Brent Slides Toward 100-Day Average as China Demand Wanes

China’s crude oil imports fell to approximately 7.8 mb/d in May, the lowest level since October 2017 and a more than eight-year low, according to data from the General Administration of Customs cited by Bloomberg. This compares with China’s average crude imports of around 11.6 mb/d in 2025.

Iraq's cabinet has approved a major expansion of exports through the Kurdistan–Turkey pipeline system to Ceyhan, aiming to raise flows from about 220kb/d to 770kb/d alongside new overland routes via Syria and potential links to Jordan. Iraq has begun moving large volumes of oil by road into Syria as part of an emergency shift in export strategy. In the latest shipment, around 150 tanker trucks crossed from Iraq into Syria through the Rabia–Yarubiyah border crossing, carrying fuel oil destined for the Mediterranean port of Baniyas. From there, the cargo is intended to reach global markets by sea.

Although the land route had been abandoned for decades, the end of the Syrian civil war and interruptions caused by regional warfare have made it the most viable alternative at present, despite the associated higher costs.

Saudi Arabia’s economy grew 3% y/y in Q1'26, driven by both oil and non-oil sectors, with non-oil activities contributing the largest share of growth as diversification under Vision 2030 continues. Oil and non-oil sectors both expanded by 2.9%, while government activity rose 1.5%. However, GDP fell 1.2% q/q on a seasonally adjusted basis. Forecasts remain positive, with the OECD projecting growth of 3.2% in 2026, rising to 4.3% in 2027. Ghana has begun a major push to expand its oil refining capacity, with the first delivery of Jubilee crude to the Sentuo Oil Refinery marking a key milestone in domestic processing. The refinery is expected to expand from 40kb/d to 100kb/d, with the government planning a formal launch of the expansion on 24 Jun. Finally, the Aug/Sep’26 and Aug/Feb’27 Brent futures spreads are at $1.89/bbl and $8.85/bbl, respectively.

Front 380 crack was offered this morning traded from -$3.10/bbl to -$3.80/bbl. Structure was slightly weaker on lower crude with Jul/Aug trading from $14.25/mt to $13.25/mt. Post window, we saw outright selling in front 380 cracks, which pushed the front E/W down to $15/mt. In barges, front crack was pressured by the 380 cracks selling, traded at -$6.25/bbl. Structure was implied weaker with Jul/Aug at $10/mt.

Front Sing crack sold off in the window, traded from $14/bbl to $12.60/bbl. Sing structure down the curve also saw selling interests with Jul/Aug trading down to $19/mt. Post window, interests on structure turned bid with Jul/Aug trading up to $21.50/mt. Front Sing crack was therefore supported and bid up to $13.35/bbl. In Euro, front crack traded weaker with the front Sing crack, around $4.50/bbl. Euro structure was quiet, with Jul/Aug implied at $21.50/mt.

This morning in distillates, Sing gasoil spreads were bid in Sep/Mar and Sep/Dec. The bids were nonaggressive and pulling back on lower ICE so didn’t put much pressure on the boxes. E/W firmed with MOC in Jul, going a touch better bid but felt capped at around -$25.50/mt with bal MOC offered. Regrade was better bid in Jul, trading up to $1/bbl, while kero spreads were bid on slightly lower ICE.

Prompt ICE gasoil sold off, dropping from $23.50/mt to $21.50/mt in Jul/Aug. Aug cracks reached a high of $46.80/bbl pre window, then came off to $46.20/bbl post-window. European jet diffs traded at similar levels to yesterday, at $115/mt in Jul. Heating oil spreads came off while the M1 HOGO swap came off from 27.5c/gal to 26.8c/gal.

This morning in gasoline, flat price traded end window at $110.45/bbl with MOC better bid. The east started the morning with a better bid, with Jul cracks trading up to $20.25/bbl before softening to $20/bbl. There was also better buy-side interest on Jul/Aug up to $5.85/bbl, and E/W got bid up to -$3.90/bbl before getting sold down to -$4.20/bbl. EBOB was well supported with July cracks trading up from $24/bbl to $24.30/bbl, and Q4 was bid up to $12.90/bbl. Spreads saw better buy-side interest as well, with the Jul/Aug bid at $23.25/mt.

This morning in NGLs, FEI spreads opened weaker than yesterday’s close and were offered across the morning. Jul/Aug FEI traded down from $40/mt to $34/mt where it settled post window. Aug/Sep FEI also weakened to settle at $15/mt having previously traded at $17/mt, and the Jan/Jun ’27 spread was lifted at $89/mt. On the back of FEI weakness and spread selling, the Jul LST/FEI strengthened to settle at -$289/mt having opened at -$300/mt this morning. The Europe LST/NWE arb traded in July at -$154/mt, and the Cross Balmo Jun/Aug C4ENT/C4CP arb traded at -$169/mt. On screen end window July FEI flat price was lifted at $699/mt.

This morning in Naphtha, MOC was better bid with trade and phys guys paying up to +0.10 in July MOPJ MOC, seeing E/W price up in the front trading $36/mt end of window. Sell-side interest in deferred E/W this morning, seeing Q4 E/W trade $31.50/mt for smalls. Fund and trade buyside of Dec/Jan MOPJ this morning, paying up to $9/mt. Cracks stronger on the day seeing July Nap crack strengthen from -$11.80/bbl to -$11.50/bbl end of window.

China’s K-shaped economy continued to deepen, with exports up 19.4% y/y in May, above the expected 15%. Exports remain largely dependent on Asian neighbours, though shipments to the US increased over 35% - partly due to the post-tariff base effect last year. The PBoC net injected over CNY 152 billion via OMO today, via 7-day reverse repos.

Korean Q1 GDP growth revised up in the final estimate, up 1.8% q/q vs the previous contraction of 0.1%. Saudi Arabia's Q1 GDP also outperformed expectations, rising 3% y/y against the expected 2.8%, though messy due to the US-Iran war.

Trump continues to claim progress towards a peace deal with Iran, Brent crude futures down to the low-$90s range around the low point during the war and since the mid-April ceasefire announcement.

Equities found some support since Friday’s steep selloff, with S&P 500 Emini futures up 0.4% this morning. Treasurys also steadied, with 10-year yield around 4.55%, off recent highs.

Data today: US balance of trade, ADP weekly employment change, home sales