OPEC+ supply expansion and Russia’s export woes keep crude rangebound

Key Points:

• OPEC+ production increases and speculation of further October adds weigh on sentiment
• Russia’s refinery disruptions and sanctions on Indian buyers recently hurt wrong-footed short sellers
• Longer-term outlook points to a potential 2026 glut, reinforced by tariff-driven demand risks

Crude oil futures have started September on a slightly defensive note, as trading activity and volumes pick up after the peak holiday month of August. Prices remain confined within a relatively narrow range amid a tug-of-war between near-term supply additions and disruption risks. Brent has settled into a USD 65–70 range, with WTI anchored a few dollars lower.

OPEC+ adds supply, with more possibly to come

So far this year, OPEC+ has already rolled back 2.2 million barrels per day of voluntary cuts, with an additional 0.3 million allocated to the UAE—bringing the total increase to around 2.5 million b/d in 2025. The next test comes at this weekend’s meeting, where some market chatter suggests the group may opt for another quota adjustment for October. That prospect has kept a lid on rallies and reinforced the sense that supply risks are skewed toward overshot rather than undershoot in the months ahead.

The reasons why the market has not responded with lower prices while OPEC+ ramped up production are several. Producers, most notably Iraq and Kazakhstan, have for some time produced above quota and must for now compensate by keeping output below their new limits. China has become a major swing-buyer of oil, filling strategic reserves when prices are low and supply is ample, thereby absorbing surplus barrels. This flow will likely slow at higher prices, thereby helping to curb potential price rallies. Third, some members have struggled to reach their new higher targets, while others kept exports low to meet strong domestic demand during the high-demand summer months.

So far, OPEC has managed to raise output without undermining prices while also squeezing high-cost producers, most notably in the US where production is nearing a peak. That removes the single largest source of non-OPEC supply growth of the past decade.

Russia adds friction, not barrels

Countering OPEC+’s production increases are the consequences of Russia’s conflict with Ukraine. Drone attacks on refinery infrastructure have trimmed Russian product output, especially diesel, while sanctions on Indian buyers of Russian crude have complicated trade flows. These developments have helped underpin prices, without triggering a full-blown rally, with most of the recent bidding being down to short-covering from wrong-footed short sellers in the futures market. 

Positioning asymmetry: the first-ever net short in WTI

The most striking shift in recent weeks has been positioning. Weekly COT data provided by the US CFTC show that managed money accounts for the past three weeks held a net short in WTI futures across CME and ICE for the first time. That matters because shorts, as mentioned, carry asymmetric risk as price friendly headlines or developments raises the risk of a squeeze higher. Among others, these dynamics help to explain why crude oil traded higher in the past few weeks.

The curve speaks: tight now, loose later

Time spreads tell their own story. Brent and WTI remain in backwardation near the front, a reflection of prompt tightness and ongoing geopolitical risk premia. Yet the curve flattens and edges toward contango into 2026. That’s where the longer-term bearish narrative sits. Goldman Sachs and others project a supply surplus emerging by late 2025, expanding into 2026 as OPEC+ barrels collide with non-OPEC growth. Their forecast sees Brent slipping to the low USD 50s by the end of that year, with global stocks potentially swelling by 800 million barrels. 

Rangebound for now

On the demand side, tariffs and trade tensions are becoming a creeping headwind, and although a major slowdown is unlikely to occur these factors may still cap demand growth, reinforcing the surplus view for 2026. For now, refinery runs and implied demand remain healthy enough, but traders should treat tariff headlines as a medium-term drag that may surface in prices and positioning later this year and next. Put together, the opposing forces explain why crude has been stuck near the middle of the 24-dollar wide trading range seen so far this year. OPEC+ supply increases, combined with long-term surplus forecasts, pulls the market lower. Russia’s export frictions, a combustible short base in WTI, and prompt tightness in the curve push it higher. Overall, traders need to watch distillate markets and refinery margins for early warnings about incoming demand shifts while focusing on OPEC+ production increases and whether or not they are being absorbed by the market.

Overall, we see limited upside above USD 70 in Brent with a slowdown in Chinese demand at higher prices, and OPEC+ production increases offsetting any geopolitical-driven disruption risks.