Distillates

The Sep’25 Brent futures contract fell from $69.80/bbl at 12:25 BST to $68.60/bbl at 16:55 BST, increasing slightly to $68.95/bbl at 17:10 BST (time of writing). Reuters reported that the European Commission plans to propose a floating Russian oil price cap this week as part of its 18th sanctions package, aiming to overcome opposition from some EU states. The current G7 cap of $60/bbl, set in December 2022 to limit Russia’s war financing, has become ineffective due to falling global oil prices, prompting the EU to draft a mechanism starting around $45/bbl that adjusts with market prices. OPEC’s 2025 World Oil Outlook projects global oil demand rising by over 19 mb/d by 2050, reaching nearly 123 mb/d, and requiring up to 19.5 mb/d of new refining capacity. India, Other Asia, the Middle East, and Africa will drive growth, adding 22.4 mb/d combined, with India alone contributing 8.2 mb/d, while Chinese growth slows and developed economies see declining demand. Emerging markets, policy shifts, and stronger economic prospects will support medium- and long-term demand. The UAE reaffirmed its 5 mb/d production capacity target by 2027 but signalled it could increase to 6 mb/d if markets demand, potentially making it the world’s fourth-largest producer. Energy Minister Suhail al-Mazrouei stressed this is not an official target, and the ministry confirmed the current goal remains unchanged. OPEC+ granted the UAE a higher quota in 2024. It is set to rise by another 300,000 bpd through September 2025, as part of a 2.5 mb/d group-wide output increase, while 3.65 mb/d of cuts remain until end-2026 amid ongoing quota disputes within the group. US pipeline safety enforcement actions fell to a record low at the start of Donald Trump’s new term, as his administration prioritises deregulation. The Pipeline and Hazardous Materials Safety Administration opened just 40 cases between January 20 and June, the lowest for any presidential term in two decades and 68% lower than during Trump’s first months in office in 2017. Finally, the front-month Sep/Oct and the 6-month Sep/Mar’26 spreads are at $1.13/bbl and $3.04/bbl.

The Sep’25 Brent futures contract fell to $69.65/bbl at 14:32 BST. Prices have since rallied up to $70.43/bbl at 16:52 BST and softened slightly to $70.42/bbl at 17:25 BST (time of writing). In the news, US crude oil stockpiles unexpectedly rose by 7.1 mb to 426 mb for the week ending 4 July, according to the EIA. This increase was larger than analysts’ expectations for a 2.1 mb draw. However, gasoline stocks fell by 2.7 mb as gasoline demand surged by 6% to 9.2 mb/d ahead of the July 4 weekend. Refinery crude runs dropped by 99 kb/d, while refinery utilization rates decreased slightly to 94.7%. In other news, Nigeria’s Dangote refinery is set to build storage tanks in Namibia to store at least 1.6 mb of gasoline and diesel, aiming to supply refined fuel to southern Africa. This move aligns with Dangote’s strategy to dominate fuel supply across the continent and reshape regional energy trade. The 650 kb/d refinery has been increasing production and exploring new markets. The storage tanks in Walvis Bay will supply fuel to Botswana, Namibia, Zambia, Zimbabwe, and possibly the southern Democratic Republic of Congo. Turkish energy companies are set to explore oil and gas offshore Pakistan following agreements with local firms, as announced by Turkish Foreign Minister Hakan Fidan during his visit to Pakistan. This collaboration is part of broader discussions between Turkey and Pakistan on potential cooperation in energy exploration, mining, and rare earth elements. Finally, the front-month Sep/Oct and the 6-month Sep/Mar’26 spreads are at $1.25/bbl and $3.56/bbl.

Sep’25 Brent futures contract continued to rally this afternoon to $70.25/bbl at 17:40 BST (time of writing). US Gulf Coast fuel oil imports dropped to a record low of 213 kb/d in June. Reuters reported that refiners chose cheaper heavy sour crude, like Mexico’s Maya, over high-priced high-sulphur fuel oil. This shift reduced imports and stocks, with Gulf Coast fuel oil inventories falling to 10.63 mb, their lowest since March 1996. According to its SEC filing, ExxonMobil warned that lower crude, NGL, and gas prices may cut Q2 earnings by $1.1–1.9 Bn. Despite the outlook, ExxonMobil shares rose 2% in Tuesday morning trading. Officials have set a provisional two-week deadline to find a buyer for Prax Lindsey refinery, which supplies 10% of the UK’s fuel and remains operational under a temporary crude supply deal with Glencore, amid insolvency proceedings and an investigation into its owners over £250 million in tax debts. Restructuring specialists FTI Consulting have begun canvassing interest in the 400-employee site and may also market other Prax Group assets. JODI reported that Saudi Arabia’s crude oil production increased by 48 kb/d in April, while crude exports jumped by 412 kb/d. Finally, the front-month Sep/Oct and the 6-month Sep/Mar spreads are at $1.17/bbl and $3.30/bbl, respectively.

