Donna Dong
Research Analyst, Flux
Brent Falls to $104.64/bbl
US pushes China energy purchases; India seeks UAE supply deals; Japan-linked tanker clears Hormuz; China fuel demand weakens
The Jul’26 Brent futures contract has fallen this afternoon, from $106.01/bbl at 15:27 BST to $104.64/bbl at 17:05 BST (time of writing).
In the news, US officials suggested that China may purchase more American energy following talks between Presidents Donald Trump and Xi Jinping in Beijing. The White House reported that Xi showed interest in increasing US oil imports to lessen China's reliance on the Strait of Hormuz. Soon after, US Treasury Secretary Scott Bessent told CNBC that the discussion included Beijing's potential to buy more energy and that Alaska's production would be a "natural" choice for China. However, Chinese state media summaries of the meeting made no mention of energy purchases. Chinese purchases of US energy and agricultural products have been identified as potential components of a deal, though no specific details have been revealed so far. Elsewhere, Indian Prime Minister Narendra Modi will make a brief visit to the United Arab Emirates on Friday, where he is expected to discuss long-term energy supply agreements and seek support to expand India's strategic oil reserves. The UAE will be Modi's first destination on a five-country tour, as the world's third-largest energy importer aims to secure supplies that have been significantly disrupted by the US-Israeli conflict with Iran. The UAE's recent departure from OPEC is anticipated to increase its oil production and benefit countries like India. In other news, a Japan-managed crude oil tanker registered under the Panama flag has travelled through the Strait of Hormuz — the second such Japan-linked vessel to do so. Prime Minister Sanae Takaichi announced that she had personally contacted Iranian President Masoud Pezeshkian to facilitate the ship's passage, which carries four Japanese crew members. The tanker, operated by Eneos, is transporting 1.2mb of Kuwaiti crude and 700kb of Emirati Das Blend oil, loaded in late February, according to Kpler data, with an expected arrival around 03 June. In China, gasoline demand has decreased since the start of the Iranian war and is expected to fall more than initially predicted this year, driven by rising prices and the ongoing shift toward electric vehicles. According to Bloomberg, China could see gasoline demand decline by up to 5.5% in 2025 compared with this year. Finally, at the time of writing, the front-month (Jul/Aug) and 6-month (Jul/Jan) Brent futures spreads are at $4.05/bbl and $17.95/bbl, respectively.
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