On price caps and sub-$70 crude

Earlier this month, Brent crude futures touched $70 per barrel levels despite a suggested uptick in the amount of oil OPEC+ was bringing on to the market. 

The widely held belief here was that internal cheating or quota busting within OPEC+ ranks meant the announced increase wasn't what it was being made out to be. 

In step with that, Iran-backed Houthi rebel attacks in the Red Sea upped the geopolitical stakes a bit. 

Then a week ago, the EU and UK moved to lower the price cap on Russian crude from $60 per barrel to $47 per barrel, with effect from September 3. As inventory data at the time also pointed to a decline, traders took their cue and kept prices elevated. 

But keeping prices at $70 Brent levels looked unrealistic then, and has proven to be so in the sessions that have followed since. Thing is, as past Western sanctions and price caps on Russian crude have demonstrated, it always finds a way to reach where those willing to buy it need it, albeit at a discount that's priced comfortably above price cap. 

For instance, the previous price cap and sanctions regime did not prevent India from taking plenty of Russian crude, cracking it and exporting petroleum products and distillates around the world. This point hasn't been lost on the EU, which took a direct swipe at India's Nayara Energy (formerly Essar Oil) - the operator of the country's second-largest single-site refining complex in the coastal town of Vadinar, in which Russia's Rosneft has a stake. 

However, European curbs on Nayara's exports derived from Western sanctions-ridden Russian crude are unlikely to make any tangible difference to the wider scheme of things. India's exposure to the European market is not what it used to be, and its domestic market is more than capable of picking up middle distillate volumes left unexported. 

The wider crude market has also come to the belief that should China and India want Russian crude in higher volumes, they will find a way. Hence, the current decline in prices. Overall, there is ample crude in the market and current price levels are unlikely to be sustained. We are looking at a likely surplus from Q4 2025 to Q1 2026, as yours truly noted via Forbes post earlier this month, if not earlier. As such lower prices may beckon. 

Finally, here are another couple of the Oilholic's Forbes missives - the first a take on OPEC's latest forecast dismissing peak oil demand and projecting a global demand growth of 123 million bpd by 2050 contrary to the opinion of many in the market, and the second, a take on how China and India are keeping coal in play and a future energy transition at bay! 

Well that's all for now folks! More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2025. Photo: Oil production site. © Monika Wrangel / Pixabay, May 2015. 

On OPEC's higher output, no peak demand & no access

OPEC's two-day biennial 9th International Seminar came to a conclusion on Thursday after its key voices roundly declared the world simply needed more oil, there was no prospect of peak demand any time soon and denied half the world's scribes an opportunity to forensically question that assertion. 

More on the latter point later, but as The Oilholic noted in an overnight Forbes missive, the Saudi energy minister and de facto OPEC leader Prince Abdulaziz bin Salman warned against hurting global economic growth and people's "affordability" in the name of energy transition, multiple attendees confirmed to the Oilholic. 

The minister also said Wednesday that as renewable energy sources continue to grow, hydrocarbons will remain “indispensable” in supporting the economic progress of developing countries, and ensuring mission critical hard-to-abate sectors like heavy industry, aviation and haulage keep going.

And on Thursday - the second and final day of the OPEC Seminar - OPEC published its World Oil Outlook report claiming that crude demand will average 105 million barrels per day (bpd) this year. The producers' group expects demand to grow to average 106.3 million bpd in 2026 and then rise to 111.6 million bpd in 2029, and as high as 123 million bpd by 2050. To be read as - there's not going to be a peak demand scenario any time soon.

Now speaking of being reliant on third parties and quotes of seminar attendees to bring you these snippets dear readers, you may be wondering what's afoot. Well, for the first time since September 2004, OPEC turned down the Oilholic's request to attend, write op-eds for Forbes and blogs from the seminar.

Yours truly wasn't alone. It also withheld access to a number of global newswires, WSJ and FT, among many others. And for good measure, the event management company was instructed to tell all "non-partner media" journalists that the venue was full to capacity in case they turned up at the registration desk unannounced. 

There's not much one can do about this, but it didn't stop The Oilholic from flagging the goings-on at the event, and meeting and greeting familiar friends and faces from our 'crude' world. 

Still not sure what triggered but if it has something to do with objective reporting and searching questions - that ain't getting compromised folks, not now, not ever!

Non-access also meant that market commentary had to be done offsite, including with Asharq Business with Bloomberg TV. Yours truly discussed Brent crude touching $70 per barrel intraday on Wednesday with Senior Business News Anchor Nour Amache, and why near-term market sentiment was being impacted by lower inventories and anticipated higher summer demand in the Northern Hemisphere.

Furthermore, OPEC may have raised its output, but the hikes have already largely been factored in by traders. So, the move is currently not serving as a drag on prices. However, it would be interesting to note what happens when summer demand tails off, and the fourth quarter approaches with more OPEC+ barrels and hedged US / non-OPEC crude on the market. 

That will likely create a surplus, especially for light sweet crude, thereby potentially driving prices lower. Who knows, it may even convince US President Donald Trump to perhaps top up his country's strategic reserves. It seems we're heading for an interesting second half of the year. 

