The Aug’25 Brent futures contract initially rallied to $68.45/bbl at 08:50 BST before falling to $67.72/bbl at 11:25 BST. Prices have since fallen further to $67.65/bbl at 11:25 BST (time of writing). In the news, according to the API, US crude inventories dropped by 4.277 mb for the week ending Jun 20. Gasoline stocks increased by 764kb but remain 2% below the five-year average. Distillates fell by 1.026mb, Cushing hub inventories edged down by 75kb. The Strategic Petroleum Reserve (SPR) rose slightly by 200kb to 402.5 mb. In other news, Brazil is expanding its oil sector auctioning 19 offshore blocks in the sensitive Foz do Amazonas region and is investing $900 million to boost refinery capacity. With oil output at 3.5 mb/d and limited refining capacity, the focus is on energy security. At the same time, Brazil seeks $6.2 B more from the energy industry through tax changes or new licenses. The recent conflict between Israel and Iran has heightened Beijing’s concerns over energy security and renewed its interest in Russia’s proposed Power of Siberia 2 (POS 2) pipeline. According to the Wall Street Journal, Chinese officials are now more open to the project despite previous hesitations over ownership, pricing, and fears of over-reliance on Russian gas. In addition to gas, China may also look to reduce its dependence on Iranian oil by increasing imports from Russia. Finally, the front-month Aug/Sep spread is at $0.86/bbl and the 6-month Aug/Feb’26 spread is at $2.69/bbl.