The Sep’25 Brent futures contract continued rallying all afternoon to $69.54/bbl at 17:37 BST (time of writing). In the news, Canadian Prime Minister Mark Carney expressed strong confidence that a proposed oil pipeline to the Pacific coast will likely be included in Canada’s list of national interest projects. Carney emphasised that the private sector will drive the pipeline proposal, with the federal government aiming to fast-track such projects. Alberta Premier Danielle Smith indicated that a private company could soon propose the pipeline, with a target of transporting 1 mb/d. The Trans Mountain expansion remains the only active pipeline for exporting Alberta’s crude to the West Coast. In other news, ExxonMobil, leading a consortium with QatarEnergy, has discovered a natural gas reservoir off Cyprus’ coast. Drilling at the Pegasus-1 well revealed a gas-bearing layer of 350 meters at a depth of 1.9 km. Further evaluation will be conducted in the coming months to assess the discovery. This marks the second gas find in Block 10, following the Glaucus-1 discovery in 2019. While Cyprus has found gas in several areas, it has yet to commercialise the resources. Ecuador’s private OCP pipeline, which transports heavy crude, resumed operations on today after a precautionary suspension on 1 July due to heavy rains. The restart followed the completion of a bypass built to address erosion along the Loco River in the Amazon region, the company reported. Finally, the front-month Sep/Oct and the 6-month Sep/Mar spreads are at $1.16/bbl and $3.23/bbl respectively.

The Sep’25 Brent crude futures saw a quiet Friday afternoon, trading between $68 and $68.50/bbl. Prices are on track for a weekly gain after seeing sideways action following last week’s rout. The UK’s insolvent Lindsey oil refinery faces shutdown within 3 weeks with the current 1.8mb of crude it has in storage. According to Woodmac analyst Emma Howsham, crude throughputs are likely scaled back with yesterday’s FCC shutdown, operating in the less profitable hydroskimming configuration. Nonetheless, the Official Receiver (officer of the Insolvency Service of the UK) reached a deal with Glencore overnight for the trade house to continue to supply crude oil to the refinery. In other news, Trump and Zelenskyy discussed boosting Ukraine’s air defences and joint military cooperation amid escalating Russian strikes, following Trump’s call with Putin and a major drone attack on Kyiv. Finally, the front (Sep/Oct) and 6-month (Sep/Mar) Brent futures spreads are at $1.07/bbl and $2.77/bbl respectively.

The Sep Brent Futures contract has seen a choppy afternoon session, trading gradually down from $69.07/bbl at 13:00 BST to $68.64/bbl where it prints at the time of writing (17:25 BST). In headlines, the Arabian Gulf Oil Company (AGOCO), a subsidiary of Libya’s National Oil Corporation, has completed repairs on the Hamada-Zawiya crude oil pipeline after a leak was detected in late May, temporarily halting crude flows. The pipeline supplies Libya’s largest refinery in Zawiya, which processes up to 120kb/d and is linked to the 300kb/d Sharara oilfield. Meanwhile, India has voiced concerns over a proposed US bill by Senator Lindsey Graham that would impose a 500% tariff on imports from countries buying Russian oil. Indian External Affairs Minister S. Jaishankar said the issue has been raised with US lawmakers, noting that President Trump appears to support the bill. Finally, at the time of writing, the front (Sep/Oct) and 6-month (Sep/Mar’26) Brent spreads were at $1.16/bbl and $3.05/bbl.

The Sep’25 Brent futures contract fell off to 67.24/bbl at 15:32 BST. Prices then rallied to $68.35/bbl at 16:56 BST before softening to $68.25/bbl at 17:30 BST (time of writing). In the news, India is considering building three new sites to expand its Strategic Petroleum Reserve (SPR), which currently has a capacity of about 39 mb equivalent to eight days of the country’s oil consumption. The proposed new sites include locations in Mangalore, Bikaner (Rajasthan), and Bina (Madhya Pradesh). The move aims to increase India’s reserves to 90 days’ worth of oil consumption (current reserves are 75 days worth including private) , allowing the country to meet International Energy Agency (IEA) requirements. In other news, Kazakhstan’s energy ministry announced the cancellation of plans to build a gas processing plant at the Karachaganak field, which was initially set to be developed with foreign shareholders. The field, operated by the Karachaganak Petroleum Operating consortium, had previously agreed to build a gas processing plant, set to start operations in 2028. The ministry did not explain the reason behind halting the project, though some industry sources suggested it was linked to ongoing legal disputes with the foreign companies. A group led by Vitol has submitted a bid of over $10B in the final phase of the court-organized auction for shares in PDV Holding, the parent company of Citgo Petroleum. This auction aims to compensate creditors seeking to recover nearly $19B after Venezuela expropriated assets and defaulted on debt. Vitol had previously participated in earlier bidding rounds, but new bidders have emerged with improved offers. Finally, the front-month Sep/Oct and 6-month Sep/Mar’26 spreads are at $1.05/bbl and $2.78/bbl respectively.