Crude Prices to Remain Firm Through August Amid Tight Inventories

Tight global oil inventories will likely keep crude prices supported through August despite OPEC+ increasing production, according to Tamas Varga, analyst at PVM Oil Associates.

The oil market remains dominated by geopolitical risks, including conflicts in the Middle East and Ukraine, trade disputes, and inflation. These factors continue to cloud the broader economic outlook.

OPEC+ has now fully reversed its voluntary production cuts, but a meaningful recovery in regional oil flows remains elusive. The group's decision to raise output by another 188,000 barrels per day (bpd) beginning in September has done little to ease concerns over global supply.

Tightening global oil inventories and continued disruptions affecting crude and refined product markets will keep prices firm through August unless Middle East oil flows recover sustainably or demand begins to weaken. U.S. distillate inventories have recovered from May lows but remain significantly below year-ago levels and the five-year seasonal average.

The latest snapshot hardly paints a picture of an abundance of black gold, Varga said, adding that recent shifts in U.S. policy toward Iran continue to inject uncertainty into the market.