While oil markets have calmed somewhat at the start of this week after a period of intense volatility, developments in either Ukraine or Iran might soon spark another significant move.
Rome will host the fifth round of US-Iran talks this upcoming weekend, whilst the Trump administration is ratcheting up sanctions pressure on Iranian shipping companies and Chinese buyers of Iranian oil, having OFAC-listed two Chinese refiners last month.
- Iran’s leader, Ayatollah Ali Khamenei, questioned the viability of a deal with the United States, saying that Trump’s demand to halt nuclear enrichment is ‘excessive and outrageous’, lowering the likelihood of a diplomatic breakthrough.
- Chinese refiners are hoping for the negotiations to fail - accounting for 77% of all Iranian exports last year, the so-called teapots in Shandong province would no longer enjoy discounts on Iranian oil.
- According to OPEC secondary sources, Iran’s oil production remained steady at 3.3 million b/d in April, higher than the 2024 average of 3.25 million b/d, even if floating storage of Iranian storage anchored off Singapore and Malaysia has been on the rise, potentially signalling difficulties in delivering the oil to China.
Market Movers
- Nigeria is in negotiations with Brazil’s state oil company Petrobras (NYSE:PBR) to provide it with deepwater exploration acreage, five years after it divested all its Nigerian assets to trading firm Vitol.
- France’s nuclear giant Orano is reportedly looking into divesting its uranium mining assets in Niger after Paris’ relationship with West African countries have deteriorated beyond repair.
- The government of Oman extended an exploration and production deal with Occidental Petroleum (NYSE:OXY) for Block 53 until 2050, with the US oil major vowing to invest at least $29 billion in the acreage.
- French energy major TotalEnergies (NYSE:TTE) signed a long-term supply deal for 2 mtpa of LNG from the planned Ksi Lisims site in British Columbia, Canada, also allowing it to take an ownership stake in the project.
Tuesday, May 20, 2025
Oil prices have been range-bound after weeks of wild swings, with both positioning data and traded volumes indicating traders are taking a breather to assess where Brent futures would be moving next. With Brent at $65 per barrel and WTI at $62.5 per barrel, the next big pricing move might come from the Russia-Ukraine or US-Iran negotiations.
Chinese Refinery Runs Fall on Trump Impact. China’s crude refinery throughput declined by 1.3% from a year ago and averaged 14.12 million b/d last month, with consultants estimating that utilisation rates were as low as 73.8%, the lowest in the country’s post-COVID recovery period.
UK Signs All-Round Trade Treaty with Europe. Nine years after the United Kingdom voted to leave the European Union, London signed a defence and trade treaty with Brussels, opening up each other’s waters for fishing for 12 years, easing agricultural exports and facilitating arms investments.
Baltic Sea Shipping Roiled by Tanker Detainments. Russia detained a Greek tanker after it left Estonia’s port of Sillamae and crossed into Russian territorial waters, four days after the Baltic country’s navy attempted to stop a Russia-bound oil tanker for being part of the ‘shadow fleet’.
Indonesia Investigates Its Own State Oil Firm. The Indonesian Attorney General’s Office reached out to a number of trading firms in Singapore to investigate corruption in its state oil and gas company Pertamina, alleging that fraudulent oil import deals caused $12 billion in lost government revenue.
Turkey Keeps on Finding More and More Gas. Turkish explorer TPAO has discovered a new offshore gas field containing at least 75 billion cubic metres (2.6 Tcf) in the Black Sea, adding to the 400 bcm Sakarya field as Ankara doubles down on domestic exploration, still importing 90% of its energy needs.
China Becomes the New Favourite of TMX Exporters. Fears of US-Canada trade frictions have led Canadian oil exporters to focus primarily on China with their TMX barrels, sending 226,000 b/d of heavy sour crude (or 55% of all exports) to Chinese refiners, with Sinopec emerging as the largest buyer.
Equatorial Guinea’s Territory Expands. Following five lengthy years of arbitration, the International Court of Justice ruled in favor of Equatorial Guinea in its territorial dispute with Gabon, awarding it the Mbanie, Cocotiers and Conga islands, located in the oil-rich waters in the Gulf of Guinea.
China’s Copper Stocks Recover. Copper inventories in warehouses controlled by the Shanghai Futures Exchange rebounded sharply this week after weeks of continuous declines driven by strong US-bound export flows, jumping 34% week-on-week to 108,142 metric tonnes, marking the end of destocking.
Denmark Seeks to Attract Wind Investment. Having failed to attract any bids for its biggest ever offshore wind tender in late 2024, Denmark plans to launch its 2025 offering with two areas in the Danish North Sea, willing to dole out government subsidies for new developments worth $8.3 billion.
Venezuela Takes Over Chevron’s Export Grades. As US sanctions were snapped back on Venezuela, the Latin American country’s state oil firm PDVSA has begun exporting the heavy Boscan grade itself, produced at the Petroboscan JV that US oil major Chevron (NYSE:CVX) used to operate.
Nippon Steel Still Didn’t Give Up on Its Dream. Japanese steel giant Nippon Steel (TYO:5401) vowed to invest up to $4 billion in a new US steel mill should the Trump administration approve its $14 billion takeover of US Steel (NYSE:X), ahead of the May 21 deadline for the completion of its national security review.
EU Pitches Lower Oil Price Cap on Russia. The European Commission will propose to lower the current $60 per barrel oil price cap to $50 per barrel in this week’s meeting of G7 finance ministers, as lower outright prices are now keeping Russian barrels sanctions-compliant even without using the ‘shadow fleet’.
Shell Plays Down BP Merger Probability. After re-electing Shell CEO (LON:SHEL) Wael Sawan, the annual general meeting of the London-based energy major poured cold water on market speculation about a potential BP merger, saying the bar for M&A deals is very high, preferring to put money into share buybacks.
By Michael Kern for Oilprice.com
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Iran has already rejected the United States' demand that it halts nuclear enrichment insisting that it will continue to enrich uranium with or without a nuclear deal. Moreover, Iran’s leader, Ayatollah Ali Khamenei, questioned the viability of a deal with the United States, saying that Trump’s demand to halt nuclear enrichment is ‘excessive and outrageous’ thus lowering the likelihood of a diplomatic breakthrough.
The Ukraine conflict won't be resolved except on Putin's terms. Putin has prevailed in Ukraine and therefore he dictates the terms. Trump isn't going to be able to bring peace into Ukraine until he accepts Putin's terms and therein lies the problem.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert