Oil
Diesel Emerges as Key Winner Amid Middle East Tensions
Oil trading has seen some of its most volatile days in recent history as non-stop missile strikes exchanged between Israel and Iran ratcheted up fears of potential supply disruptions from the Middle East. Amidst unsubstantiated reports of the two sides seeking a ceasefire, the risk premium is back in the ICE Brent as the global crude benchmark remains around the $75 per barrel mark.
US diesel futures saw an unprecedented surge in the wake of the Israel-Iran hostilities, rising even steeper than crude oil to $2.38 per gallon and improving the ULSD crack to a whopping $28 per barrel, as markets feared supply disruptions from the Middle East, OilPrices.com reports.
Israel’s strikes on Iran’s section of the South Pars field, the continuation of Qatar’s North Dome play into Iranian territorial waters, debilitated one of the four refining units of Phase 14 with a capacity of 4 bcm per year or 2% of the country’s output.
Unable to tap into Israeli pipeline gas supplies after the forced halt of the Leviathan and Tamar offshore gas fields, Egypt is reportedly preparing to issue a hefty 1-million-tonne import tender for fuel oil, facing rolling blackouts amidst peak summer temperatures.
China’s refinery throughput posted a 1.8% year-on-year decline to average 13.92 million b/d in May, the lowest levels since August 2024 as many refiners took capacity offline for maintenance works and saw operating rates decline to a mere 73%.
As the European Union mulls lowering the oil price cap for Russia from $60 per barrel to $45 per barrel, the rise in global crude prices has brought the price of Moscow’s benchmark Urals grade back into non-compliant territory, around $62-63 per barrel.
ADNOC, the national oil company of Abu Dhabi, has offered almost $19 billion for Australia’s gas-focused producer Santos (ASX:STO), offering a premium of more than 27% to the Adelaide-based producer’s Friday closing price of $4.52 per share.
Overshadowed by the Israel-Iran conflict, the moratorium on energy infrastructure attacks between Russia and Ukraine is no longer intact, with Moscow claiming to have struck Ukraine’s only remaining refinery in Kremenchug.
France’s state energy firm TotalEnergies (NYSE:TTE) continued its buying streak in Malaysian gas assets operated by Petronas, taking new stakes in several offshore areas, including blocks SK301b and SK313 with proven gas reserves of 4 TCf.
Following months of waiting, China’s market regulator has granted conditional approval to the $34 billion merger of agricultural giants Bunge (NYSE:BG) and Glencore-backed Viterra, despite noting that the new giant’s market share could reduce competition.
Overriding the opposition of Hungary and Slovakia, Brussels is preparing to formally ban EU Russian gas and LNG imports by the end of 2027, adding momentum to TTF’s pricing upside as Europe’s gas benchmark rose to €38 per MWh.
In its monthly report, OPEC curbed its 2026 outlook for non-OPEC supply to 730,000 b/d amidst expectations of stagnating US supply, whilst the oil group kept demand projection for both 2025 and 2026 intact, maintaining that economic growth will remain robust.
Aster Chemicals and Energy, a joint venture between global trader Glencore and Indonesia’s Chandra Asri, agreed to fully acquire a 70,000 b/d condensate splitter in Singapore, buying the remaining half from petchem firm PCS, boosting its refining capacity.
In what was initially believed to be a result of a missile strike, two oil tankers collided and caught fire near the Strait of Hormuz, with a VLCC carrying Iraqi oil to Zhoushan, China, hitting a ballasting tanker that was slowly moving away from its anchorage in Khor Fakkan.
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