The Officials

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.

In the week ending 16 May 2025, exchange traded futures volumes in July Brent were almost unchanged, while WTI volumes decreased 1.76% w/w. In more deferred tenors, the weekly changes were more pronounced, with August Brent seeing the largest change, up 8.7%. In the July tenor, RBOB fell slightly more than WTI, while diesel contracts saw significant increases across the board, most notably the August tenor of the gasoil contract.

The buck that flat price dropped after Trump and Putin got on the phone was half regained before long and today’s Asian session saw a market not wanting to commit to a direction in the typically uncertain Trumpist diplomatic scene: he has a deadline. But when is it? Nobody knows… except him.
Over in the structural department, futures time spread structure has strengthened since yesterday’s close of Asia, as the prompt Brent spread increased to 70c at the close today, and the Aug/Sep spread is on a bulking phase at 55c too.

The North Sea bursts into life! Recent sessions had been sleepwalking into a deeply depressed diff, as almost nobody showed any buying interest. Today, however, Glencore barged in with enough bids to fill several VLCCs. They went on the hunt for Midland, throwing bids in like crazy, though not high enough to result in any trades. But then again, there were plenty of other buyers more than happy to lift Midland offers: Litasco lifted Exxon’s 31 May-4 Jun Midland at Dated +$1.05; PetroIneos lifted Aramco’s 9-13 Jun offer at $1.35 over Dated; Trafi lifted Aramco’s 13-17 Jun offer at Dated +$1.50; BP lifted Aramco’s 17-21 Jun at Dated +$1.60! Whew!

The two juggernauts of the global economy are hitting bumpy territory, as the US’ fiscal integrity and debt mountain weigh on
Moody’s credit rating downgrade and China’s economic data fails to live up to expectations. The late-Friday rally that sent Brent
briefly above $65.50 faltered as optimism waned this morning. Before it lost its mojo, the market was really in party mode on
Friday evening! But this morning, the futures structure has cooled from that surge and the Brent front spread slipped from its 65c
high to 60c at the Asian close. However, that famous lopsided smile structure in the curve is still there, and it’s even crept
forward such that the structure slips into contango from the December 2025 contract, despite the prompt strength.

And breathe! The market needed a moment to pause and reassess after all the excitement of OPEC speculation and trade deal carnage. It’s been chaotic run lately, with the flat price rollercoaster entering a calming period after the ‘hold onto your hats’ moments of the past few weeks. Remember to read our Liquidity Report every Tuesday to see how exchange traded volumes vary week by week and year by year! But after all was said and done today, Brent closed at $65.06/bbl, up a healthy 80c/bbl on the day. The futures structure has strengthened somewhat through the 2025 tenors, with the front spread closing at 59c. It went even higher post-window, hitting even 63c! Flat price rose after the window too, going on an adventure towards $65.50 – it looks much healthier than in the first week of May!

PetroChina wrestled back dominance of the Dubai window following yesterday’s chaos, throwing down bid after bid, while also lifting plenty of offers. Mitsui didn’t want to be outdone, putting in a decent shift lifting offers by the likes of Exxon and Phillips, but it just couldn’t keep up with the zeal of the Chinese buyers, who scooped up another two convergences today: both Murbans, declared by Gunvor and Vitol. That brings the PC total for May trading to 8 – now double Mitsui’s count! Trafi also showed up on the buyside, picking off a few offers by Gunvor and Vitol. The Dubai physical premium seems to be treading water these recent sessions: after falling to $1.10 on Wednesday, it’s only ground up to $1.145 as of today.

After a violent morning that sent front month Brent down all the way to $63.55/bbl, Brent felt a sense of reprieve throughout the European session, retracing some losses to close at $64.26/bbl. Everyone gets excited about resolution, especially after last weekend’s trade deal with China. But really progress is often slow, and while we have heard positive noises, we still await the paperwork to back it up, even if concerns about demand destruction by tariffs are massaged. One the supply side, the claims of progress between the US and Iran are playing their part too. No matter how impotent sanctions against Iran have proven in terms of restricting its exports, the prospect of unfettered Iranian supply back on the global market had the longs on the run! The easing of the sanctions would broaden demand and lower transhipment costs.

The percolating US-Iran deal and rising inventories whacked the market…hard! Brent got battered this morning! It dropped like a stone at the Asian open, falling 60c off the bat and continuing to decline to below $64 for the first time since very early on Monday morning. By the close it managed to rebound slightly to $64.06/bbl – down $2.21/bbl and almost 3.5% from the previous close. The Dubai window turned into a bigger bunfight than international diplomacy. PetroChina was getting whacked from all angles by Vitol, Reliance and co, while also lifting plenty of their offers. Trafi showed up on the buyside too, while Mitsui was throwing its weight around as well, lifting Vitol offers like there was no tomorrow. Long gone are the days of a binary window, dominated by one major player on each the sellside and buyside – May has been chaotic to say the least. While Vitol and PetroChina remain two of the most prominent participants, they are finding their influence eroded by this armada of competitors. Just today, Mitsui bagged another convergence with Vitol – its fourth convergence of May so far. They’re hot on PC’s heels, which is on 6!

It’s a tentative start by OPEC, like a runner starting off gently to avoid pulling a hamstring. The secondary sources claimed OPEC+ production of 40.9 mil b/d, coming to a cutback of 106 kb/d – compliance is back in fashion! Naturally, they’re also toeing a bullish line when it comes to demand growth, expecting 1.3 mil b/d oil demand growth in 2025 to be followed up with another 1.3 mil b/d of growth in 2026. There’s a term for this…fakery! Most figures, we are told directly by numerous sources, are managed by some of the OPEC members. So you can’t believe those figures. Just see the numbers as the wishful bullish OPEC narrative and that’s it!

Following the successful agreement of The Officials Brent Index (OBI) with Jakarta Futures Exchange, The Officials are working on partnerships with other exchanges, including with the Stock Exchange of Thailand. We will keep you informed but we think there is a big market for low-cost data and market use. Guess who is your premier low-cost data provider? The Officials! Stay tuned for any new developments!
Brent must have felt dizzy at those lofty heights near $67, as it stalled yesterday evening and fell through today’s Asian session. The Dubai physical premium may be running out of steam too, as it felt the pain for the second consecutive session today, falling a further 31c to $1.10. Who’s surprised, as Totsa popped up on the sellside along with the regulars Vitol and Gunvor – plus of course Reliance, steady as a rock! PetroChina remained a constant presence on the buyside, while Mitsui put in a good shift next to the Chinese, earning a convergence with Gunvor – which nominated a Murban cargo. Mitsui reached a convergence with Vitol too, for yet another Murban. Trafi also showed up on the buyside, picking up a few partials from Vitol and having its bids hit by the likes of North Petroleum. This saw Vitol declare yet another Murban to Trafi…