The Officials

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.

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.