Oil extends gains on Red Sea tensions and lower U.S. supply outlook

Wednesday, July 9, 2025

Oil prices rose further on Wednesday, reaching their highest levels in over two weeks as renewed Red Sea attacks stoked geopolitical risks while traders assessed U.S. tariff moves and a forecast for slower American production growth next year.

Market snapshot (as of 6:15EST):

• Brent (September): $70.42 (▲$0.27)

• WTI (August): $68.63 (▲$0.30)

Both benchmarks are on track for a second consecutive daily gain after rebounding from last week’s lows.

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Red Sea attacks rekindle supply concerns

After months of relative calm, attacks on shipping in the Red Sea resumed in recent days. On Wednesday, a mission was underway to rescue the crew of a cargo vessel that sank following a strike which killed at least four seafarers. While Yemen’s Houthi militia has not claimed responsibility, the escalation revived fears over potential disruptions to global trade flows.

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U.S. production forecast revised lower

Prices also found support after the U.S. Energy Information Administration on Tuesday cut its forecast for 2025 U.S. oil production, citing slowing activity as producers react to weaker prices. Lower expected output has helped offset some of the bearish sentiment around rising OPEC+ supply.

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Tariff uncertainty lingers

Late Tuesday, President Donald Trump announced a 50% tariff on copper, intensifying trade tensions. Though he delayed the start of some tariffs to August 1, the lack of clarity on the final scope and timing of the measures has left many businesses bracing for higher costs.

While tariffs have fueled concern that slowing economic growth could weigh on oil demand, traders were encouraged by strong travel demand during the U.S. July 4 holiday weekend.

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Inventories and demand in focus

Weekly EIA inventory data is due later Wednesday. Preliminary reports indicated a possible U.S. crude build of around 7.1 million barrels, which could temper further gains if confirmed. Last week’s official data showed a surprise 3.8 million-barrel build and weaker gasoline demand.

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OPEC+ holds steady with supply increases

On the sidelines of the OPEC seminar in Vienna, UAE Energy Minister Suhail al-Mazrouei said the market was absorbing additional barrels without inventory overhang:

“You can see that even with the increases for several months we haven’t seen a major buildup in inventories, which means the market needed those barrels,” Mazrouei said.

The group approved a 548,000 bpd hike for August and is expected to finalize an additional 550,000 bpd increase for September at its next meeting on August 3, fully unwinding the voluntary 2.2 million bpd cuts set in 2023.

Saudi Energy Minister Prince Abdulaziz bin Salman emphasized the importance of a “flexible energy transition” that includes oil and gas while maintaining affordability.

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Factors to watch

• U.S. EIA stockpile report (10:30EST)

• Final tariff policy details before the August 1 implementation deadline

• OPEC+ August 3 meeting, where the final supply additions will be formalized

• Ongoing Red Sea security developments that could disrupt shipping routes