Donna Dong
Research Analyst, Flux
Brent Climbs Above $113/bbl
Missiles hit US ship near Hormuz; China blocks US sanctions; Japan taps Russian oil; OPEC+ hikes output; disruptions persist
The Jul’26 Brent futures contract has rallied this morning, from $109.22/bbl at 10:05 BST to $113.54/bbl at 11:12 BST (time of writing).
In the news, two missiles have reportedly hit an American warship near Jask Island in the Strait of Hormuz after the US ignored previous warnings from Iran that it would “respond harshly” to any US threat from within the Strait. No further verifiable details have become available thus far. Elsewhere, Japanese refinery Taiyo Oil will receive a cargo of crude oil from Russia's Sakhalin-2 project next week, as Japan looks for alternative petroleum sources. While the Asian nation has largely ceased Russian oil purchases since 2022, a US exemption for oil sales from the Sakhalin-2 project remains in effect until 18 Jun. In China, the Ministry of Commerce announced it had issued an injunction to prevent US sanctions targeting five Chinese refiners suspected of purchasing Iranian oil. The ministry identified these refiners as Hengli Petrochemical (Dalian) Refinery, along with the so-called 'teapot' refineries: Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical. The ministry has stated that the American sanctions violate “international law” and has detailed that the injunction stipulates that the United States cannot “recognise, implement, or comply with the sanctions imposed on the aforementioned five Chinese companies”. In other news, OPEC+ has agreed to a minor oil output hike for June, though this is likely to be offset by disruptions to the Gulf caused by the Iranian war. Seven OPEC+ countries will increase their oil output targets by 188kb/d in June, marking the third consecutive monthly rise. Finally, at the time of writing, the front-month (Jul/Aug) and 6-month (Jul/Jan) Brent futures spreads are at $7.44/bbl and $25.69/bbl, respectively.
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