Donna Dong
Research Analyst, Flux
Brent Declines to $110.01/bbl
UAE nuclear plant hit by drones, China refinery runs slump, Russian oil waiver ends, inventories tighten.
The Jul’26 Brent futures contract has declined from $111.33/bbl at 07:29 BST to $110.01/bbl at 10:52 BST (time of writing).
In the news, a drone strike on 17 May caused a fire at a nuclear power plant in the United Arab Emirates. Meanwhile, Saudi Arabia reported intercepting three drones. Emirati officials stated they are investigating the origin of the strike and emphasised the UAE's right to respond to such "terrorist attacks." The UAE defence ministry added that two additional drones were successfully intercepted and that the drones originated from the "western border," though no further details were provided. Saudi Arabia noted that the three intercepted drones had entered from Iraqi airspace and warned it would take necessary operational measures to defend its sovereignty and security. Elsewhere, China's crude oil throughput in April has declined to its lowest level since August 2022, due to the Iran war limiting refinery operations. Refinery throughput decreased by 5.8% y/y to approximately 13.3mb/d, according to data from the National Bureau of Statistics. According to reports, run cuts resulted from negative margins, and Chinese independent refineries are anticipated to intensify these cuts in May despite Beijing's urging for small refiners to sustain fuel output. In the US, the Trump administration has let a sanctions waiver on Russian seaborne oil to expire. This waiver had previously permitted countries to purchase Russian seaborne oil, following a month-long extension designed to mitigate oil supply shortages and high prices caused by Iran's closure of the Strait of Hormuz. Treasury Secretary Scott Bessent previously stated that he would not extend the general license permitting the purchase of Russian oil stored on tankers. In other news, Fatih Birol, head of the International Energy Agency, has stated that commercial oil inventories are rapidly declining due to the Iran war. He stated that these inventories could last "several" more weeks. Additionally, at the G7 meeting in Paris, Birol noted that releasing strategic oil reserves has added an additional 2.5mb/d to the market, but emphasised that these reserves are finite. Finally, at the time of writing, the front-month (Jul/Aug) and 6-month (Jul/Jan’26) Brent futures spreads are at $4.57/bbl and $20.50/bbl, respectively.
Related News
Brent Meets Resistance Above $111/bbl
The Jul'26 Brent futures contract surged to a high of $111.60/bbl at 17:28 BST this afternoon, where it met resistance...
4 page report
Blending in the bulls
We have seen net selling in the front EBOB crack and these players are out of the money....
14 page report
From Top-J to Drop-J
Naphtha market sees a week of two halves; thinner market due to PFA; cross-product driven liquidity
17 page report
Anticipating Peace
Speculators turn bearish in Brent on improved ceasefire prospects; Heating Oil net positions fall to 4-month lows
13 page report