The Officials

The Americans are in a good mood again: no more war, their 401(k) balances bulging as the S&P 500 hunts an all-time high! The vibes are good. Just don’t look ahead too far and see the ugly tariffs rearing their head again on 9 July. Oh, and the dollar is getting hammered. Pound Sterling reached $1.3769 in terms of US dollar this afternoon. Everyone is scrambling to get their money out of the US.
Flat price was on the up today as well, for the first time since Israel and Iran cooled their heels. It even peaked just over the $69 mark shortly before the close, though it fell back to $68.92/bbl. Time spread structure has solidified a little with the front spread firming at $1.28/bbl. But we still have a lingering contango from March 26 tenor forwards…

Flat price may have found some firmer ground and steadied in the upper 60s, but the prompt spread is beavering its way up again: by today’s Asian close it had climbed to $1.19, with that strength filtering down the curve. Supply and demand balances
are still showing supply overhangs into Q4 this year, as the Onyx Global Oil Balance projects a 500 kb/d surplus. Once the
summer burn and peak demand season filters out, the longer tem market outlook is a bit shaky, as the global economy continues to struggle with tariff threats and lukewarm growth.

Trump’s on a victory lap at the NATO summit, boasting about how bombing Iran ended the war in an unprecedented chain of events. But now he likes them and he wants Iran to sell oil to China, “They’re going to need money to put that country back into shape. We want to see that happen”, he said. Trump’s rolling out the red Iranian carpet, saying “We’re not taking over the oil” and he won’t stop oil flows to China – he wants to see Iran back on its feet. BFF time. Israel is very mature so surely they aren’t jealous. The Americans, Israelis and even CIA can’t agree! Iran’s now claiming the facilities were gravely damaged – convenient… And the IAEA’s stumbling around in the dark trying to figure out what’s up. They’re playing ‘4D chess,’ said a source.

Square one. It’s a comforting place. You know where you stand. Maybe it’s around a negotiating table again for the US and Iran, following their well-mannered de-escalation earlier this week. Whether or not Trump’s bombing actually destroyed Iran’s nuclear facilities (even the CIA said the damage at Fordow was minimal), he’s certainly quick to claim it as a win, even despite Iran sauntering out of cooperation with the IAEA and being able to continue unfettered oil exports. Credit where credit is due, Trump can rightfully claim that he stopped the shooting between Israel and Iran. Well done! He needed a win as his diplomatic scorecard hasn’t been looking pretty since he came into office. But hey at least he’s got cheap oil again.
According to conversations with market sources, as the under allocation by Adnoc filters through the system, buyers are physically short on the number of barrels received and this causes issues on their refining systems which were counting on the cargoes. And critically the hedges are losing money big time, ‘it is a $12 million loss,’ said a source. Lawsuits are launched through the chain – likely to hit even Adnoc-said equity sources.

Good manners are back! First Trump thanks Iran for the heads up before the theocracy hit the US base in Qatar. Then he doubles up on his graciousness and says openly China can buy Iranian oil! He even said China can “continue purchasing” Iranian oil – recognising the open secret that China’s been buying shedloads of Iran’s supply for years. This will surely open the floodgates to more nations demanding the right to buy cheap Iranian crude – based on market conversations, there’s certainly appetite in India for cheap Iranian oil if sanctions loosen. Mr T also hopes China will buy “plenty” of US crude. But he’s got to remove the tariffs! Even 10% on oil kills competitiveness of American grades, so only a complete removal of tariffs would see that happen.

Amidst mounting tensions in the Middle East and speculation of possible US involvement -ahead of the weekend strikes- in the week ending 20 June 2025, exchange traded futures volumes in Brent, RBOB and WTI declined w/w across the board. For Brent, August contract volumes fell the most (-13.35%), while for WTI it was the September contract that saw the steepest drop (-54.11%). Heating Oil August exchange traded volumes declined w/w, whereas volumes for September and October contracts rose w/w. By contrast, Gasoil exchange traded futures volumes rose across the board w/w, the only instrument to post universal increase.

