Oil Extends Gains On Reduced U.S. Output, Rising Red Sea Tensions

by Ship & Bunker News Team
Tuesday July 8, 2025

Oil on Tuesday extended its gains by a minimal degree, with cautiously optimistic traders buoyed by news that U.S. output may be substantially less in 2025 than originally thought, and as the Houthis stoked geopolitical tensions in the Red Sea.

Brent settled up 57 cents to $70.15 per barrel, and West Texas Intermediate settled up 40 cents at $68.33, the highest closes since June 23.

The Energy Information Administration predicted less U.S. output due to declining oil prices, which have reportedly inspired producers to slow activity.

U.S. crude output is now expected to grow by 160,000 barrels per day (bpd) this year to 13.37 million bpd and remain flat in 2026; also, the number of drilled but uncompleted wells fell by seven to 5,291, the lowest among records dating back to the start of 2013.

Reaction to the second Houthi attack on the Red Sea was late in coming but contributed to Tuesday's gains: the Eternity C, a Liberia-flagged vessel, was hit off Yemen's Hodeidah coast on Monday and  stoked fears of renewed escalation of hostilities in one of the world's most important oil transport corridors.

If continued, the attacks could boost freight rates and insurance costs for shippers, making crude supplies from the Middle East more expensive. 

Meanwhile, analysts forecast a 2.1 million barrel drop for U.S. crude stockpiles last week, which also supported Tuesday's gains; however, the American Petroleum Institute later reported that crude rose sharply, gaining an additional 7.1 million barrels in the week ending July 4.

But gasoline inventories fell in the same time frame by 2.2 million barrels, suggesting that consumption remains healthy despite headwinds.

On the bearish side of trading activity Tuesday, U.S. president Donald Trump said he will announce a 50 percent tariff on copper; however, Ritterbusch and Associates analysts wrote in a note, "The best thing that this complex has going for it on the upside is its recent ability to advance despite a steady flow of seemingly bearish headlines that would usually be weighing on oil values."