About The Author

Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

Oil prices are trending upward, mounting a potential breakaway move with concerns about an oil glut from the International Energy Agency appearing increasingly unlikely. The risk of sanctions on Russia and the Trump Administration’s push for Europe to stop buying Russian oil are contributing to this rise. Treasury Secretary Scott Bessent told Fox News that, “all options are on the table” regarding further sanctions as Russia intensifies its attacks against Ukraine after recent meetings between US and European leaders. Bessent added that potential measures will be closely reviewed in the coming week.

Oxford Energy came out with a report that really raised questions about The International Energy Agency prediction of  a massive oil glut. They say that predictions of big oil surpluses for 2025 and earlier years have been scaled back by the IEA as many started to question their motives or maybe their sanity. For example, in May 2025, the International Energy Agency (IEA) updated its estimates, saying the world used 350,000 more barrels of oil per day in 2024 than previously thought according to Oxford. This changed what they thought was a surplus (extra oil) in 2023 and 2024 into a deficit (not enough oil) of 40,000 and 140,000 barrels per day, respectively.

At the end of 2024, the IEA estimated a surplus of 1.1 million barrels per day for the first half of 2025, assuming OPEC+ (a group of oil-producing countries) didn’t ease their voluntary production cuts. By August 2025, the IEA slightly increased this surplus estimate to 1.2 million barrels per day, even though they also raised their estimate of OPEC+ oil production by 300,000 barrels per day. On the other hand, OPEC’s own reports paint a different picture. They estimate deficits (not enough oil) of 1.2 million barrels per day in 2024 and 410,000 barrels per day in the first half of 2025.

So, the IEA and OPEC disagree a lot about whether there’s too much or too little oil. Looking ahead, the IEA predicts a huge surplus of 3 million barrels per day in 2026, up from 1.8 million this year, while the U.S. Energy Information Administration (EIA) expects smaller surpluses of 1.6 million barrels per day in 2025 and 1.4 million in 2026. On top of that Kepler came out with a report that suggested that floating storage has dropped dramatically which doesn’t fit the bearish oil glut mentality .

The market anticipates stricter sanctions on Russia as the Ukraine conflict continues. Meanwhile, meetings between India, China and Russia may further strain relations with the U.S., increasing concerns about supply shortages. This uncertainty comes ahead of the OPEC meeting, where producers are expected to uphold voluntary production cuts while addressing overproduction through compensation cuts. Reuters reports that recent Ukrainian drone attacks have shut down facilities responsible for at least 17% of Russia’s oil processing capacity, equivalent to approximately 1.1 million barrels per day, based on Reuters’ calculations.

According to the Ukrainian military, a fire occurred in August at the Syzran oil refinery in Samara Region, which previously had a processing capacity of 8.5 million tonnes per year. On August 15, the military reported targeting the Syzran refinery. The facility suspended production and crude intake following the incident, according to two industry sources.

Adding to the upside risk is the possibility of a tropical storm that could be heading towards the Gulf of America. Fox Weather is reporting that the odds are continuing to grow that we will see our next tropical depression or Tropical Storm Gabrielle in the Atlantic Basin soon, but it’s going to be a slow process. A tropical disturbance emerged off the western coast of Africa over the weekend and is currently located in the far eastern Atlantic, south of the Cabo Verde islands. It’s producing disorganized showers and thunderstorms, but it is moving into an area where environmental conditions appear to be conducive for development. As a result, the National Hurricane Center (NHC) said a tropical depression could form by the middle to end of this week.

Make sure you download the Fox Weather app to keep up with the latest on this storm. Stay tuned to the Fox Business Network.

You can also sign up for the Phil Flynn Daily Trade Levels by calling me at 888-264-5665 or you can email me at pflynn@pricegroup.com.

 

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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