Saudi Arabia announced an additional production cut of 1 million barrels per day, and international oil prices rose in response.

Date: July 27, 2025

Source: Reuters, Bloomberg 

The Saudi Arabian Ministry of Energy announced that to stabilize the global oil market, it will voluntarily reduce crude oil production by an additional 1 million barrels per day starting from August for at least one month. This move comes as a further action following the decision made at the "OPEC+" meeting in June to extend production cuts. 

Background of production cut: Due to the slowdown of the global economy, especially the weak demand in China and Europe, international oil prices have been under pressure recently. Saudi Arabia's additional production cut this time aims to prevent a supply glut from causing a sharp drop in oil prices.

Impact: After the cut, Saudi Arabia's daily crude oil production will drop to 9 million barrels per day, the lowest level since 2021. After the announcement, the price of Brent crude oil rose by 2.3% to $72.5 per barrel.

Future outlook: The Saudi energy minister said that if necessary, the production cut measures may be extended until September. Market analysts believe that this move may prompt other OPEC+ member countries to follow suit and adjust their production. 

2. U.S. crude oil inventories dropped significantly, with WTI oil prices approaching $70

Date: July 26, 2025

Source: U.S. Energy Information Administration (EIA) 

The latest report from the U.S. Energy Information Administration (EIA) shows that as of the week ending July 21, U.S. commercial crude oil inventories decreased by 6.2 million barrels, far exceeding market expectations of a 2.4 million-barrel drop. 

Reason analysis: The decline in inventory is mainly attributed to the increase in refinery operating rate (93.5%) and the rise in exports (4.2 million barrels per day).

Market reaction: WTI crude oil futures rose by 1.8% to $69.8 per barrel. Analysts predict that if inventory continues to decline, oil prices may break through the $75 per barrel mark. 

3. Taiwan's oil prices rose slightly by NT$0.1 due to international market conditions.

Date: July 28, 2025

Source: CPC Corporation, Taiwan and Formosa Petrochemical Corporation 

CPC Corporation, Taiwan announced that as of 0:00 on July 28th, the prices of gasoline and diesel will increase by NT$0.1 per liter. After the adjustment, the retail price of 92 unleaded gasoline will be NT$29.5 per liter, and that of 95 unleaded gasoline will be NT$31.0 per liter. 

Reason for price adjustment: Due to the decline in US crude oil inventories and the tense geopolitical situation in the Middle East, international oil prices have risen slightly.

Future outlook: If Saudi Arabia's production cuts continue, oil prices may rise further in August.

4. China Cracks Down on "Black Gas Stations", Seizes 2,377 Tons of Illegal Oil Products

Date: July 25, 2025

Source: The State Council Safety Commission of China 

The State Council Work Safety Committee of China has launched a nationwide special rectification campaign in the refined oil market, with a focus on cracking down on illegal storage, transportation and sale of refined oil. 

Action Outcomes:

562 illegal fueling stations were sealed off - 2,377 tons of illegal fuel were seized

394 mobile fueling vehicles were seized

Policy Background: Illegal fuel not only disrupts market order but also poses significant safety hazards. This operation aims to regulate the market and safeguard the rights and interests of legitimate enterprises. 

5. U.S. May Ease Sanctions on Venezuela, Chevron May Boost Output by 200,000 Barrels per Day

Date: July 24, 2025

Source: The Wall Street Journal 

The US government is considering allowing Chevron to expand its oil exploration activities in Venezuela to ease global supply tightness. 

Potential impact:

Chevron may increase its production by 200,000 barrels per day, mainly for export to the US market.

Venezuela's current oil production capacity is approximately 800,000 barrels per day, far lower than the 2.5 million barrels per day in 2016.

Market concern: If the US eases sanctions, the production cut effect of OPEC+ may be partially offset, putting pressure on oil prices.

6. Geopolitical Risks: Tensions in the Middle East Drive Up Oil Prices

Recently, the conflict between Israel and Hezbollah in Lebanon has escalated, and the negotiations on the Iranian nuclear issue have stalled. The market is concerned that oil supplies from the Middle East may be disrupted. 

Key Impacts:

Shipping safety in the Strait of Hormuz is drawing attention (about 20% of global oil is transported through here).

The risk premium of Brent crude oil has risen by $1.5 per barrel. 

Summary and Outlook

Short-term trend: Saudi Arabia's production cuts and the decline in U.S. inventories support oil prices, but potential production increases in Venezuela may limit the extent of the rise.

Long-term challenges: The sluggish recovery of the global economy and the accelerated substitution by new energy sources may curb the growth of oil demand.