Crude oil prices slip to $67.18 as rising output, U.S. tariffs offset supply disruptions

Oil prices traded within a narrow range on Monday as concerns about increasing output and the effect of U.S. tariffs on demand countered supply disruptions resulting from intensified Russia-Ukraine airstrikes. Brent crude decreased by 30 cents, or 0.46 percent, settling at $67.18 a barrel, while U.S. West Texas Intermediate crude stood at $63.74 a barrel, down 27 cents, or 0.42 percent. Trading activity is anticipated to be subdued due to a U.S. bank holiday.

Ukrainian President Volodymyr Zelenskiy pledged on Sunday to retaliate by ordering additional strikes deep within Russia following Russian drone assaults on power facilities in both northern and southern Ukraine. In recent weeks, both nations have escalated airstrikes, focusing on energy infrastructure and disrupting Russian oil exports.

Markets continue to harbor concerns regarding Russian oil flows, with weekly shipments from its ports declining to a four-week low of 2.72 million barrels per day, as reported by tanker tracker data cited by ANZ analysts in a note.

Investors are closely monitoring the September 7 meeting among members of the Organization of the Petroleum Exporting Countries and their allies for additional insights regarding OPEC+‘s increasing output.

In the meantime, U.S. crude oil production reached a record high in June, climbing by 133,000 barrels per day to 13.58 million bpd, according to data published by the Energy Information Administration on Friday.

A U.S. labor market report scheduled for this week will provide a vital indication of the economy’s health and will test investors’ confidence in the likelihood of forthcoming interest rate cuts—a perspective that has enhanced their appetite for riskier assets such as commodities.

U.S. EIA forecasts decline in Brent crude prices

Recent reports by the U.S. Energy Information Administration forecast a decline in Brent crude oil prices toward the end of 2025 and early 2026, projecting an average of $58 per barrel in Q4 2025 and around $50 per barrel in early 2026. This downward price trend is mainly driven by expected global oil inventory builds exceeding 2 million barrels per day in late 2025 and early 2026, a consequence of accelerated production increases by OPEC+ members. These inventory surpluses are anticipated to prompt supply reductions from both OPEC+ and non-OPEC producers later in 2026, aiming to stabilize the market. The Energy Information Administration also expects U.S. crude oil production to reach an all-time high near 13.6 million barrels per day by December 2025 before declining slightly in 2026 due to lower prices incentivizing reduced drilling activity. 

Additionally, Russia has adjusted its crude oil export plans upwards by 200,000 barrels per day for August 2025 following refinery disruptions caused by Ukrainian drone strikes. Despite these attacks, which temporarily shut down significant processing units at major refineries owned by Rosneft, Russia aims to boost crude oil exports to nearly 2 million barrels per day from western ports. This adjustment reflects an effort to maintain revenue amid Western sanctions and U.S. pressure on key buyers like India to reduce imports of Russian oil. However, ongoing security risks and repair uncertainties keep the export outlook volatile. 

Read more: Crude oil prices fall to $68.24, set for weekly gain despite demand concerns

Domestic demand weakness vs. export resilience

The week commenced with China’s manufacturing activity contracting for the fifth consecutive month in August, according to an official survey released on Sunday. This trend suggests that producers are exercising caution amid uncertainty surrounding a trade agreement with the U.S. and weak domestic demand.

China’s manufacturing sector showed mixed signals in August 2025. While the official manufacturing purchasing managers’ index (PMI) indicated contraction for the fifth consecutive month, a private-sector survey by S&P Global’s RatingDog reported an unexpected expansion, reaching 50.5 in August, its fastest growth pace in five months. This discrepancy highlights ongoing domestic demand weaknesses contrasted with resilience in new export orders despite trade tensions and tariffs, painting a nuanced picture of China’s economic activity impacting global commodity demand. 

From a labor market perspective, the U.S. is experiencing a noticeable slowdown in job gains with significant concentration in health services and social assistance, but losses in manufacturing, government, and professional services. The overall unemployment rate modestly increased to 4.2 percent, with labor force participation declining slightly, signaling potential constraints on economic growth that may influence Federal Reserve policies on interest rates.