Morning Highlights: Oil rises as Russian supply risks offset OPEC+ output boost

Monday, August 25, 2025

Oil prices climbed Monday as traders weighed renewed threats of U.S. sanctions on Russia and fresh Ukrainian drone attacks against Russian energy facilities, even as OPEC+ supply additions capped gains.

Market Snapshot (as of 6:15 EST)

• Brent (Oct): $68.07 (▲$0.34 / +0.4%)

• WTI (Sep): $64.03 (▲$0.37/ +0.6%)

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Russia Supply Risk Back in Focus

U.S. President Donald Trump warned Friday that Russia could face additional sanctions within two weeks if no progress is made on a Ukraine peace settlement. Vice President JD Vance said over the weekend Moscow had made “significant concessions,” but Ukrainian strikes have intensified against Russian energy infrastructure.

• A drone attack set ablaze the Ust-Luga fuel export terminal.

• A fire continued for a fourth day at the Novoshakhtinsk refinery (100,000 bpd capacity).

“The market is looking for supply to exceed demand in the autumn months, but in the short term that’s being challenged by potential geopolitical disruption,” one analyst noted.

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OPEC+ Output Gains Cap Upside

Countering disruption fears, OPEC+ is in the process of reversing recent cuts, adding millions of barrels back into the market.

• Eight members will meet Sept. 7 to finalize approval of another production boost.

• “OPEC+ supply expansion softens the geopolitical premium,” said Saxo Bank’s Ole Hansen.

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Macro Tailwinds: Fed Pivot Lifts Risk Appetite

Investor sentiment improved after Fed Chair Jerome Powell, in what is expected to be his final Jackson Hole speech, strongly hinted at a September rate cut.

• Market odds of a cut rose to 85% (from 72%) following his remarks.

• ING noted Powell’s shift “injected a large dose of optimism into commodities,” even as tariff-related inflation risks linger.

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India Tariff Deadline Looms

Further volatility could come later this week as Trump’s additional 25% tariffs on Indian goods take effect, aimed at penalizing New Delhi for continuing to buy Russian crude.

“Uncertainty prevails as US President Trump once again threatens tougher sanctions on Russia unless there’s a deal to end the war,” ING analysts said, adding the oil market has so far responded cautiously given past U.S. inaction.