Donna Dong
Research Analyst, Flux
Brent Dips to $108/bbl, Recovers After
Brent dips below $109 as US-Iran tensions ease, while refiners seek alternatives to Middle East crude supply.
The Jul’26 Brent futures contract dipped from $110.87/bbl at 07:08 BST to $108.67/bbl at 10:02 BST, before recovering slightly to $109.10/bbl at 11:07 BST (time of writing).
In the news, US Vice President JD Vance stated that the United States and Iran have achieved significant progress in their negotiations and that neither side desires to restart the military conflict. "We believe we've made considerable progress. We think the Iranians are interested in reaching an agreement," Vance told reporters during a briefing at the White House. Vance emphasised that the main issue for the US is preventing Iran from acquiring a nuclear weapon. He warned that any contrary stance would prompt the US to be prepared to resume military action. "That’s not what the president wants, and I don’t think that’s what the Iranians want either,” the US vice-president said during the White House briefing. “We want to avoid that route, but the president is ready and capable if necessary." Elsewhere, two supertankers have exited the Strait of Hormuz, with another en route after waiting in the Gulf for over 2 months with 6mb of Middle Eastern crude onboard. The South Korean-flagged VLCC, Universal Winner, is carrying 2mb of Kuwaiti crude and departed the strait following two Chinese tankers that left on 20 May. Kpler has reported that the tanker is heading to Ulsan, home to South Korea's largest refiner, SK Energy, to unload its cargo on 09 June. In Britain, the UK will permit imports of diesel and jet fuel refined abroad from Russian crude oil under a sanction carve-out. This move relaxes restrictions to help secure the domestic supply amid rising prices driven by the conflict in the Middle East. While Britain continues to strongly support Ukraine, junior Treasury minister Dan Tomlinson explained that the national interest must take priority. The move comes after a similar action by the United States, which on Monday extended a sanctions waiver permitting the purchase of Russian seaborne oil. In Japan, oil refiners will be able to obtain enough alternative crude and petroleum products to replace Middle Eastern supplies throughout the summer, according to Shunichi Kito, president of the Petroleum Association of Japan. Kito noted that US crude is increasingly becoming the primary substitute, as efforts persist to source crude from Saudi Arabia and the UAE through routes that avoid the Strait of Hormuz. Finally, at the time of writing, the front-month (Jul/Aug) and 6-month (Jul/Jan) Brent futures spreads are at $4.34/bbl and $20.36/bbl, respectively.
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