Oil Prices Drop on US-China Trade Doubts and Easing Supply Fears

Oil prices declined over $1 a barrel on Wednesday amid skepticism about progress in upcoming U.S.-China trade talks and easing concerns over global oil supply. Brent fell to $61.12 and WTI to $58.07, with analysts expressing low expectations for a breakthrough despite planned negotiations in Switzerland. Market uncertainty was heightened by U.S. officials’ dismissive tone toward the talks, with Treasury Secretary Scott Bessent calling them “the opposite of advanced.” Meanwhile, speculation that U.S. sanctions on Iranian oil may be lifted also weighed on prices. A surprise build in U.S. gasoline inventories further pressured the market, suggesting weaker demand ahead of the summer season. However, U.S. crude inventories fell by 2 million barrels, offering limited support. Some American shale producers signaled potential cutbacks in spending, indicating output may have peaked. Geopolitical tensions in the Middle East and OPEC+ supply actions continue to add to market volatility.

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EU Considers Sanctions on Lukoil’s Dubai Unit Over Shadow Fleet Links

The European Union is contemplating sanctions against Litasco Middle East DMCC, a Dubai-based subsidiary of Russian oil giant Lukoil, as part of a new set of measures targeting Moscow’s shadow fleet of oil tankers. This would be the first instance of Western sanctions against a Litasco entity since Russia’s invasion of Ukraine. The proposed sanctions, part of the EU’s 17th package aimed at curbing Russia's energy revenues, would target approximately 60 individuals and 150 vessels, bringing the total number of EU-sanctioned ships to over 300. Litasco Middle East is accused of facilitating the expansion of Russia’s fleet of unregulated tankers that transport Russian oil to international markets. The EU’s move comes as it seeks to increase pressure on President Vladimir Putin to end the war in Ukraine. Additional targets include Russian insurance companies like VSK and crude exporter Surgutneftegas, with implications for European shipowners still transporting Russian oil. The EU is expected to finalize the sanctions package later this month, which also includes measures against Russian disinformation and Chinese entities linked to Russia’s military.

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Slovakia and Hungary Oppose EU Plan to End Russian Gas Imports by 2027

Slovakia and Hungary have strongly opposed the European Commission’s proposal to phase out Russian gas and energy imports by the end of 2027. The proposal, announced this week, includes legal measures to end reliance on Russian gas, liquefied natural gas (LNG), oil, and enriched uranium. It aims to sever decades-old energy ties with Russia following its 2022 invasion of Ukraine. Slovak Prime Minister Robert Fico warned that cutting off Russian energy could harm the EU’s economy and competitiveness, calling it “economic suicide.” Hungary's Foreign Minister Peter Szijjarto labeled the plan “unacceptable” and vowed to resist it. While the Commission’s proposal needs approval from the European Parliament and a qualified majority of EU member states, individual countries like Slovakia and Hungary cannot veto it outright. Both countries remain dependent on Russian energy and maintain closer political ties with Moscow than many of their EU peers. The proposal reflects the EU's broader goal to reduce Russian energy's share of EU gas imports, which has already fallen from 45% to 19% since 2022.

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San Francisco Gasoline Prices Surge as Only One Refinery Operates in Bay Area

A fire at Valero’s Benicia refinery has left only one gasoline-producing plant operational in the San Francisco Bay Area, significantly impacting gasoline prices. Chevron's Richmond refinery is now the sole source of gasoline production for Northern California, after Phillips 66 and Marathon Petroleum converted their operations to renewable fuels. As a result, the premium for California gasoline, known as Carbob, spiked 10 cents on Tuesday and rose another 12 cents on Wednesday, reaching its highest level since October 2023. The timing is particularly troubling with Memorial Day approaching, signaling the start of the summer driving season when demand and prices typically rise. California’s dependence on a few refineries, combined with limited infrastructure for fuel imports, has made the state vulnerable to price surges following refinery outages. Despite these increases, California's average gasoline price remains lower than last year and significantly lower than the record highs seen in 2022. The shutdown of Benicia’s gasoline unit adds to the series of refinery closures, including PBF Energy’s Martinez refinery and Phillips 66's upcoming closure in Los Angeles. Governor Gavin Newsom has been attempting to regulate the refining industry to prevent future price hikes, after the state’s refining capacity has continued to shrink.

