refiners amid strength in the margins space.

Despite this, crude arrivals remained strong, and in June, a fourth consecutive month of stock builds of around 1 million barrels per day was shown.

China’s domestic outlook is driven by pricing levels, with strong purchases at low prices.

Brent is likely to remain in the mid-$60s until the end of the year, with a Q3 average of $66 and Q4 at $63.

The risk premium attached to real price could add volatility as discussions on Russia-Ukraine enter a critical phase, some tensions in the Middle East still exist, and further sanctions on Iran and Venezuela are still on the table.