Saudi cutting Chinese supply: Saudi Arabia’s crude oil supply to China is expected to dip slightly in July to 47 million barrels, down 1 million barrels from June, though volumes remain strong overall. State refiners like Sinopec and PetroChina will receive more oil, while allocations to independent refiners such as Rongsheng and Hengli will decrease. This comes as OPEC+ continues to raise output, with a planned increase of 411,000 barrels per day in July. Since April, OPEC+ has announced total production hikes of 1.37million barrels per day, about 62% of its goal to restore 2.2 million barrels per day to the market.
OPEC: OPEC oil production rose by 150,000 barrels per day in May, falling short of the planned increase due to Iraq making additional compensation cuts and smaller-than-expected hikes from Saudi Arabia and the UAE. Under an agreement among five OPEC members to raise output by 310,000 bpd, the actual rise was only 180,000 bpd, with Saudi Arabia contributing the largest increase of130,000 bpd. Iraq reduced output significantly to comply with past overproduction commitments, while the UAE also pumped below its quota. Estimates of production levels vary widely, with some sources suggesting higher output than reported by Iraq and the UAE, though the Reuters survey uses multiple data sources to track market supply.
Ukraine: Ukrainian Foreign Minister Andrii Sybiha spoke in Kyiv yesterday with Lithuanian Foreign Minister Kestutis Budrys, where Sybiha noted that Ukraine has not yet received a response from Russia regarding the peace proposals that were made in Istanbul. Sybiha also added that he expects the next EU sanctions package “not to be just powerful but destructive too,” and reiterated calls for G7 countries to lower the price cap on Russian crude to $30/bbl. Budrys added that allies of Ukraine have room to increase sanctions on Russia, and that next steps need to be coordinated with the US.
Market Overview: Oil prices are rising as optimism surrounding ongoing U.S.-China trade talks and a dip in Saudi crude supply to China supported market sentiment. U.S. crude futures are up by about 0.5%, with investors hopeful that easing trade tensions could boost global demand. Meanwhile, Saudi Aramco is set to ship 1 million fewer barrels to China in July, despite OPEC+ plans to increase output by 411,000 barrels per day. Potential supply pressures also remain from Iran’s nuclear negotiations and wildfires in Canada affecting North American output.
In 2024, the United States produced a record amount of energy, according to data in the EIA's Monthly Energy Review. U.S. total energy production was more than 103 quadrillion British thermal units in 2024, a 1% increase from the previous record set in 2023. Several energy sources—natural gas, crude oil, natural gas plant liquids, biofuels, solar, and wind—each set domestic production records last year. So far in 2025 energy production, specifically crude oil, has been lower than 2024.
