September WTI crude oil (CLU25) today is down -0.09 (-0.14%), and September RBOB gasoline (RBU25) is down -0.172 (-0.82%).

Crude oil and gasoline prices today are under pressure from a stronger dollar, as the dollar index (DXY00) rose to a 1-week high.  Also, expectations that the US and Russia are working toward an agreement to end the Ukraine war are weighing on crude prices as it eases concerns that the US will ramp up additional export sanctions on Russian energy supplies.  However, losses in crude are limited after comments from Ukrainian President Zelenskiy dampened hopes for a quick end to the war when he rejected any talk of Ukraine ceding territory to Russia.

Crude prices are under pressure on hopes for an end to the Russian-Ukrainian war.  President Trump is set to meet Russian President Putin on Friday in Alaska to discuss an end to the war, which could boost global oil supplies as sanctions on Russian energy exports could be lifted, which would add crude supplies to the global market.  

Crude has support after President Trump recently said that he would impose new tariffs on countries buying Russian energy unless Russia reaches a ceasefire with Ukraine.  Last Wednesday, President Trump doubled tariffs on Indian exports to 50% from 25% because of India's purchases of Russian crude.  JPMorgan Chase warned that if enforced, oil markets would be unable to ignore the impact of triple-digit tariffs on Russian oil, given the significant scale of Russian exports and limited OPEC spare capacity, which could potentially lead to a supply shock.    

Concerns about a global oil supply glut are weighing on crude prices after OPEC+ on August 2 endorsed an additional 547,000 bpd increase in its crude production for September 1.  OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026.  After the August 2 meeting, the group said it will closely monitor demand and may maintain production levels, restart halted supplies, or reverse recent production increases.  OPEC+ has 1.66 million bpd of supplies that are currently due to remain offline until late 2026.  The International Energy Agency said inventories have been accumulating at a rate of 1 million bpd and that the global crude oil market faces a surplus by Q4-2025 equivalent to 1.5% of global crude consumption.  OPEC July crude production fell -20,000 bpd to 28.31 million bpd.

The European Union recently approved fresh sanctions on Russian oil due to its aggression against Ukraine.  The sanctions package includes cutting off 20 more Russian banks from the international payments system SWIFT, as well as restrictions imposed on Russian petroleum refined in other countries.  A large oil refinery in India, part-owned by Russia's Rosneft PJSC, was also blacklisted.  Additionally, 105 more ships in Russia's shadow fleet were sanctioned, pushing the number of sanctioned ships above 400.

A decline in crude oil held worldwide on tankers is bullish for oil prices.  Vortexa reported today that crude oil stored on tankers that have been stationary for at least seven days fell by -5% w/w to 80.52 million bbl in the week ended August 8.

Last Wednesday's weekly EIA report showed that (1) US crude oil inventories as of August 1 were -6.5% below the seasonal 5-year average, (2) gasoline inventories were -0.3% below the seasonal 5-year average, and (3) distillate inventories were -16.1% below the 5-year seasonal average.  US crude oil production in the week ending August 1 fell -0.2% w/w to 13.284 million bpd, modestly below the record high of 13.631 million bpd posted in the week of 12/6/2024.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ending August 8 rose by +1 rig to 411 rigs, just above the 3.75-year low of 410 rigs from August 1.  Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022.