Oil prices have remained relatively stable in recent trading sessions, with Brent crude hovering around $70.23 per barrel and West Texas Intermediate (WTI) maintaining support near $68.37. This stability reflects a balance between external political and trade pressures and ongoing economic and technical support factors that continue to uphold current price levels.
Recent moves by U.S. President Donald Trump, including the imposition of a 50% tariff on copper imports and a surprise increase in tariffs on Brazil, signal a shift in U.S. trade policy toward greater protectionism. These measures have also targeted key partners such as South Korea and Japan. This shift has introduced uncertainty into global markets and forced a repricing of expectations for energy demand growth, particularly amid real concerns of an economic slowdown in emerging markets.
Data from the U.S. Energy Information Administration (EIA) showed an unexpected increase in crude inventories by 7.07 million barrels the highest weekly rise since January which surprised markets expecting a drawdown of around 2 million barrels. Despite the build in crude stockpiles, gasoline inventories dropped by over 2.6 million barrels, reflecting continued strong fuel demand during the summer travel season.
OPEC+ has announced plans to raise output by 548,000 barrels per day starting in August, though the effectiveness of this move remains uncertain. Some members are still exceeding their quotas, while others such as Russia face logistical challenges in meeting production targets. With growing signs of global demand softness, the timing of this production increase adds complexity to short-term price forecasts, especially in the absence of additional policy interventions or monetary adjustments.
UBS projects that the global refining market will face supply shortfalls over the next two years due to delays in new projects, including the postponed launch of India’s Barmer refinery. Additional shutdowns confirmed or expected at the Benicia refinery in the U.S. and the Lindsey facility in the U.K. are expected to reduce refining capacity by 200,000 to 700,000 barrels per day through 2025–2026.
On the demand side, UBS has raised its forecasts, expecting refined product demand to grow by 0.4 million barrels per day in 2025 and 0.6 million barrels per day in 2026. This outlook is supported by projected global economic growth of 2.8% in 2025 and 2.7% in 2026, along with a weaker U.S. dollar, which tends to boost consumption in energy-importing countries.
Despite volatility in the second quarter partially influenced by Middle East tensions UBS has revised its estimates for European refining margins upward to $5.7 per barrel for 2025 and $4.2 per barrel for 2026. This reflects improved profitability despite structural supply fragilities, particularly in middle distillates.
Looking ahead, UBS believes that Europe will require the closure of more than 3 million barrels per day in refining capacity by the end of 2027 to return to pre-COVID balance levels. The situation at the Lindsey refinery is viewed as a signal of deeper restructuring needs across the European refining sector in the coming years.
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