Summer demand supports prices despite oversupply warnings
Oil prices rebounded slightly on Friday
Crude oil prices rose during trading on Friday, July 11, 2025, compensating for part of their losses that exceeded 2% in the previous session, as investors expect a short-term supply shortage against a possible surplus later this year.
According to the IEA, summer demand driven by travel and power generation is currently supporting prices, but it warned that increased production could lead to a surplus in the market, prompting it to lower its long-term global demand forecast, especially with slowing growth in China.
China drives demand with rising Saudi imports
Data showed Saudi oil exports to China rose in June to 1.57 million barrels per day, the highest level in two years, reflecting the strength of demand in the world's second largest economy.
The kingdom is also preparing to ship 51 million barrels to China in August, the largest monthly amount in more than two years.
However, OPEC has lowered its forecast for oil demand due to slowing Chinese growth, adding to fears of a supply-demand imbalance in the future.
OPEC increases production, surplus risks loom
OPEC is scheduled to increase its production by 548 thousand barrels per day in August, which could push the market into a significant surplus in the fourth quarter of the year, according to ING analysts.
But prices are still supported by other factors, such as:
- Houthi attacks on ships in the Red Sea, prolonging transportation routes and raising shipping costs.
- Possible sanctions on Russian oil exports after US President Donald Trump's statements about an important announcement regarding Russia next week.
Mixed forecasts between improving demand and increasing supply
Despite fears of overproduction, some factors point to continued support for oil prices, including:
- Lower gasoline and diesel inventories in the United States, reflecting the strength of domestic demand.
- Seasonal demand improved with the peak of summer.
- Geopolitical tensions that may disrupt global oil flows.
In the end, the oil market is between the risks of surplus and demand support, as investors are now looking forward to the upcoming OPEC meeting and the developments of sanctions on Russia, which may determine the direction of the market in the coming months.
