The Officials

After slowly bouncing its way lower through this morning’s session, flat price leapt on Iranian state television’s announcement that a full closure of the Strait of Hormuz is imminent if blah blah blah. Brent front month rallied from $75.34/bbl at 10:50 BST, up to over $76.40 again in about 20 minutes. Normal in this kind of market. At the same time, Iran is saying there will be a surprise tonight that the world will remember for many centuries. But they said the same thing yesterday and the day before. Every day it’s the same rhetoric, we think it is to deprive the Israelis from a proper night of sleep. But closing the Strait, as we have said before, makes no sense. However, giving the illusion does make sense. Now we know they are long!

The pressure is being put on Iran, Trump is pushing for “An end. A real end. Not a ceasefire. An end”. But as we mark the fifth day of missile lobbing and war lobbying, there seems to be no clear route towards a resolution. We were waiting for exactly how Trump would facilitate an end, apparently it’s “unconditional surrender”. Seems a little desperate. And as Trump and Vance, the US government really make noises and threats about going in some of us wonder, why is the US about to go in, if the Israelis are winning? Why did Trump dropped the pretence that the Israelis were doing the heavy lifting and he acknowledges that it was the US? Trump also said that the US knows where the “Supreme Leader is hiding” and that they are not going to kill him “at least for now”. And perhaps he’s running out of patience as according to Axios, Trump is considering a strike on Iran ahead of the ongoing Situation Room meeting.

Amidst elevated geopolitical tensions in the Middle East in the week ending 13 June 2025, exchange traded futures volumes in Brent, Gasoil, Heating Oil, RBOB and WTI increased across the board w/w. With all instruments seeing a steep rise in volumes, especially for September and October tenors. For Brent, it was the September contract volumes that had the largest increase (over 112%), whereas in WTI, the August futures soared the most (over 84%).

Trump cut his trip to Calgary for the G7 short. With Macron, among others, suggesting it might have something to do with sorting out the mess in the Middle East. Well, today, he nipped those hopes in the bud. In fact, Trump outright denied Macron’s claims that a cease-fire deal was in progress, noting, “Emmanuel always gets it wrong.” Trump said he wasn’t in the mood to negotiate with Iran and that Iran should have taken the deal that was on the table before. All the while, as the big dogs bicker, conflict continues: drone attacks, hypersonic missiles, ballistic missiles. So much destruction and unnecessary loss of life.

Be prepared for everything! The afternoon’s confidence of de-escalation between Israel and Iran saw flat price falling from the highs of $78 in the open to the lows of $71.80/bbl. However, after market close tensions escalated again signalling a conflict that could stay in place longer than expected. With the intraday Brent flat price ranging from -4% to +6.6% compared to Friday’s close.

Friday’s attack sent Brent beyond $78, with traders noting money managers buying on the evacuation news, and retail piling in throughout the thin overnight liquidity. The buying Brent buying was almost entirely M1, seeing the front spread rip to $4, a clear sign of retail buying. This morning prices spiked beyond $76, before retracing after Europe came in, and front month Brent closed in Singapore at $73.70/bbl.

Be ice cool as fear provides sell opportunities! The voices of reason are reminding us supply is unimpeded! Strangely, sellers tell us all is cool and consumers tell us things are iffy. Things are upside down! OPEC waded in, reaffirming no supply disruption has actually occurred. Basically, ‘Don’t panic!’ The IEA weighed in too, flexing 1.2 bil bbl of reserves and readiness to pump. But really the IEA controls nothing and, in case you don’t know, there are no stocks in Europe the IEA controls. The only one that has barrels and controls its release is the US and they don’t listen to the IEA, we heard they don’t like them! The OPEC-IEA ding dong was the last thing we expected out of today’s developments… Cooler heads are coming to the conclusion that oil supply from the Gulf shouldn’t be affected as it’d be impractical for Iran to disrupt the Strait of Hormuz and neither side would benefit. Iran has minimal alternative export routes – and China would not be happy! – while it would deeply sour regional relations.

