Oil markets began the week under bearish pressure as expectations for another OPEC+ production hike weighed heavily on sentiment. Brent and WTI extended Monday's steep losses into Tuesday, with Brent slipping to $66/bbl and WTI to $62/bbl, both slipping by over $1/bbl. OPEC is expected to approve an additional 137,000-140,000 bpd quota increase at its upcoming October meeting, adding to more than 2.5 Mbpd of supply already returned to the market this year.

Crude exports from Iraq's Kurdistan region resumed through Turkey for the first time in over two years, which could add over 150,000 bpd to international markets. At the same time, Goldman Sachs noted that solid Asian demand and low U.S. inventories could leave room for an even larger production increase.

The International Energy Agency (IEA) expects global oil demand growth to slow through the remainder of the year, highlighting a weaker outlook for consumption. In its latest report, the IEA forecast demand will rise by just 0.7 Mbpd in 2025, a sharp contrast to earlier years of stronger growth. This slowdown comes as OPEC+ continues to increase output and non-OPEC producers also expand supply. Together, these demand trends are expected to create a global surplus that could persist into 2026.

Canada reported record-high crude and equivalent production in July. Total output reached 153.02 million barrels of crude and 17.53 million barrels of equivalents, edging past the previous record from December 2024. Oil sands output was the primary driver, climbing 8.1% year-over-year to 113.84 million barrels.

Exports also hit unprecedented levels at 130.68 million barrels, with shipments to Asia and other non-U.S. destinations surging 47.3%. Meanwhile, pipeline exports to the U.S. fell for the sixth consecutive month, highlighting a gradual diversification of Canadian supply channels.

Refined products production set new highs as well. Gasoline output rose 4% year-over-year to 24.9 million barrels, while jet fuel production climbed nearly 4% to 4.7 million barrels. Jet fuel demand was particularly strong, with supply increasing 38% from the previous year, despite inventories declining.