The Officials

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…

After dithering throughout the Asian session, Brent found some upward momentum in the late morning and powered on up, climbing from below $65 to burst above $66 to close at $66.18/bbl. Despite this rally, the market felt woozy today, lacking umph as though its mind was on other things, like trying to guess where Trump’s Gulf visit would lead. Brent futures time spreads were treading water through much of the session, coming to the close at 44c. The fun was in the product cracks, as gasoline fell off its perch and diesel fought its way upwards – see more on this on page 2!

In the week ending 9 May 2025, exchange traded futures volumes in both Brent and WTI front month contracts declined w/w. Following the rescheduled OPEC meeting on 3 May, the crude market has cooled somewhat and volumes in Brent and WTI contracts declined across July, August and September tenors. By contrast, volumes in gasoil, heating oil and RBOB July futures increased on the week. In the more deferred September tenor, RBOB was the only contract to see an increase in exchange traded volumes, rising by 7.5% w/w.

The inevitable Donald is dashing about in his new spangled jet, stopping off first in Saudi Arabia on the hunt for some progress on “big business”. Yet with Trump, nothing is as simple as it seems, especially when it comes to tariff policy. After the pomp and circumstance of declaring a 90-day reduction to tariffs on China, the US has quietly kept its “de minimis” tariff in place – meaning the tariff on goods valued less than $800 will face a 54% tariff (or a flat duty of $100 – this is not cheating, is it?), rather than the 30% now applied to other goods. Fortunately for Apple, the iPhone 16 costs rather more than that… Will they regret spending so much on an emergency airdrop of devices from India last month?

‘Nothing to see here,’ say the Saudis as their June allocations to Chinese refiners stick in line with the May allocations, coming to a total of 47.5 mil bbl. But within the headline figure, Unipec will have to tighten its belt as its allocation fell steeply to 10 mil bbl from 14 mil bbl in the previous allocation. Unipec’s been on a bumpy ride though this year’s allocations so far, dropping as low as 3 mil bbl in April before jumping to 14 mil bbl in May! Sinochem, Hengli and Shenghong all got a bump, while Rongsheng remains the biggest recipient, at a massive 16 mil bbl. The Saudi budget is already creaking under the weight of its enormous infrastructure and sports projects, and the PIF might have to cut back on its shopping spree. Whatever the Saudis may say about being able to weather the storm of low oil prices, it’s clear it would be a very painful experience for them… Just look at our analysis of Aramco’s earnings on the next page!

Markets felt good this morning but by lunchtime Brent flat price began to feel heavy near $64 and it fell back before regathering and
building up to reach the close at $63.58/bbl. Talking about falling back, just how far can the North Sea physical fall? It was so
strong at $1.13 just on 24 April but a deluge of Midland offerings in the North Sea window has tanked it to -48c yesterday, as little
to no buying interest has materialised to absorb those cargoes – though it rebounded slightly to -32.5c today. ‘The North Sea
market is very long,’ said an Asian buyer whose company is going into turnarounds. And the North Sea is long despite loads of
Midland cargoes going East. ‘Some of the Midland sales make no sense but the buyers want to show something to Mr Trump.
These purchases also affect Murban as buyers of Midland cut other competing grades. And don’t forget there’s a lot of Forties
floating about since Grangemouth closed, around 6 extra cargoes a month. No wonder Forties has set the Dated benchmark
recently… But today no sooner had the window opened than Gunvor, Aramco, BP and Unipec all charged in to offer Midland.
Aramco tried to tempt buyers with a 30 May-3 June Midland offered at Dated +$1.15 and offers for 2-6 June at $1.40 over Dated
and 4-8 June at Dated +$1.50. BP offered similarly, while Gunvor also offered an 11-15 June cargo at Dated +$1.45.

‘I am bullish,’ said a large Asian trader. He noted most OPEC producers are already and have been at near max and the market has been absorbing the over quota oil. Another trader was also cautiously bullish looking at $65 if not higher. We are also thinking that the tariff negotiations between China and the US are a sign of price strength as the market oversold last week. As a new Pope entered the Vatican, the Brent bulls are back in town.

This is a huge deal, folks! A source told The Officials the deal for Shell to acquire BP is progressing and will happen… BP hasn’t had long to reset itself but it’s not going particularly well, if the Q1 financials are to be believed, so it’s a sitting duck for the takeover. Things don’t seem to be plain sailing for Chevron either, as we’ve heard it could cut 20% of its staff! It’s brutal out there, people, take care…

The market doesn’t know which way to go. The post-OPEC meeting dump to $59 was offset by relieved anxieties about a Saudi-led price war with the release of their June OSPs, but that rally has run out of steam and Brent flat price fell to $61.43/bbl by this morning’s close. As Brent waxes and wanes, the front spread has been ebbing and flowing too. After the heavy roll down on expiry, the July/August spread has fallen back to 32c as of this morning, a far cry from the June/July spread’s $1+ level heading into its expiration.

No Gulf is safe! Trump just won’t put down his rubber and pencil and stop renaming these bodies of water. First, he proclaims the Gulf of Mexico as the Gulf of America and now he announces he will switch from using the term Persian Gulf to use instead the Arabian Gulf. While Vance says it’s possible to find a deal to reintegrate Iran into the world economy, we expect this will get right up their nose! National pride is no small thing when it comes to international relations and diplomacy…

While the world’s eyes were on pressure points like Gaza, Ukraine and Taiwan, its attention has been grabbed by Pakistan and India. Both sides have given the impression they wanted to show a quick success or victory, without desire for an extended or protracted conflict. A major conflict between two nuclear powers (sadly the wrong kind of nuclear power) could be disastrous. Of course, India claimed to have hit militant sites, while Pakistan said the strikes killed 26 civilians and that the Indian missile attack was an “act of war.” Pakistan claimed to have shut down five Indian aircraft. Other sources said at least one French jet was shut down. Nerves are frayed and we hope the two sides can keep a lid on things before they escalate.

Trump doubled down on the false assertion that the US doesn’t need Canadian energy – except 5 mil b/d of heavy crude they would have to go and find elsewhere… We can’t wait to see dozens of US refineries run on the power of “friendship” alone! How many times can they cry wolf? Another day, another promise of incoming trade deals. This time, Bessent said trade deals may come as soon as this week… hang on, didn’t they say the same thing last week?