Crude

The Aug’25 Brent futures contract fell to $66.32/bbl at 14:36 BST before rallying to $67.06/bbl. Prices have since softened to $66.63/bbl at 17:40 BST (time of writing). In the news, OPEC’s oil output rose by 150 kb/d in May, reaching 26.75 mb/d, according to a Reuters survey. The rise was limited as Iraq cut production to compensate for earlier overproduction. Saudi Arabia saw the largest increase at 130 kb/d, still 100kb/d below its quota. Overall, the five OPEC nations involved in the May agreement raised output by 180 kb/d, below the planned 310kb/d due to offsetting compensation cuts. In other news, California’s fuel imports surged to 279 kb/d in May, the highest since 2021, as refinery outages and declining in-state capacity drove the state to rely more heavily on imports, especially from Asia and atypical sources like the Bahamas and India. Imports from South Korea and other Asian countries made up nearly 70% of May volumes, while Bahamas shipments hit a record 38kb/d. Refinery closures and supply crunches are shifting California toward long-term import dependency, raising fuel costs. Kenya plans to begin commercial crude oil production and exports in 2026, according to Energy Cabinet Secretary Opiyo Wandayi. This development hinges on the finalization of Gulf Energy Ltd’s acquisition of Tullow Oil’s assets in the country, including the long-stalled South Lokichar Basin project. The field is expected to produce between 60kb/d and 100kb/d, with an estimated 560 mb recoverable over a 25-year period. The project could position Kenya as a new oil exporter and boost its standing in the global energy market. Finally the front-month Aug/Sep spread is at $0.73/bbl and the 6-month Aug/Feb’26 spread is at $1.89/bbl.

The Aug’25 Brent futures contract rallied to $65.84/bbl at 14:38 BST before softening to $65.45/bbl at 17:30 BST (time of writing). In the news, US President Donald Trump and China’s Xi Jinping agreed to resume trade talks amid renewed tensions over tariffs and rare earth mineral exports. Both leaders expressed willingness to visit each other’s countries, but broader issues like Taiwan, fentanyl, and economic models remain unresolved. The talks aim to avert further disruption to global supply chains. In other news, Vermilion Energy will sell its US assets for $87.8 million, completing its exit from the US market. The Canadian firm will use the proceeds to reduce debt and now expects 2025 net debt of $951 million. It also raised its production forecast and cut its capital budget following recent asset sales. Earlier this year, Vermilion acquired Westbrick Energy for $790 million to boost its Alberta operations amid rising natural gas prices. Petronas will cut about 10% of its nearly 50,000-strong workforce in a restructuring move, CEO Tengku Muhammad Taufik announced. He denied reports that the company plans to exit Canada, calling it vital to Petronas’ LNG ambitions. Finally, the front-month Aug/Sep and the 6-month Aug/Feb’26 spreads are at $0.61/bbl and $1.47/bbl respectively.

The Aug’25 Brent futures contract traded between $65.14/bbl and $65.91/bbl for most of the afternoon. The contract fell to $64.48/bbl at 16:18 BST but has slightly recovered to $64.69/bbl at 17:30 BST (time of writing). In the news, US crude inventories dropped by 4.3 mb last week to 436.1 million, as refineries ramped up operations to 93.4% capacity for the summer driving season, EIA data shows. However, fuel inventories rose sharply: gasoline by 5.2 mb and distillates by 4.2 mb. Gasoline consumption fell by 1.2 mb/d to 8.3 mb/d, raising concerns about demand despite the post-Memorial Day period. Crude imports increased by 389kb/d, and Cushing stocks rose by 576kb. In other news, PetroChina will shut down the last crude unit at its 410kb/d Dalian refinery, its largest in northern China, on June 30, marking the first full closure of a state-run refinery in the country. The secondary units will follow in July, and inventories will be cleared by August. The Dalian plant, which processes mainly Russian ESPO crude, represents nearly 3% of China’s refining capacity. Russia’s National Wealth Fund lost nearly $6B in liquid assets in May, falling to $35.5B, according to the finance ministry. Liquid assets have dropped 68% since the Ukraine invasion began in 2022. The decline is tied to falling oil prices, which pushed Russian oil revenues to just $6.5B in May. Crude export volumes held steady, but revenues sank to a two-year low. Finance Minister Anton Siluanov has suggested revising the $60/bbl benchmark in Russia’s budget rule as oil prices stay below that level. Finally, The front-month Aug/Sep and 6-month Aug/Feb’26 spreads are at $0.64/bbl and $1.41/bbl respectively.

The Aug’25 Brent futures contract rallied all afternoon to $65.86/bbl at 17:11 BST, but has since softened a little to $65.66/bbl at 17:40 BST (time of writing). In headlines, Venezuela’s May oil exports held steady at ~779kb/d, with rising shipments to China of 584 kb/d offsetting the end of US-authorized sales; Chevron and Reliance deliveries ceased, and PDVSA began independent Boscan crude exports to Asia. In other news, according to Reuters, refining margins hit their highest since March 2024 due to tight fuel oil supply, strong summer demand, and outages, though analysts warn the surge may be short-lived. Meanwhile, new US-Iran nuclear talks are underway, but major obstacles remain, including Iran’s refusal to halt enrichment or export its enriched uranium. Any new agreement would need to restore robust IAEA oversight and reconstruct a “baseline” of Iran’s nuclear activities, an effort experts say will be difficult and potentially incomplete due to long-standing information gaps. At the time of writing (17:40 BST), the prompt (Aug/Sep) and 6-month (Aug/Feb) Brent Spreads were at $0.66/bbl and $1.57/bbl.