CRUDE IN SIGHT

Crude eases in renewed profit-taking after Thu's modest gains - Aug. 29, 2025

  • Crude futures unwound nearly all of the 45-60 cents/barrel gains notched at Thursday’s settle early Friday in Asia, as a tug-of-war persisted between Russia supply concerns and expectations of a looming glut.
  • An intensified  campaign of Ukrainian drone attacks have knocked out an estimated 0.8-1.0 million b/d of Russian refining capacity, according to news reports, while the Ust-Luga port in the Baltic Sea will operate at 50% of its capacity in September.
  • The US Commerce Department on Thursday revised the estimate for second-quarter GDP growth from 3% to 3.3%.

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OIL VIEWSLETTER

Crude trapped in narrow band, Ukraine holds the key to a breakout - Aug. 29, 2025

  • Ukraine peace push at an impasse: Brent held in a narrow $1.58/bbl range ($67.22–$68.80) for a third straight week. Trump’s “two-week” timeline for Putin and Zelensky to find a resolution to the Ukraine war points to around Sep 5, but options range from extending talks, to ramping up pressure, to walking away. We examine the choices Trump has – not just in theory, but practice, if he wants a positive outcome.
  • Immediate supply risk: Kyiv’s drone strikes have knocked out 0.8-1.0 mb/d of Russian refining and halved Ust-Luga port’s loading capacity to ~350 kb/d for September, keeping infrastructure attacks squarely on the market’s radar.
  • India defiant: New Delhi is standing firm despite the US 25% “secondary tariff” (effective Aug 27) and cumulative 50% tariff burden. Modi, set to meet Putin and Xi at the SCO summit in Tianjin, shows no sign of curbing Russian crude imports.
  • Glut narrative builds: With Q4 in view, the EIA and IEA project a 2-4 mb/d surplus in Q4/Q1, weighing on sentiment. However, Brent’s M1/M2 spread remains in backwardation at 50-60 cents, though narrowing since August. Our view: a milder 1-1.5 mil b/d surplus.
  • Macro backdrop: US GDP for Q2 was revised up to 3.3%, putting H1 growth at 1.4% annualised. Fed cut bets at Sept 17 meeting are ~85% after a dovish Waller speech. Focus turns to August labour data due out next Friday; Powell paved the way for a cut at Jackson Hole last week, downplaying tariff-driven inflation.
  • Iran sanctions snapback move: UK, France and Germany triggered a 30-day process reinstate UN sanctions against Iran, but oil markets shrugged. Here, Washington’s stance is more crucial. Iranian crude output has remained steady at ~3.3 mil b/d, with exports averaging 1.53 mb/d YTD despite a steady ramp-up in US sanctions in recent months.

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BULLS & BEARS

Aug 2025: Mildly bullish near-term, Moderately bullish H1 Sep - Aug. 22, 2025

Our latest crude price outlook:

  • Near term: Mildly Bullish 
  • First half of Sep: Moderately Bullish 

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EXECUTIVE BRIEFING NOTES

Trump's Iran attack jolts markets but worst-case scenarios capped - June 22, 2025

Mideast tensions surged after the US hit Iran’s three main nuclear sites in a pre-dawn strike Sunday, marking a sharp reversal from President Trump’s earlier two-week diplomatic window.

Brent could briefly jump above $80/bbl at Monday’s open, but a quick pullback is likely as markets reassess the escalation risk.

Despite fiery rhetoric, Iran’s actual response appears measured. We do not expect a near-term blockade of Hormuz or strikes on Gulf producers’ oil assets, keeping worst-case risks contained.

Trump’s “one-and-done” signal and Tehran’s continued openness to talks raise the odds of resumed nuclear negotiations — potentially easing the $12–14/bbl risk premium, though volatility will stay elevated.

OIL RADAR

OIL IN 2025: Softer crude prices but not because of oversupply - Dec. 27, 2024

Benchmark Brent crude prices averaged just under $80/barrel in 2024, about 2.7% lower versus last year.

We expect the average to dip into the $70-75/barrel band in 2025, but not because of a sizeable oversupply in the market, let alone a “glut”. 

A sombre economic outlook for 2025, bolstered by China’s uphill battle to jump-start growth and amplified by expectations of a fresh round of trade wars under Trump 2.0, has shaped a bearish narrative around oil demand. 

But we would caution against leaning too much into the gloom-and-doom scenario. 

Crude is more likely to come under pressure from an evaporating geopolitical risk premium and worries over economic stability than any severe economic downturns or recessions.

Oil demand could remain relatively resilient, helped by softer prices, leading to a largely balanced market, especially with OPEC+ remaining extra cautious and conservative in bringing back the barrels it has locked away.

What challenges our baseline views? We also bring you the contrarian perspective and wildcards!