Where are Oil Prices Heading in August 2025? 

Currently, the most significant dynamic in the crude oil market has to do with OPEC’s decision to restore supplies despite the danger of exacerbating a surplus later in the year. Starting in 2023, OPEC cut production by as much as 2.5 million barrels per day (bpd) in order to support prices, which were under threat from weakening global demand and rising production in the Americas. August 3rd, 2025, marked a milestone in the steady return of those barrels to the market, which had begun several months before.  

Specifically, OPEC agreed to release an extra 547,000 bpd, starting in September. Coming in the face of an expected supply glut as well as low American fuel demand, the move triggered a 1.3% drop in the prices of Brent crude futures, and a 1.5% fall for WTI oil. OPEC explained their decision as reflecting healthy demand dynamics, but the data told a different story – that May fuel demand in the U.S. had not been this low since the Covid pandemic in 2020. 

Why, then, did OPEC unwind supplies in a situation where prices could be driven below $60 a barrel – a level far beneath what’s needed to balance the Saudi Arabian budget? The answer is, in order to secure market share. Although pumping more barrels lowers prices, thus reducing oil revenues temporarily, Saudi Arabia wants to claim the lion’s share of global production – especially in an environment where U.S. shale drilling makes for hot competition. Even after the August-3rd announcement, OPEC still had the capacity to add a further 1.66 million bpd to the market, which it could feasibly release at its next meeting in September.  

Let’s take a deeper dive into forces guiding crude oil prices in August 2025. 

Oil Demand 

When the data revealed that only 73,000 jobs had been added in the U.S. in July, and furthermore that the numbers for May and June should be revised down by 258,000, it seemed the economy was doing worse than believed – implying less fuel demand. Other information told a similar story. Comerica reports that, in the month of May, there were activity declines in several categories including “retail sales, industrial production, housing starts, building permits, new home sales, construction spending, personal income, and personal consumption expenditures”, signifying sluggish growth. For those analysts, next year should bring some improvements in these areas due to the effects of President Trump’s Big Beautiful Bill, which will lower taxes. 

Over in China, oil demand is also waning due to a mix of structural and temporary factors. The burgeoning electric vehicle market is one of the most important structural trends in this regard. In August 2024, for instance, the government doubled its subsidies for its vehicle trade-in program – assisting citizens in exchanging internal combustion cars for electric brands. Plus, China’s high-speed railway reduces oil consumption by as much as 300,000 bpd. 

Construction equipment runs on diesel, so China’s property sector slowdown is undermining oil demand considerably. The government has introduced policy to stimulate the sector, including interest rate cuts, but “The stimulus measures are unlikely to provide a strong boost to oil demand”, says Columbia University. That’s because they’re not really designed to boost the fundamentals of the economy. Add to this the fact that natural gas trucks have been accounting for a greater proportion of construction vehicles in recent years – with the percentage rising from 9% in 2022 to 42% last year. 

 

Punitive Tariffs 

In his efforts to end the Ukraine conflict, President Trump has threatened to impose 100% tariffs on any buyers of Russian oil, and has actually slapped India with additional 25% duties for fueling Russia’s war machine in this way. For JP Morgan, it’s “impossible” to pursue this policy without impacting oil prices bullishly. In their opinion, once the market believes Russia oil flows are being inhibited, prices could leap up beyond $80/bbl. or even higher. There’s also the possibility that Russia could retaliate by shutting down the CPC Pipeline in Kazakhstan, through which American oil firms send 1 million bpd. This may impact supplies significantly. 

 

The other guilty party in purchasing Russian crude has been China. President Trump hasn’t ruled out the option of sanctioning them too, but his will to do so may be compromised by the sensitivity of the recent U.S.-China trade deal. In talks that began in May 2025, China agreed to continue exporting the minerals needed by multiple U.S. industries in exchange for lighter import duties on Chinese products. Throwing a spanner in the works with new punitive tariffs may be something Trump would prefer to avoid. In any case, if Indian oil refiners stopped buying Russian oil, it would put 1.7 million bpd at risk, working bullishly on prices. 

 

Conclusion 

Parallel to sanctions threats, there has also been the force of geopolitical tensions keeping oil prices elevated. Indeed, OPEC’s success in bringing so much supply to the market without depressing prices below $70 bbl. was due to the conflict occurring simultaneously in the Middle East. During the short battle between Iran and Israel in June, Brent futures rose to $81.40 bbl., although prices soon settled closer to $70 bbl. 

India has signaled its unwillingness to bow to U.S. pressure regarding Russian oil purchases, but hostilities in the Middle East are far from resolved. In addition, Russia’s assaults on Ukraine are not abating, while President Putin may feasibly wield his leverage over the CPC pipeline if he feels pressured by the United States. Stay abreast of news in these two regions of the globe to gauge the developments of these two bullish forces. Predominantly, though, both supply and demand trends point to a continuation of the bearish trend in oil prices we’ve seen for most of the year. Following OPEC’s August supply hikes, Goldman Sachs predicted prices would recede to $60 bbl. before the end of 2025.  

FAQs 
What’s an example of using the WMR London fix to set up a forex trade? 

Since large institutions convert currencies at the 4 p.m. fix, traders know to expect high volumes to hit the market at that time. This often causes price spikes in major pairs like EUR/USD or USD/JPY just before that hour arrives. 

• You start monitoring EUR/USD from 3.45 p.m. London time, and see prices rise strongly at 3.57 p.m. 
• Therefore, you open a long position on the EUR/USD at 3.58 p.m. 
• At 4.01 p.m., the EUR/USD spikes. You close your trade and collect your earnings 

 

What’s a good benchmark for commodities trading? 

The Bloomberg Commodities Index tracks 24 commodities from all categories, and is widely relied upon by both institutional and retail traders around the world. 

 

What’s the most popular benchmark for emerging market (EM) equities? 

The MSCI (Morgan Stanley Capital International) Emerging Markets Index. Covering 24 EM countries including Brazil, Mexico, and South Africa, the MSCI Index is used to assess the performance of EM stocks. Institutional funds based on EM equities compare their own performances with the MSCI, while it is also frequently looked to by financial analysts and the media. 

 

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