Well that's all from Vienna folks. More market musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma, July 2025. Photo I: Gaurav Sharma, energy analyst outside OPEC International Seminar venue at Hofburg Palace in Vienna, Austria on July 9, 2025 © Gaurav Sharma, July 2025. Photo II: Gaurav Sharma offers oil market commentary on Asharq Business with Bloomberg TV, July 9, 2025. © Asharq Business with Bloomberg TV, July 9, 2025.

Vienna bound ahead of OPEC seminar

After the latest OPEC meeting follows the producers' group's seminar - its invitation to the great and the good of the energy world held once every two years in Vienna. 

As the Oilholic heads out there for a business trip, while sitting and musing at London's Heathrow airport before the flight, one cannot but help notice that oil benchmarks are on the up. 

That's despite OPEC+'s decision to up production by another half a million plus barrels. The group has effectively unwound nearly 90% of the so-called "voluntary" cuts it brought in back in 2022. Conventional market wisdom would suggest that oil futures would head lower on the development but they haven't. 

That's down to three key reasons. They include: (1) an expectation that the summer driving season in Northern Hemisphere in general, and the US in particular, would absorb the additional barrels, (2) an uptick in attacks on cargoes in the Red Sea by Houthi rebels providing an element of risk, and (3) a belief that quota busting within OPEC+ ranks means many of the additional barrels are not all that additional at all. 

Regardless of where we head to in the very near-term, there is likely to be a surplus and relatively weaker prices as the end of the year approaches. It sets up an interesting second half of the trading year, one, that as things stand, the market bears are likely to win bar another major geopolitical flare-up or a macroeconomic event. 

Well that's all for now folks. More musing from Vienna soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma, June 2025.

Do sub $60 oil prices beckon in H2 2025?

The second half of the current crude oil trading year was ushered in by a larger-than-expected output hike by OPEC+ over the weekend, just ahead of the first week's trades in Asia. The market was largely pricing in a 411,000 bpd hike like the previous month, but got a whopping 548,000 bpd uptick instead. 

The latest addition effectively unwinds nearly 90% of the "voluntary" OPEC+ cuts in place since 2022. Here is the Oilholic's take on it via a column for Forbes. Unmistakably, this is a very bearish development. But it is also a statement of intent that OPEC is more than willing to take the fight to non-OPEC producers in a bid for a higher market share. 

Of course, non-OPEC production - especially that of the US - continues to go from strength-to-strength, at least for now, until production hedges unwind in the next 12 to 18 months. Until then it might well be a buyers' market with likely lower, even sub $60 per barrel Brent prices in a glut-ridden market. 

And speaking of the US, here is yours truly's latest Energy Connects column on how that record high US production has effectively reset the global energy market's risk premiums, as recent events in the Middle East have demonstrated.   

The said events, i.e. the Israel-Iran conflict and the bombing of Iran's nuclear facilities by the US, were the subject of The Oilholic's most recent appearance on TRT World's Round Table programme. Escalating tensions brought home long-held market anxieties - about energy cargoes in the Strait being disrupted as well as higher risk premiums - to the fore once again. 

Together with fellow guests on the programme, yours truly discussed why the closure of the Strait would be an act of self-harm for Iran, why Tehran simply won't (and didn't) do it, and ultimately why oil prices failed to hold on to the gains following a cessation of hostilities, courtesy of a well-supplied market and lacklustre demand growth. 

Here's an upload of the broadcast via TRT World's YouTube stream. Have a listen in if interested. Well that's all for the moment folks! More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2025. Photo: Gaurav Sharma on TRTWorld's Round Table programme in June 2025 © TRT World, 2025.

Oil market fundamentals return with aplomb

The oil futures slide began even before Iran's muted response to the US bombing of its nuclear sites had ended on Monday. And the benchmarks tanked further still once a ceasefire between Israel and Iran took effect in the following session. 

That's because oil market fundamentals took hold the moment de-risking started, evaporating the so-called risk premium double quick. 

Prior to this week's declines, oil futures had risen 20% month-over-month. Those price gains have now almost entirely been lost. And so much so for the outlandish claims that Iran may shut the Strait of Hormuz, which was never going to happen as yours truly noted in a column for Forbes. 

Since the start of hostilities on June 13, the Oilholic has always maintained that if there was a swift end to the conflict - as has been the case - price will fall rapidly again. That's because the market remains well supplied with plenty of non-Middle Eastern, non-OPEC crude from Brazil, Canada, Guyana, Norway, and indeed - the US - still the world's number 1 producer of oil. 

If you believe global oil demand growth for 2025 to be in the region that's just a smidge north or south of 1 million barrels per day, that can be serviced by growth in non-OPEC production alone. And OPEC+ led by the Saudis and Russians is also pumping more in a fight for market share. 

It all points to a market surplus come the end of 2025, especially for light sweet crude. That itself points to oil prices heading lower, perhaps even below $60! Well that's all for the moment folks! More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Forbes click here.

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2025. Photo: Oil pump jack building block model at the AVEVA World 2023 Conference, Moscone Center, San Francisco, US © Gaurav Sharma, October 2023.