The drums of war are rolling across the Middle East again. Israel bombed Iran. The signs were there to see, from the pull out of American personnel from the embassy in Iraq to persistent buying of high strike call options and rising flat price ahead of the actual strikes. But some of us felt reason would prevail – big error in thinking – that nothing of significance would happen on the TACO Thursday night Washington/Friday the 13th in other areas of the world. Iran is a big place and it would take a massive effort to move the needle, so we felt the action would not happen because any pinprick would be futile.

Everyone took a breath! Flat price cooled from its flirtation with $70, descending through the European morning towards $68.50 by lunchtime. Team America didn’t want to miss out on the bullish fun, though and the afternoon saw it back up above $69 and having another punt at $70! The structure had a relatively muted response to yesterday evening’s assault on the 70 handle but post-close it skyrocketed to near $1! The strongest we’ve seen since April, excluding expiry wackiness at the May roll. Having flirted with contango for a while, the Dec/Jan spread is now at a robust 20c!

The market’s twitchy! There are lots of itchy small fingers hovering ominously over big red buttons. But it is Taco Thursday, so don’t worry! The buy button was in hot demand as Brent surged – and $70 was so close it could almost taste it! It peaked at $69.92/bbl but failed to get a hold on the elusive handle – it would have been the first time since 3 April, just after Trump barged into the world economy with a huge machete on ‘Liberation Day’. While Brent failed to breach $70, GME reported Oman futures trading at $70.20 early in Singapore! Crude oil outside of the Strait of Hormuz is particularly tasty in the event of an almighty mess. Imagine the impact of gasoline for the summer driving season in the US. But we really hope cooler heads prevail and respect the sovereignty of countries, while doing what is best at home!

The dip didn’t last long. Trump’s pessimism on Iran and optimism on China had Brent bounding up to the $68 level again, breaking above there for the first time since 23 April! 55% tariffs on Chinese imports into the US and 10% tariffs on China’s imports of US goods. Americans should feel so grateful that now they get to pay 55% more for the Chinese products they import while the Chinese people equally should feel grateful they only pay ten percent more for what they import from America! Let me ask y’all who got the better deal when you buy your next TV? While Brent reacted, other markets quietly sat on their hands, digesting the announcement: equities ebbed and flowed and the DXY only wilted marginally. The first of many? Lutnick assured us of “deal after deal” next week – but he’s not one to under-promise, having said the same many times before… Lunatic times!

It’s more important than ever to be fluent in reading tea leaves and consulting the stars or coffee grounds to understand where the market’s going. With so much up in the air at the minute, the market is unsure which way to go: trading off scraps of clues coming out of the US-China trade talks is tricky game, while Iran and the US contradict themselves in their public and private statements. A “framework” for US-China trade is a good start, but it’s nothing for the market to work with. In whatever analysis, you or we are making, take into consideration TACO as well as a growing reluctance for any self-respecting country to just give
in. This means that the global growth rate will be lower than expected with energy crimped slightly. A trading source expected the adjusted growth rate pre import/exports accounting to go negative, job losses to mount and industrial activity to decline.

The window’s been chaotic of late and today continued to be busy, though somewhat more orderly. BP led the charge on the sellside, lowering offers for both Midland and CIF Forties. It was the Midland that attracted buying interest, as Totsa swept in to lift the offer for 22-26 June at Dated +$1.25, while PetroIneos picked up Vitol’s offer at $1.95 over Dated for 3-7 July – that’s a steep curve!

In the week ending 6 June 2025, exchange traded futures volumes in Brent, Gasoil, Heating Oil, RBOB and WTI increased across the board w/w. With all instruments seeing steep rises in volumes, especially in September and October, with most
notable ones, Heating Oil (over 81% and 96% respectively). For Brent, it was the September contract volumes that had the largest increase (over 39%), whereas in WTI, the August futures soared the most (over 60%).

It’s allocation day! And no huge surprises in the July allocations; the Saudis held pretty steady from their June provision to send 47 mil bbl to Chinese refiners in July. Within that, there was some chopping and changing as Unipec and PetroChina got slightly larger allotments, while Rongsheng lost 1 mil bbl – but the ‘teapot’ (bigger than most global refineries) by far the largest share! Allocations for May hit a record since the start of The Officials at 48 mil bbl – the highest since July 2024 allocations – while the June and July allocations occupy second and third spots, respectively.