The Officials

After making the most of the good vibes early this morning on the news reciprocal tariffs could be toned down, Brent took a tumble before lunchtime, plummeting back towards $65. That wasn’t all though and it dropped below $64 by 15:00 BST. The front spread started getting funky though, as we approach tomorrow’s expiry, while the M2/M3 spread held relatively steady in the low 60c range.

The wheels are falling off! A US federal court struck down Trump’s cherished reciprocal tariffs, deeming them an overstep of presidential authority and unconstitutional. There is a 10-day deadline, but, of course, the White House was quick to shout back
that it’s “Not for unelected judges to decide how to properly address a national emergency”. But really, this ruling is an effort to offset the economic emergency of a financial meltdown precipitated by Trump’s gung-ho approach to tariffs! This is a point of pride and ego now!

Brent tirelessly worked its way up from the late afternoon to $65.04/bbl by the close, gaining $1.38/bbl from yesterday’s close. Is it the summer burn? Throughout flat price’s upward slog, however, the front spread held fairly steady, hovering near 55c and reaching the close at 57c. But after the close Brent rapidly spiked 60c – the bulls are back! Or perhaps not; since 9 May, Brent has struggled to maintain a position above $66 or below $64 for long and has been stuck bouncing between the two for the most part, despite the incessant deluge of headlines – it shows just how much headline fatigue has infiltrated the market.

Don’t believe what the West says, China is not alone and has many friends! The Dubai window showed PetroChina isn’t
entirely isolated on the buyside, as Phillips showed up to lift a few partials from the likes of BP and Totsa. And that makes the
Gang of Four. But, as ever, it was PC doing the lion’s share of the work, bidding with as much vigour as ever! Vitol was back as the
main seller, though joined by Totsa and BP, while Reliance and Gunvor skirted around the edges of the sellside and buyside,
respectively. The more active buyside today saw the physical premium continued its upward momentum to hit $1.49 today – its
highest since 9 May. In the end, Vitol nominated an Oman cargo to PC, the third of the grade this month. Clearly the Murban
stores at Vitol have dried up, as they’ve only nominated one of those since 16 May.

To sanction or not to sanction? That is the question for Trump, who is reportedly considering whacking Russia with more sanctions as Putin gets increasingly on his nerves. But the small price jump that inspired didn’t last long and it fell back very quickly to below $64. Maybe the market’s not entirely sold on another outsized 411 kb/d increase in OPEC production from July, as reports emerged that delegates were expecting exactly that from this week’s meeting.

In the week ending 23 May 2025, exchange traded futures volumes in Brent, Gasoil, Heating Oil, RBOB and WTI front
month contracts declined w/w -Heating Oil especially dropped over 40%. Brent future volumes were up in the August
tenor while WTI dropped w/w, whereas, both September Brent and WTI were relatively flat. By contrast, volumes in Gasoil,
Heating Oil and RBOB significantly decreased w/w across the board.

Brent is still stuck in the mud near $65, eagerly awaiting news from the upcoming OPEC meeting and the dragging US-Iran talks.
Before we get a bombshell from either side, however, the futures structure remains solid at the front, as the front spread holds
firm at 61c, and the M2/M3 spread isn’t far off. Look further down the curve for the fun times, though, as the structure slips into contango from the November contract onwards.

Brent bounced its way through the Asian session through thin holiday liquidity, flirting with the $65 handle but largely failed to break convincingly higher. Despite Trumps optimism on “very good” US-Iran talks, we are still awaiting any sort of break through. On Friday Iran reiterated that they would not concede on uranium enrichment for domestic use, but nevertheless, Trump said to upon his return “I don’t know if I’ll be telling you anything good or bad over the next two days, but I have a feeling I might be telling you something good.” Oh and Trump’s decided to postpone the threatened 50% EU tariffs until 9th July. For now at least, the market is in wait and see mode. Who can blame traders for not reading too much into the Trump-talk, they’ve been burned in the past for that. Crude remains somewhat supported, at least if you look at Brent flat price, which closed at $65.08/bbl up $1.15 on the day. And Brent structures too, with front spreads still robustly backwardated at 63c.