Back to the 60s! The ceasefire between Israel and Iran double tapped flat price after yesterday evening’s plunge. Having ended yesterday’s trading above $72, it dropped to open today at $69.60. We were talking yesterday about how the spreads also had to weaken from their inflated and bulked up position near $1.50 and we saw evidence of that today, as the prompt spread dropped to below a buck, reaching the Asian close at 92c.
The dust is settling as the market falls and teams are busy assessing the damage. We saw the bombardment of Qatar’s American base and even Iraq also reported drone attacks targeting military sites and bases. And now Israel’s reported missile launches from Iran and ordered its people to get to safe spaces! Iran denied firing missiles. And Israel vowed to retaliate with force. Some things are clear but there is a lot of misinformation about. But the narrative and the direction of the war has shifted, and we are in the de-escalation mode. This war is over, folks!

Talk the market up! Bomb! Rinse! Repeat! It’s a broken record. Even the greatest conductors of all time would be envious of such orchestration. The market saw through the transparency and Iran was quick to reassure its “friendly and brotherly” neighbours it meant no harm… Because there was nobody where they fired! They were nice enough to fire the slow ones that are easy to intercept and Qatar reported no casualties. Everyone’s a winner. What a rinse it was, if you were a long holder you were rinsed, bleached, dried out and are now wondering ‘why didn’t I read The Officials?’ We have been telling you the Strait cannot be closed and the supply is healthy and uninterrupted. Don’t forget Trump wants low prices. A winning combo… if you’re short!

The Americans wanted to play ‘whack-a-mole’ but now they’re busy playing ‘Where’s Wally’, searching for where Iran’s stashed its uranium stockpiles – regardless of how “spectacular” a success Trump claims! He came in to end the wars but has become what he promised to destroy! He went from ‘Big Beautiful Bill’ to ‘Big Bad Bombs’. Talk the market up, bomb, rinse, repeat! After gapping up on open to a 5-month high above $80, the market realised there’s no actual disruption and Brent got depressed through the Asian session, dropping back towards $77. In this kind of operation, you need to be on the same page as your allies, but the US and Israel seemed divided on the regime change question. Trump just wanted to blow something up, while Netanyahu wanted to topple an empire. But now Mr T fancies a go at toppling too, because Iran’s regime can’t “MAKE IRAN GREAT AGAIN”. An Israeli strike on a road to Fordow this morning did “very significant damage”, according to IAEA chief.

The Middle East and Asia are hot in more ways than one. Chaos is also reigning supreme in areas beyond Israel and Iran as Adnoc has cut the nominations to equity holders by 20 pct! Look at the document we received and do not ask who gave it but we would appreciate it if you send us more information.

Everyone has their limit, and it would seem we might have found Trump’s. Trump wants cheap oil prices; that’s priority number one. And it turns out war isn’t very good at facilitating cheap oil.
We saw a similar Trump reaction function in equities, and to a bigger extent, bonds. Trump’s economic agenda had pushed treasury yields higher and higher, and stocks lower and lower, and as much as he hoped for a saving grace in the form of a Fed cut, it’s not gonna happen. So, he had to moderate his sweeping tariff agenda, slowing the treasury fire sale.

Brent flat price saw its highest European close since January at $78.80/bbl. But shortly after the close, Brent collapsed to near $76.50/bbl! ICE shut early for a mini break, but CME and Flux kept ticking too! What a TACO speech can do to oil prices. Trump will decide “within two weeks” whether to join Israel or not… Clearly, he doesn’t have a plan, and the threat of direct intervention by the US is rapidly evaporating.

ADNOC faced a horrible May. Prices collapsed so badly that Murban crashed again below the price of crude oil that was believed to be inferior, even by itself, such as Upper Zakum. Not only Murban underperformed on a relative basis, but the flat price also plunged in IFAD, the exchange generating the daily settlements the National Oil Company uses to set its official selling prices. In early June, after some hand wringing, the NOC set the price for its benchmark and flagship Murban crude oil at $63.62/bbl, down a whopping $4.11/bbl from the previous month when Murban was already looking infirm at $67.73/bbl.

