Oil Prices Surge as US Drilling Slows and Global Factors Tighten Market

Oil Prices Surge as US Drilling Slows and Global Factors Tighten Market

Brent Crude Posts Weekly Gain of Nearly 6%

The oil market firmed notably last week, with ICE Brent Aug-25 contracts closing up 5.9%, driven by a combination of global supply risks and strong demand signals. Canadian wildfires, known to threaten oil sands production, were one of the key contributors to the upward pressure on prices.

US Drilling Activity Slows, Supporting Prices

A slower pace in US drilling operations added further strength to the bullish narrative, suggesting restrained supply growth in the world’s largest producer. The pause in drilling expansion could limit near-term output increases, adding to tightening market expectations.

OPEC+ and Trade Tensions in Focus

The announcement of OPEC+ supply increases scheduled for July was absorbed by the market without derailing the rally. Traders appear confident that global demand will remain strong enough to absorb the extra barrels.

At the same time, US-China trade talks resumed in London, marking the second round of negotiations. These high-stakes talks are being closely watched, as they may impact not only economic relations but also broader commodity demand patterns.

Key Takeaways for Oil Traders

• Brent Aug-25 contract climbed nearly 6% last week
• US drilling deceleration tightens supply outlook
• OPEC+ output increase in July already priced in
• Canadian wildfires create short-term supply risk
• US-China trade talks in London could sway market sentiment

Related Reads on Tredu:

• WTI Oil Outlook for Q3 2025
• Impact of Canadian Wildfires on Commodities
• OPEC+ Production Strategy Explained