Oil prices are back in the green, up about 2%, as traders try to make sense of a tight short-term market, fresh supply forecasts, and rising geopolitical tensions.
This is why oil markets are looking jittery despite signs of future surplus.
After dipping over 2% in the previous session, both Brent and West Texas Intermediate (WTI) crude made a solid recovery on Friday, July 11.
Brent crude rose $1.35 (2%) to $69.99 per barrel, and WTI crude gained $1.49 (2.2%) to $68.06 per barrel.
This bounce puts Brent on track for a 2.5% weekly gain, while WTI is up about 1.6% week-to-date.
But why this rebound? It is all about short-term tightness vs. long-term surplus fears.
The International Energy Agency (IEA) noted that despite projecting a global oil surplus for 2025, current markets are tighter than they appear. Summer travel demand is driving up refinery runs and fuel consumption, especially for jet fuel and gasoline.
Saudi crude shipments to China are expected to hit 51 million barrels in August, the biggest monthly volume in over two years, highlighting robust Asian demand.
The IEA may be sounding the surplus alarm for the months ahead, but right now, traders are focused on immediate demand.
Front-month Brent contracts are trading at a premium to later contracts, a signal of current supply strain. Russia said it will compensate for overproduction by cutting output in August–September to stay in line with OPEC+ quotas. OPEC+, while eyeing long-term cuts due to slowing Chinese demand, still has room to “turn up the oil tap” quickly if needed, according to Commerzbank.
Oil prices are walking a tightrope. On one side, you’ve got strong summer demand and production tweaks keeping things tight. On the other? Growing fears of oversupply, potential economic slowdown due to tariffs, and looming geopolitical risks.
