Global Oil Markets: OPEC+ Output Discipline and WTI Recovery
Despite macroeconomic headwinds, OPEC+ maintained production cuts driving WTI above the $79 threshold. We assess Q3 trajectory and demand signals from Asia.
Executive Summary
OPEC+ maintained its voluntary production cut framework through June 2025, with Saudi Arabia extending its unilateral 1 mb/d reduction into Q3. The discipline held despite pressure from Russia and the UAE, supporting WTI's recovery above the $79/bbl threshold after the April dip to $74.
Demand signals from Asia remain constructive. China's industrial PMI recovered to 50.4 in May, and Indian crude imports hit a record 5.3 mb/d in June driven by refinery margin optimisation ahead of the monsoon season.
Crude Oil Price Analysis
WTI Cushing Spot
WTI averaged $79.4/bbl in June, up $3.2 from May's $76.2 average. The recovery was driven by:
- OPEC+ reaffirmation of cuts at the June ministerial meeting
- Drawdown of US commercial crude inventories by 4.2 mb over the month
- Softer USD index reducing the dollar-denominated commodity headwind
Key levels to watch: $82 resistance (200-day MA) · $76 support (May low)
Brent ICE Spot
Brent averaged $83.2/bbl, maintaining the typical $3.5–4.5 premium to WTI. The spread widened briefly to $5.2 mid-month as North Sea Forties loading programmes tightened.
OPEC+ Production Watch
| Country | Voluntary Cut | Compliance (Jun) | |---|---|---| | Saudi Arabia | 1,000 kb/d | 104% | | Russia | 500 kb/d | 96% | | Iraq | 220 kb/d | 88% | | UAE | 163 kb/d | 101% | | Kuwait | 135 kb/d | 103% |
Iraq's under-compliance remains a structural friction point. Baghdad has committed to compensatory cuts in Q3, though enforcement history suggests partial delivery at best.
Demand Outlook
Asia — Leading Signal
China's apparent demand (crude imports + domestic production – stock build) averaged 16.1 mb/d in Q2, up 0.8 mb/d YoY. Teapot refinery utilisation rose to 68% from 61% in Q1 on improved refining margins.
India continues to absorb discounted Russian Urals at scale. Indian refiners processed 5.3 mb/d in June — a record — with Reliance and HPCL expanding capacities adding incremental pull.
Europe — Subdued But Stable
European demand remained sluggish at 12.8 mb/d due to industrial weakness in Germany and France. However, summer driving season provided modest uplift in gasoline and jet demand.
Rig Count & Upstream Activity
Global active rig count stood at 582 as of 28 June, up 4 from month-end May.
North America:
- US: 579 rigs (-3 MoM) — Permian basin holding at 305, Eagle Ford declining
- Canada: 98 rigs (+7 MoM) — seasonal rebound post spring break-up
International:
- Middle East: 234 rigs (+8 MoM) — Saudi Aramba and ADNOC expansion programmes
- North Sea: 12 active rigs, stable
Q3 2025 Price Outlook
| Scenario | WTI Range | Probability | |---|---|---| | Base (OPEC+ holds) | $77–$84/bbl | 55% | | Bull (demand surprise) | $85–$92/bbl | 20% | | Bear (macro deterioration) | $68–$75/bbl | 25% |
Base case: We maintain our Q3 WTI forecast of $78–$83/bbl. The OPEC+ framework is holding but fragility remains. A material deterioration in Chinese industrial activity or an unexpected rise in US output (currently near record 13.2 mb/d) could pressure the lower bound.
Risk Factors
- Macro headwinds — Persistent US core inflation keeping Fed rates elevated, strengthening USD
- OPEC+ cohesion — Iraq and Russia compliance slippage in H2
- China property sector — Continued weakness dampening broader industrial demand
- US shale response — DUC inventory drawdown could add 200-300 kb/d output into autumn
- Geopolitical — Red Sea shipping disruptions adding freight costs but not materially affecting crude flows
Data Sources
- EIA Weekly Petroleum Status Report
- IEA Oil Market Report — June 2025
- Baker Hughes Rig Count — June 28, 2025
- OPEC Monthly Oil Market Report — June 2025
- Argus Media spot price assessments
This report is published by Greenstone Energy Ltd for informational purposes only. It does not constitute investment advice. All price data sourced from publicly available sources.