The Aug’25 Brent Futures contract gapped down to $69.62/bbl at market opening and continued falling to $67.68/bbl at 07:43 BST before recovering to $69.86/bbl at 09:08 BST. Price have since come off to $69.49/bbl at 12:00 BST (time of writing). The drop in prices comes after Israel accepted US President Trump’s ceasefire proposal with Iran, easing fears of a broader conflict and potential supply disruptions. The 12-day conflict had caused sharp volatility, but with direct US strikes on Iranian nuclear sites failing to escalate the situation further, markets pulled back. Analysts caution, however, that tensions remain high and the ceasefire’s durability is uncertain. In other news, China remains Iran’s largest oil customer, buying around 90% of its seaborne exports. In 2024, Iranian oil has made up about 13.6% of China’s total crude imports, averaging 1.38 mb/d, mostly purchased by independent refiners or “teapots” in Shandong. US sanctions have made Iranian oil less accessible, pressuring some Chinese teapots to reduce imports amid fears of penalties. Still, Beijing continues to defend its trade with Iran, with imports often disguised as originating from other countries like Malaysia. Liquefied natural gas (LNG) shipping costs have hit their highest levels since October. Atlantic freight rates for standard LNG carriers reached $51,750/day, while Pacific rates climbed to $36,750/day, according to Spark Commodities. Fears of a potential closure of the Strait of Hormuz amid the Israel-Iran conflict have also driven up insurance costs and war risk premiums, further pressuring the market. Finally, the front/month Aug/Sep spread is at $0.86/bbl and the 6-month Aug/ Feb’26 spread is at $2.93/bbl.