Trump and Bessent launched a classic good cop bad cop offensive on the market after the US woke up, sending flat price on a roller coaster through the European session. After news that a complete end to uranium enrichment in Iran was not on the cards, brent strengthened steadily throughout the afternoon to $64.60/bbl. But then, Trump being Trump, decided it was the perfect moment to take another swing at the EU. He’s now threatening a “straight 50% tariff” starting June 1. His reasoning? The usual: claims that the EU takes advantage of the US, that trade deficits are a form of exploitation… It’s nonsense, really. If anything, it’s the reverse. Trade deficits just mean you’re importing things you don’t have a comparative advantage in – often at better quality
and lower prices.

What’s happening with Murban and Dubai? Will there be a negative QP? Will the price of Dubai be higher than Dubai? Will the Middle Eastern OSPs be affected? So many questions so little time as some market participants expected a new pricing system to be unveiled during the MPGC conference in Bahrain. Meanwhile, Brent was a bit soft around $64.00/bbl plus or minus. The price was edging up over $65 early this week but OPEC quickly nipped that in the bud. But in any case, it’s been searching for a direction, having traded within a narrow mid-$60s range since 9 May, in the absence of any recent tariff news or overwhelming directional impetus. The market seems able to absorb these OPEC paper production hikes -we have explained the production increase is not real yet- without too much trouble, as these announcements and rumours only spark short-term reactions…

Consumption is rising steadily in the northern hemisphere due to summer seasonal demand and burn crude and fuel consumption for power generation in the Middle East. But prices get beaten down on a regular basis by either Trump saying or doing something and by OPEC also talking the market down. Sources wondered why markets weren’t at fifty dollars a barrel already. Bloodied and bruised by the reports OPEC would unleash yet another flood of supply in July, Brent futures tumbled to below $64 and struggled to climb back above that level throughout the day. The front spread also struggled to shrug off the 50c level, despite brief forays up to 56c and down to 46c – eventually coming to the European close at exactly 50c.

Just as Brent was gearing up for a relaxed day, gently oscillating through the Asian session on a gradual uptrend, OPEC barged in and kicked the legs out from under it! Reports OPEC will pursue its more aggressive unwind of production cuts tanked Brent from the $65 handle it had worked so hard to reach and it fell to under $64 within an hour. The prompt spread showed relative resilience, however, dropping from 54c to 47c. By the close, flat price had regathered to $64.37/bbl, though the subsequent decline towards $63.50 suggests the battle isn’t over yet!

The window proceedings opened as you would expect this week: Exxon returned to offer Forties and Midland, while Glencore came back to bid Midland and BP made another appearance bidding Johan Sverdrup. BP wasn’t too fussy about freight either, bidding for both CIF and FOB cargoes. Totsa’s bids for Sverdrup also went unanswered. In fact, the only trade today came as Glencore lifted Exxon’s 2-6 June Forties offer at Dated +$0.65. Remember, this one was a CIF, so the physical differential slipped from yesterday’s strength back down to near flat at just 3c.

Back above $66! But not for long. The market is fatigued. Headlines just don’t do it for the market anymore. Increasingly noisy suggestions Israel is gearing up to strike Iran’s nuclear facilities reminds us of the sabre-rattling last October, but this time the market is much less bothered – at least until something real happens! Brent flat price jumped $1 at the Asian open but the prompt futures simply ignored the development and continued business as usual. By the close, Brent had slid back to $66.20/bbl Trump’s decision to skip over Israel on his Middle East trip is rather telling. As we well know, he wants low oil prices and Israel can only send them skyward – namely by attacking Iran! Hey, no need for a nuclear deal if Iran’s nuclear facilities have gone up in smoke! But Trump’s even trying to one-up his Israeli allies by going full Reagan and attempting to reignite the ‘Star Wars’ project that he’s renamed to the ‘Golden Dome’ of air defences around the US.

There’s trouble in paradise! OPEC’s Secretary General went for the jugular of the IEA, writing a rebuke to what he sees as the Agency’s repeated under-counting of ‘missing barrels’. He’s especially unhappy with the “narrative that the IEA itself has propagated” that new investments in oil supply are not necessary, which jeopardises energy security. The big wigs are pulling their hair out and nitpicking about missing barrels but really they’re both missing the point: nobody knows! Both have their flaws, as it’s the IEA’s foolhardy and premature abandonment of hydrocarbons as a key energy investment versus OPEC’s inability to keep a handle on its members’ output… Physicians, heal thyselves… still! Yet again, Kazakhstan’s production is reportedly on the rise.