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Braemar Identifies Opportunities for Product Tankers Amid California Refinery Closures

The closure of several refineries in California is expected to drive demand for clean product tankers, according to UK shipbroker Braemar. Valero's decision to shut its 145,000-bpd Benicia refinery and possibly repurpose its 85,000-bpd Wilmington refinery will significantly impact California’s refining capacity. Phillips 66’s 139,000-bpd Los Angeles refinery is also scheduled to close by the end of 2025. These closures, which remove nearly 370,000 bpd of refining capacity, will increase the state’s reliance on imported refined products. California historically experiences price spikes during seasonal inventory drawdowns, a situation that could be exacerbated by refinery closures. This could further elevate demand for clean products such as petrol and jet fuel, which arrive via MR tankers from East Asia. The closures are also expected to reduce California’s crude oil imports, lowering its seaborne crude volume. Despite these opportunities, product tanker rates have been falling recently, driven by cancellations and lower chartering activity.

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U.S. Jet Fuel Demand Surges to Highest Level Since December 2019, Says EIA

U.S. jet fuel demand exceeded 2 million barrels per day last week—the highest since December 2019—rising by 474,000 bpd, according to the Energy Information Administration. The four-week average also climbed to 1.86 million bpd, reflecting a steady rebound in air travel and aviation fuel consumption.

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India Ramps Up U.S. Crude Imports via VLCCs Ahead of Trade Talks

India’s imports of U.S. crude are set to hit a two-year high in June, with approximately 470,000 barrels per day expected, driven by favorable pricing and potential tariff concerns. Most of this increase is being transported on VLCCs, reflecting a notable uptick in long-haul crude shipments. UK shipbroker Braemar attributes the rise partly to wider discounts on WTI crude and uncertainty surrounding proposed U.S. tariffs on Indian goods. In April alone, India imported 85,000 bpd more U.S. crude than the previous month. While Indian imports of Russian oil also rose, shorter-haul imports from the Middle East declined. This shift has helped boost spot VLCC rates from the Middle East to Asia by 32% in the past month. Clarksons Securities noted that rising oil inventories historically correlate with higher VLCC freight rates due to increased storage incentives. They also emphasized that a return to a contango market structure could drive demand for both onshore and floating oil storage, supporting further gains in tanker activity.

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Evalend Shipping Expands $3bn Orderbook with Two New Suezmax Tankers

Greek shipowner Evalend Shipping has expanded its $3.3 billion orderbook by ordering two suezmax tankers from HD Korea Shipbuilding & Offshore Engineering (HD KSOE), valued at $180 million. The 157,000-dwt crude carriers are slated for delivery in the first half of 2027 and will be built by HD Hyundai Samho. Evalend's order raises its total fleet of newbuildings to 32, having previously entered the suezmax market in 2023 with two additional tankers. The latest vessels will be powered by conventional marine fuel and equipped with scrubbers. Evalend's decision to opt for suezmaxes follows a broader market trend, with several other companies such as Sonangol Shipping and Dynacom Tankers also ordering similar vessels this year. Shipbuilding analysts note that suezmaxes are primarily used for European and Indian oil imports, with China favoring VLCCs. HD KSOE has already reached 36% of its annual target for newbuildings, securing contracts for LNG carriers, bunkering vessels, and tankers.

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Lotte Chemical Indonesia Inks Decade-Long Ethylene Supply Deal with Asahimas Chemical

Lotte Chemical Indonesia (LCI), a subsidiary of Lotte Chemical Corp, has signed a 10-year ethylene supply agreement with PT Asahimas Chemical (ASC). The deal is tied to LCI’s new $3.9 billion petrochemical complex, which includes a 1 million ton-per-year naphtha cracker. Ethylene, a crucial raw material for various petrochemical products, will be supplied by LCI to ASC for use in its production processes. The agreement aims to strengthen Indonesia’s petrochemical supply chain and reduce the country’s reliance on imported raw materials. Although the plant was originally scheduled to begin commercial operations in April 2025, the start has been postponed to September or October due to weak market margins. Trial production began in early April as part of the facility’s ramp-up process. LCI stated that the long-term nature of the deal reflects both companies’ commitment to supporting local industrial growth. The agreement also signals growing confidence in Indonesia's domestic petrochemical infrastructure despite current market challenges.

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Exxon to Supply Low-Carbon Ammonia to Japan's Marubeni in Landmark Hydrogen Deal

Exxon Mobil has signed its first customer agreement for its planned low-carbon hydrogen facility in Baytown, Texas, committing to supply 250,000 metric tons of low-carbon ammonia annually to Japan’s Marubeni. The ammonia will serve as a hydrogen carrier and will be produced with carbon capture technology to minimize emissions. This deal represents a key step for Exxon’s ambition to build the world’s largest low-carbon hydrogen plant. Hydrogen, when burned, only produces water, making it a clean energy source. Ammonia facilitates hydrogen transportation in liquid form, especially for long-distance exports. The agreement is contingent upon Exxon’s final investment decision on the Baytown project, expected later this year. That decision will hinge on favorable U.S. government policy and regulatory approvals. Marubeni will also take an equity stake in the project, though the exact percentage was not disclosed.