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Informist, Friday, Aug. 22, 2025

MUMBAI – Crude oil prices are unlikely to sustain the slight recovery that happened this week. The prices are likely to fall as there is a risk of significant oversupply in the oil market in the second half of 2025, which is likely to cause global oil inventories to rise further, analysts at Commerzbank said in a report Friday. The prices of Brent crude oil rose to a two-week high of $67.50 per barrel this week despite recent hopes for an end to the war in Ukraine, the analysts said.

Oil prices got support in the middle of the week by the larger-than-expected decline in US crude oil inventories, Commerzbank said. Crude oil inventories in the US, excluding those in strategic petroleum reserves, fell by 6 million barrels to 420.7 million barrels in the week ended Friday, according to the US Energy Information Administration. "The sharp decline in inventories was driven by a significant drop in net imports due to increased exports and lower imports," analysts at Commerzbank said.

There is a risk of new trouble in the oil market as a result of sanctions policy in the short term. Additional US tariffs of 25% on imports from India will come into effect on Wednesday as India is still buying Russian oil, the report said. India is now increasingly sourcing Russian oil by using the so-called shadow fleet, Commerzbank said citing media reports. "One refinery has even announced a significant expansion of its capacity. Russia also assumes that India will continue to buy its oil."

Meanwhile, exports from Saudi Arabia fell in June despite a significant increase in their production, the report said citing data from the Joint Organizations Data Initiative. In June, crude oil exports fell by 50,000 barrels per day from the previous month to 6.14 million barrels per day. On other hand, oil production rose by 570,000 barrels per day to 9.75 million barrels per day. The additional oil produced remained in the domestic market and most of it is likely to have gone into storage. This is because domestic crude oil processing fell slightly to 2.7 million barrels per day, while the demand for power generation rose by 185,000 barrels per day to 674,000 barrels per day, the report said. "It cannot therefore be ruled out that the oil in storage will enter the market at a later date."  End

US$1 = INR 87.53

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Udita S. Jaiswal

Edited by Akul Nishant Akhoury

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