Oil
Uncertainty Overshadowing Fundamentals in Oil Markets
This week, one may not have noticed that oil markets are still backwardated and that refiners are still buying oil because the general sentiment in oil markets soured to its lowest level in years. Seemingly ceaseless salvos of incremental import tariffs between the US and China frightened the oil markets to such an extent that even Trump’s 90-day delay on implementation for everyone except Beijing failed to trigger any change, leaving ICE Brent stuck around $63 per barrel, Oil Price.com reports.
The US Energy Information Administration lowered its global demand forecast for this and next year, expecting consumption to rise by 900,000 b/d in 2025, whilst lowering its annual Brent forecast to 68 per barrel, some 6 per barrel lower than its previous forecast.
In an escalatory spiral of import tariffs, China’s decision to mirror Trump’s tariff hike and take its tariff on US goods to 84% led to the US President lifting tariffs to an unprecedented 145%, debilitating a $585 billion trading relationship and, in turn, triggering a 125% riposte from Beijing.
The 622,000 b/d Keystone pipeline carrying Canadian heavy crude all the way down to Cushing was shut down after an oil spill saw the release of almost 3,500 barrels of oil in North Dakota, restricting heavy sour crude deliveries to US Midwest refiners.
Kazakhstan has reportedly initiated talks with oil companies operating in the country, seeking a coordinated production cut after Chevron’s Tengiz field expansion brought production to a record high of 2.18 million b/d in March in defiance of OPEC+ quotas.
US President Donald Trump signed an executive order aimed at rejuvenating the United States’ shipbuilding industry, authorizing the USTR office to start levying multi-million port docking fees on Chinese-built or Chinese-flagged tankers.
The Indonesian government is considering starting LNG imports as soon as the third quarter of 2025, eyeing a deal with the Trump administration on prospective imports of US LNG to meet a shortfall of 50 LNG cargoes amidst plunging domestic gas output.
Saudi Aramco (TADAWUL:2222), the national oil company of Saudi Arabia, announced the discovery of 14 oil and gas fields in the kingdom’s Eastern Region and the Empty Quarter, but with incremental flows totalling 8,126 b/d, the size of new finds disappointed.
The European Commission suspended its retaliatory 25% tariffs on $24 billion worth of agricultural and industrial goods for 90 days after US President Trump capped tariffs at 10%, failing to react to the US’ 25% levies on steel, aluminium, and car imports.
Following a Russian court ruling that ordered CPC terminal operations to resume in full after Moscow tried to pressurize Kazakhstan over its OPEC+ non-compliance, the 1.6 million b/d flows of mostly Kazakh light sour CPC Blend have been restored.
This week, one may not have noticed that oil markets are still backwardated and that refiners are still buying oil because the general sentiment in oil markets soured to its lowest level in years. Seemingly ceaseless salvos of incremental import tariffs between the US and China frightened the oil markets to such an extent that even Trump’s 90-day delay on implementation for everyone except Beijing failed to trigger any change, leaving ICE Brent stuck around $63 per barrel.
The US Energy Information Administration lowered its global demand forecast for this and next year, expecting consumption to rise by 900,000 b/d in 2025, whilst lowering its annual Brent forecast to 68 per barrel, some 6 per barrel lower than its previous forecast.
In an escalatory spiral of import tariffs, China’s decision to mirror Trump’s tariff hike and take its tariff on US goods to 84% led to the US President lifting tariffs to an unprecedented 145%, debilitating a $585 billion trading relationship and, in turn, triggering a 125% riposte from Beijing.
The 622,000 b/d Keystone pipeline carrying Canadian heavy crude all the way down to Cushing was shut down after an oil spill saw the release of almost 3,500 barrels of oil in North Dakota, restricting heavy sour crude deliveries to US Midwest refiners.
China’s imports of Iranian crude surged above 1.8 million b/d last month, marking an all-time high, as increased sanctions pressure prompted Shandong refiners to stock up with sanctioned barrels even though prices of Iranian Light are now on par with Brent.
Brazil’s government has decided to organize an extra upstream licensing round as soon as September 2025 to boost revenue, offering uncontracted parts of giant producing offshore fields such as Tupi, Mero, and Atapu, whilst looking to raise $3.5 billion in revenue.
Adding to this week’s bearish sentiment, US special envoy Steve Witkoff is set to meet senior Iranian representatives for direct negotiations over Tehran’s nuclear programme, to be held in Oman this Saturday amidst a new round of sanctions on the Middle Eastern country.
Outflows of seven rare earth materials placed on Beijing’s export control list have stopped completely, with regional sellers declaring force majeure on their long-term contracts as the likes of samarium, terbium, and yttrium are unlikely to be shipped to US firms.
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