Global crude oil exports remain strong, surpassing the latest ten-year seasonal average. However, demand has also remained firm this summer, absorbing increased supply from South America—led by Brazil and Guyana—and higher production in the Middle East as OPEC+ continues easing output cuts.
As a result, the market appears balanced as the northern hemisphere’s peak consumption season draws to a close. But concerns point to a surplus emerging in the fourth quarter, leading to weaker prices once peak demand ends and OPEC+ unwinds more of its cuts.
South America Drives Higher Crude Shipments
Mark Toth, analyst at energy trade flow consultancy Vortexa, wrote this week that “despite fears that the rapid unwinding of output cuts by the eight key OPEC+ members, followed by higher exports, particularly from Saudi Arabia and the UAE, could push crude markets into surplus, this has not yet materialized in a meaningful way.”
Global crude and condensate loadings remained elevated in the first half of August 2025 at about 41 million barrels per day, according to Vortexa estimates. This is 2% above the 2016–2024 seasonal average and higher than 2023 and 2024 levels.
Pacific Basin exports were 7% below their seasonal average, but South America—where Brazil and Guyana are boosting production—led the increase. South American exports ran 9% above the 2016–2024 August seasonal high during the first 15 days of the month. Broader Atlantic Basin exports also stayed strong, Vortexa data showed.
Exports from the most important producing and exporting region, the Middle East, have not risen despite the ongoing unwinding of OPEC+ cuts. One reason is that some members, such as Iraq, are compensating for prior overproduction rather than boosting output. Another is stronger oil demand for power generation in Middle Eastern countries during extreme summer heat—a typical seasonal pattern for Saudi Arabia and other Gulf exporters.
This combination of offsetting overproduction and higher local demand has slowed inventory builds within the wider OPEC+ group, with onshore crude stocks down 4% from the seasonal average, according to Vortexa’s global inventory report dated August 15.
Downward Pressure on Oil Prices Emerging
Toth noted that “with local demand among OPEC+ members set to decline after summer and production rising in September, the durability of the current price stability is questionable.”
The Dubai market backwardation between front-month and third-month contracts narrowed to $2.37 per barrel on August 15 from about $3 at the start of the month, Argus data cited by Vortexa showed. Even so, backwardation—where near-term prices are higher than later months, reflecting tight supply—remains above the $2.104 average seen in Dubai during the first half of 2025.
But analysts are beginning to notice the narrowing as a sign that traders believe supply will be plentiful once summer peak travel demand fades.
This summer’s market was supported by strong global refinery runs and tighter fuel markets, especially diesel in the United States.
Still, spot premiums over later contracts are declining—a sign that traders expect rising supply to ease tightness once demand weakens after the summer peak.
As refinery runs ease after September, with OPEC+ adding more supply, the tightness will fade. The International Energy Agency (IEA) said last week in its monthly report that global crude consumption would near an all-time high of 85.6 million barrels per day in August, with year-on-year growth of 1.6 million barrels per day in Q3—well above the first-half average increase of just 130,000 barrels per day.
Even so, consensus points to weaker demand in Q4, when growing supplies are expected to flood the market.
Strong South American and Atlantic Basin exports, along with expectations of demand softening, are already weighing on crude spreads and price structures.
Toth explained that the seasonal decline in European crude import demand and the start of refinery maintenance in autumn are “already feeding into downward pressure on Atlantic Basin crude prices.” The Brent-Dubai exchange of futures for swaps (EFS), which shows the premium of ICE Brent over Dubai swaps, fell from a peak of $3.70 per barrel in late June to just $0.23 on August 18, Argus data showed.
He added that “benchmark crude prices themselves also appear under increasing pressure, with levels sliding since the sharp rally in late July.”
Concerns over oversupply are rising as peak demand season ends, even though inventories remain low, including at key U.S. pricing hubs. It will take some time before slower demand and higher supply translate into a clear surplus, while geopolitical and macroeconomic factors may sway market sentiment and rebalance supply and demand.