The heat is rising sharply in the Middle East with Israel and Iran in direct military confrontation and the US stirring the pot… On Wednesday, Israel announced it had struck over 40 Iranian missile sites and other military infrastructure, including the Iranian internal security agency’s headquarters. And the U.S. Embassy in Israel has begun preparing evacuation plans for American citizens, according to Ambassador Huckabee. Meanwhile, Trump stated he has daily contact with Netanyahu and encouraged Israel to “keep going”. He also claimed that Iran reached out, offering to come to the White House for negotiations. But, the elaborately named Permanent Mission of the Islamic Republic of Iran to the United Nations publicly denied any intention to send delegates to the US for talks as things stand.

After slowly bouncing its way lower through this morning’s session, flat price leapt on Iranian state television’s announcement that a full closure of the Strait of Hormuz is imminent if blah blah blah. Brent front month rallied from $75.34/bbl at 10:50 BST, up to over $76.40 again in about 20 minutes. Normal in this kind of market. At the same time, Iran is saying there will be a surprise tonight that the world will remember for many centuries. But they said the same thing yesterday and the day before. Every day it’s the same rhetoric, we think it is to deprive the Israelis from a proper night of sleep. But closing the Strait, as we have said before, makes no sense. However, giving the illusion does make sense. Now we know they are long!

The pressure is being put on Iran, Trump is pushing for “An end. A real end. Not a ceasefire. An end”. But as we mark the fifth day of missile lobbing and war lobbying, there seems to be no clear route towards a resolution. We were waiting for exactly how Trump would facilitate an end, apparently it’s “unconditional surrender”. Seems a little desperate. And as Trump and Vance, the US government really make noises and threats about going in some of us wonder, why is the US about to go in, if the Israelis are winning? Why did Trump dropped the pretence that the Israelis were doing the heavy lifting and he acknowledges that it was the US? Trump also said that the US knows where the “Supreme Leader is hiding” and that they are not going to kill him “at least for now”. And perhaps he’s running out of patience as according to Axios, Trump is considering a strike on Iran ahead of the ongoing Situation Room meeting.

Amidst elevated geopolitical tensions in the Middle East in the week ending 13 June 2025, exchange traded futures volumes in Brent, Gasoil, Heating Oil, RBOB and WTI increased across the board w/w. With all instruments seeing a steep rise in volumes, especially for September and October tenors. For Brent, it was the September contract volumes that had the largest increase (over 112%), whereas in WTI, the August futures soared the most (over 84%).

Trump cut his trip to Calgary for the G7 short. With Macron, among others, suggesting it might have something to do with sorting out the mess in the Middle East. Well, today, he nipped those hopes in the bud. In fact, Trump outright denied Macron’s claims that a cease-fire deal was in progress, noting, “Emmanuel always gets it wrong.” Trump said he wasn’t in the mood to negotiate with Iran and that Iran should have taken the deal that was on the table before. All the while, as the big dogs bicker, conflict continues: drone attacks, hypersonic missiles, ballistic missiles. So much destruction and unnecessary loss of life.

Be prepared for everything! The afternoon’s confidence of de-escalation between Israel and Iran saw flat price falling from the highs of $78 in the open to the lows of $71.80/bbl. However, after market close tensions escalated again signalling a conflict that could stay in place longer than expected. With the intraday Brent flat price ranging from -4% to +6.6% compared to Friday’s close.

Friday’s attack sent Brent beyond $78, with traders noting money managers buying on the evacuation news, and retail piling in throughout the thin overnight liquidity. The buying Brent buying was almost entirely M1, seeing the front spread rip to $4, a clear sign of retail buying. This morning prices spiked beyond $76, before retracing after Europe came in, and front month Brent closed in Singapore at $73.70/bbl.

