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Crude Oil Market in 2025: A Wait-and-Watch Scenario Amid Trump-Putin Talks

  The global crude oil market in 2025 is navigating a turbulent landscape shaped by geopolitical tensions, shifting supply dynamics, and weakening demand, with Brent and West Texas Intermediate (WTI) prices fluctuating between $60-$80 per barrel. A pivotal event, the anticipated Trump-Putin meeting on August 15, 2025, to discuss ending the Ukraine war, has put markets on edge, as it could reshape US sanctions on Russian oil exports and influence global supply chains. This, combined with OPEC+ production increases, plateauing Asian demand, and the rise of electric vehicles (EVs), has created a complex outlook marked by short-term volatility and a longer-term bearish trend. 

 

 

Geopolitical Risks and Russian Sanctions

 

Geopolitical developments are a primary driver of market uncertainty. The Trump-Putin talks could either ease concerns over US sanctions on Russian oil or escalate tensions if negotiations falter. Last week, oil prices dipped as hopes for a Ukraine ceasefire reduced fears of tightened US sanctions on Russia’s 7 million barrels per day (bpd) of exports (4.68 million bpd crude, 2.5 million bpd refined products). However, President Trump’s 25 per cent tariff on India, a major buyer of Russian oil at 1.7 million bpd, and threats of 100 per cent “secondary sanctions” on nations like India and China have introduced a risk premium. A supply shock from reduced Russian exports could push WTI to $70-$75 and Brent to $75-$80, given OPEC+’s limited spare capacity of about 3.8 million bpd, concentrated in Saudi Arabia, UAE, and Kuwait.

 

The European Union’s recent sanctions, including disconnecting 20 Russian banks from SWIFT and blacklisting 105 ships in Russia’s shadow fleet (now over 400 sanctioned vessels), aim to curb Russia’s ability to bypass export restrictions. While Russia’s dark fleet, handling 3-4 million bpd via ship-to-ship transfers, has softened the impact, stricter enforcement could disrupt supply significantly, adding $5-$15 per barrel to prices, as seen in past crises like the 2018-2019 Iran sanctions. 

 

OPEC+ Production and Global Supply

 

OPEC+ is set to fully restore 2.2 million bpd of voluntary production cuts by September 2025, with an additional 547,000 bpd increase planned. However, 1.66 million bpd of cuts are slated to remain offline until late 2026. Despite a slight decline in OPEC’s July output to 28.31 million bpd, global crude inventories are rising at 1 million bpd, with the International Energy Agency (IEA) projecting a 1.1 million bpd surplus by Q4-2025, equivalent to 1.5 per cent of global consumption. This surplus, coupled with OPEC+’s flexibility to adjust production, could cap price gains unless a major supply disruption occurs.

 

Weakening Asian Demand

 

Demand in Asia, particularly China, is faltering. China’s crude imports dropped 5.4 per cent month-on-month in July 2025, driven by stagnant demand for refined fuels and a shift to petrochemical feedstocks. The global rise of EVs, with sales projected to hit 17 million by 2026, is reducing oil demand by 0.4 million bpd in 2025, expected to reach 0.6 million bpd by 2026. India, despite US tariff pressures, continues to rely on Russian oil due to economic necessity, but broader demand growth in Asia is sluggish, contributing to bearish sentiment.

US Production and Inventories

 

In the US, lower oil prices have led to a production plateau in the Permian Basin, with total output expected to fall to 13.37 million bpd in 2025 from 13.57 million bpd in December 2024. Commercial reserves, 6.5 per cent below the five-year average, and a recent 12-million-barrel draw in petroleum stocks (notably propane and diesel) are supporting prices. However, expanded refining capacity has so far prevented significant price spikes. 

 

Economic and Tariff Impacts

 

Trump’s tariff threats, including 30 per cent on EU and Mexico imports and potential duties on Canada (60 per cent of US crude imports), could slow global economic growth and dampen fuel demand. The IEA forecasts global oil demand growth at just 700,000 bpd in 2025, the weakest since 2009, reinforcing the bearish outlook.

 

Crude oil outlook

  In the short term, WTI is expected to trade between $62-$67 and Brent between $67-$72, driven by sanction uncertainty and tight US inventories. A failure in Trump-Putin talks could push prices higher, while a resolution or increased OPEC+ output could suppress them. Long-term, rising supply and weakening demand suggest WTI averaging $58 by Q4-2025, with Brent at $66 in 2026. Investors should monitor the August 15 meeting, OPEC+ decisions, and Russian export data closely, as these will shape the market’s trajectory.

 

(Disclaimer: Mohammed Imran is a research analyst at Mirae Asset Sharekhan. Views expressed are his own.)