Be ice cool as fear provides sell opportunities! The voices of reason are reminding us supply is unimpeded! Strangely, sellers tell us all is cool and consumers tell us things are iffy. Things are upside down! OPEC waded in, reaffirming no supply disruption has actually occurred. Basically, ‘Don’t panic!’ The IEA weighed in too, flexing 1.2 bil bbl of reserves and readiness to pump. But really the IEA controls nothing and, in case you don’t know, there are no stocks in Europe the IEA controls. The only one that has barrels and controls its release is the US and they don’t listen to the IEA, we heard they don’t like them! The OPEC-IEA ding dong was the last thing we expected out of today’s developments… Cooler heads are coming to the conclusion that oil supply from the Gulf shouldn’t be affected as it’d be impractical for Iran to disrupt the Strait of Hormuz and neither side would benefit. Iran has minimal alternative export routes – and China would not be happy! – while it would deeply sour regional relations.

The drums of war are rolling across the Middle East again. Israel bombed Iran. The signs were there to see, from the pull out of American personnel from the embassy in Iraq to persistent buying of high strike call options and rising flat price ahead of the actual strikes. But some of us felt reason would prevail – big error in thinking – that nothing of significance would happen on the TACO Thursday night Washington/Friday the 13th in other areas of the world. Iran is a big place and it would take a massive effort to move the needle, so we felt the action would not happen because any pinprick would be futile.

Everyone took a breath! Flat price cooled from its flirtation with $70, descending through the European morning towards $68.50 by lunchtime. Team America didn’t want to miss out on the bullish fun, though and the afternoon saw it back up above $69 and having another punt at $70! The structure had a relatively muted response to yesterday evening’s assault on the 70 handle but post-close it skyrocketed to near $1! The strongest we’ve seen since April, excluding expiry wackiness at the May roll. Having flirted with contango for a while, the Dec/Jan spread is now at a robust 20c!

The market’s twitchy! There are lots of itchy small fingers hovering ominously over big red buttons. But it is Taco Thursday, so don’t worry! The buy button was in hot demand as Brent surged – and $70 was so close it could almost taste it! It peaked at $69.92/bbl but failed to get a hold on the elusive handle – it would have been the first time since 3 April, just after Trump barged into the world economy with a huge machete on ‘Liberation Day’. While Brent failed to breach $70, GME reported Oman futures trading at $70.20 early in Singapore! Crude oil outside of the Strait of Hormuz is particularly tasty in the event of an almighty mess. Imagine the impact of gasoline for the summer driving season in the US. But we really hope cooler heads prevail and respect the sovereignty of countries, while doing what is best at home!

The dip didn’t last long. Trump’s pessimism on Iran and optimism on China had Brent bounding up to the $68 level again, breaking above there for the first time since 23 April! 55% tariffs on Chinese imports into the US and 10% tariffs on China’s imports of US goods. Americans should feel so grateful that now they get to pay 55% more for the Chinese products they import while the Chinese people equally should feel grateful they only pay ten percent more for what they import from America! Let me ask y’all who got the better deal when you buy your next TV? While Brent reacted, other markets quietly sat on their hands, digesting the announcement: equities ebbed and flowed and the DXY only wilted marginally. The first of many? Lutnick assured us of “deal after deal” next week – but he’s not one to under-promise, having said the same many times before… Lunatic times!

It’s more important than ever to be fluent in reading tea leaves and consulting the stars or coffee grounds to understand where the market’s going. With so much up in the air at the minute, the market is unsure which way to go: trading off scraps of clues coming out of the US-China trade talks is tricky game, while Iran and the US contradict themselves in their public and private statements. A “framework” for US-China trade is a good start, but it’s nothing for the market to work with. In whatever analysis, you or we are making, take into consideration TACO as well as a growing reluctance for any self-respecting country to just give
in. This means that the global growth rate will be lower than expected with energy crimped slightly. A trading source expected the adjusted growth rate pre import/exports accounting to go negative, job losses to mount and industrial activity to decline.

The window’s been chaotic of late and today continued to be busy, though somewhat more orderly. BP led the charge on the sellside, lowering offers for both Midland and CIF Forties. It was the Midland that attracted buying interest, as Totsa swept in to lift the offer for 22-26 June at Dated +$1.25, while PetroIneos picked up Vitol’s offer at $1.95 over Dated for 3-7 July – that’s a steep curve!

In the week ending 6 June 2025, exchange traded futures volumes in Brent, Gasoil, Heating Oil, RBOB and WTI increased across the board w/w. With all instruments seeing steep rises in volumes, especially in September and October, with most
notable ones, Heating Oil (over 81% and 96% respectively). For Brent, it was the September contract volumes that had the largest increase (over 39%), whereas in WTI, the August futures soared the most (over 60%).

It’s allocation day! And no huge surprises in the July allocations; the Saudis held pretty steady from their June provision to send 47 mil bbl to Chinese refiners in July. Within that, there was some chopping and changing as Unipec and PetroChina got slightly larger allotments, while Rongsheng lost 1 mil bbl – but the ‘teapot’ (bigger than most global refineries) by far the largest share! Allocations for May hit a record since the start of The Officials at 48 mil bbl – the highest since July 2024 allocations – while the June and July allocations occupy second and third spots, respectively.

Flat price keeps going! $67 was a tempting target as Brent climbed this morning, stretching out its fingers to reach that elusive level. It brushed $67 at 13:45 BST and another during the window, but failed to gain a toehold and came to the European close at $66.92/bbl. We’ve been bullish for a few weeks now and the market’s finally waking up to the fact OPEC quota hikes don’t equate to supply increases.

Some OSPs bring joy, others bring pain. Joy for consumers ready to gobble up cheap crude, against pain of producers squeezed by low prices. The Murban/Dubai debacle had ADNOC up in arms, frustrated its ‘most valuable’ grade was setting the benchmark, pricing below the heavier, sourer Upper Zakum. For July, Murban is set at $63.62/bbl, down over 4 bucks from June pricing, with Upper Zakum set at a 10c premium, Das at Murban -55c and Umm Lulu at Murban +15c. The 10c UZ/Murban inversion is minor stuff compared to the downward flat price correction. This is real money! Imagine you produce 4 mil b/d and export 3 mil b/d, (this is just illustrative) but this would mean $12 million less revenue per day or $360 mil less per month. We’ll be talking billions if the market doesn’t recover and persistent overproduction continues. You cannot overproduce and have no price impact. In other words: you can’t have your cake and eat it!

On the 81st anniversary of D-Day, the North Sea was sombrely quiet and there was not a great battle among the traders. But the longs were definitely winning in the flat price front. Brent hit triple six for a while, $66.6+ something. The window players look fatigued after a busy week; Totsa and Mercuria were back, bidding for Midland yet again, bringing bids of +$1.45 and +$1.65 over dated. The sellside was also populated by the usual suspects, as BP and Phillips offered again, bringing +$2.00 and +$2.10 over dated to the table. But neither side wanted to budge much further, and no one traded.

Rome is burning! Brutus, Cassius, Judas… they’re all out for revenge. The knives are out and everything’s fair game! Reality TV soap operas can’t come close to this level of drama. We wouldn’t blame the US’ global rivals for warming their feet by the fire with a massive bucket of popcorn watching this one go down. The political schism is of monumental scale and could rip the American political scene asunder! As chaos engulfs the US political scene, oil remains largely unchanged, with August Brent still firmly anchored to $65, on a steady downtrend through today’s Asian session.

Trump’s phones are busier than a teenager’s as he calls his bros one after the other. Or are they rivals, despair not, a deal is in work or not. He first called Putin about the Russia/Ukraine war and today Xi to talk about the US-China trade war. Bessent said trade talks had stalled and stagnated and suggested the two biggest wigs should talk directly to iron things out. The call gave the market some good vibes and Brent flat price jumped to near $65.80 in the aftermath – it wasn’t just oil, either, as equity futures jumped on the news (though quickly sold off) and gold dropped some of its gains made in early trading.

Brent was on a sideways run though today’s Asian session, before climbing again to above $65, though it slipped to the close at $64.93/bbl. The futures structure is creaking under the pressure of headline extra supply and lukewarm demand prospects. The reality is far more complex but few understand that any headline about OPEC supply increase is fake. We mentioned yesterday that the Dec/Jan spread had returned to backwardation but it keeps flitting back and forth with contango, while the front spread is being ground down towards 60c, having started the month near 80c.