Oil Prices Hit 2-Week High as U.S.–China Tariff Easing Fuels Optimism

Oil prices climbed about 1.5% on Monday to their highest levels since April 28, following a temporary tariff rollback agreement between the U.S. and China. Brent crude settled at $64.96 per barrel and U.S. WTI at $61.95, boosted by hopes that easing trade tensions between the world's largest oil consumers could lift global economic and oil demand outlooks. Analysts at ING noted the move marks a significant de-escalation, though warned that further negotiations will remain complex. Early price gains were tempered by concerns the deal might reduce the need for U.S. interest rate cuts, which typically support oil demand. Additional support came from declining Iraqi crude exports, the shutdown of Norway’s Johan Castberg field, and lower Black Sea CPC exports. In Mexico, Pemex plans to reduce exports in favor of domestic refining, particularly at the new Olmeca refinery. However, talks between the U.S. and Iran, and the potential easing of Russian sanctions via peace talks with Ukraine, could pressure prices by increasing global crude supply. Meanwhile, geopolitical risks in South Asia remain elevated as India warned Pakistan against cross-border terrorism, reinforcing oil market volatility.

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VLCC Rates Surge as South Korea's U.S. Crude Imports Near Record Highs

U.S. crude oil exports to South Korea are projected to hit a record 20 million barrels in May, driven by sustained shipping signals and rising deliveries, according to Kpler. In April, South Korean imports of U.S. crude rose by 200,000 barrels per day (kbd) to 540 kbd, solidifying the U.S. as its second-largest crude supplier. This surge is expected to further boost VLCC spot rates, which already climbed 26% month-on-month to $53,900 per day, based on Clarksons Securities data. Braemar assessed eco-scrubber VLCC one-year charters at $51,500 per day, while Angelicoussis Group chartered the Maran Taurus to Chevron at $45,500/day. Veson Nautical reported a 5% year-on-year increase in VLCC time charter rates to $47,000/day as of May 7. These gains come despite U.S. tariff concerns, buoyed by geopolitical factors like Middle East tensions, Russian sanctions, and OPEC production hikes. South Korea's high crude imports contrast with reduced refinery activity amid widespread spring maintenance, causing crude inventories to hit near one-year highs of about 100 million barrels. Kuwait remains South Korea’s top supplier through a 4-million-barrel storage agreement in Ulsan.

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Pemex to Cut Crude Exports as New Olmeca Refinery Increases Domestic Processing

Mexico’s state-owned oil company Pemex plans to reduce crude oil exports this year as it channels more production to domestic refineries, particularly the newly operational Olmeca facility. Margarita Perez, head of Pemex’s trading arm PMI, stated the Olmeca refinery will process about 100,000 barrels per day (bpd) once fully operational, contributing to a total domestic refining capacity of 1.2 million bpd. As a result, crude exports are expected to decline to around 400,000 bpd. This marks a shift in strategy as Mexico seeks to boost energy self-sufficiency and reduce reliance on imported fuels. Perez also confirmed diesel exports from the Dos Bocas (Olmeca) refinery have already begun, although no volume details were provided. In April, Reuters reported two tankers carrying ultra-low sulfur diesel, reprocessed at Olmeca from Madero crude, were exported due to infrastructure gaps. The refinery’s ramp-up signals a key step in Mexico’s refining overhaul, aimed at increasing domestic fuel production. Pemex's shift may also affect international crude buyers as the company prioritizes national consumption.

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Traders Rebrand $1.2 Billion in Venezuelan Oil as Brazilian to Skirt U.S. Sanctions and Cut Costs

Over the past year, traders have disguised more than $1 billion of Venezuelan crude shipments to China as Brazilian oil to evade U.S. sanctions and reduce shipping costs. Using spoofed ship signals and false certificates of origin, tankers sailed directly from Venezuela to China without the usual stopover in Malaysia, saving about four days of travel. China’s customs data show it imported 2.7 million metric tons of “Brazilian bitumen blend” between July 2024 and March 2025, though Brazil officially reports no such exports. Industry experts and documents reveal the cargo is actually Venezuela’s Merey crude, falsely rebranded to bypass China’s import quota requirements and U.S. scrutiny. The spoofing tactic has been linked to Hangzhou Energy, an intermediary using renamed vessels like the Karina (a.k.a. Katelyn) to mask origin. This practice also facilitates access to financing, which is otherwise difficult for sanctioned oil. Most Venezuelan oil still enters China labeled as Malaysian crude, but reported volumes from Venezuela are rising. In early 2025, China imported 463,000 barrels per day of Venezuelan oil—up from 351,000 bpd in 2024—highlighting growing trade despite sanctions.

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Japan Launches First-Ever Gasoil Shipment to Argentina Amid Global Supply Shifts

Japan has sent its first recorded cargo of gasoil and jet fuel to Argentina, signaling a possible new trade route between the two countries. The 75,000-dwt LR1 tanker Hafnia Guangzhou loaded approximately 68,000 tonnes from the Sendai and Kashima refineries in early April and is expected to arrive in Campana, Argentina on May 29. Traditionally, Argentina has relied on the U.S. for its gasoil imports, while Asian exports have mostly headed to north-west Europe. However, recent supply shortages in Argentina and decreased availability from the U.S. have prompted the country to seek alternative sources. Middle Eastern and Indian exporters have already increased their presence in the Argentine market. Japan now joins South Korea and China as occasional long-haul suppliers, despite the lengthy voyage of up to 55 days. The move reflects shifting global supply chains and potential arbitrage opportunities driven by ongoing market dislocations.

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Aramco Sees Oil Demand Upside as U.S.–China Tariff Resolution Progresses

Saudi Aramco anticipates steady oil demand in 2025, with potential upside if trade tensions between the U.S. and China continue to ease. CEO Amin Nasser highlighted that the partial resolution of tariffs could boost global oil consumption further. Despite a 4.6% drop in Q1 profit due to weaker sales and higher costs, Aramco remains confident in its financial strength and market adaptability. The company also noted signs of demand resilience in Q2 so far. A Reuters survey in April estimated Brent crude prices to average $68.98 per barrel in 2025, down from previous forecasts. Meanwhile, OPEC+ plans to raise output by up to 2.2 million barrels per day by November, with May’s increase exceeding market expectations. Aramco estimates the additional production could contribute $1.9 billion in annual operating cash flow. Although uncertainties remain around trade negotiations and global economic conditions, Aramco continues to support Saudi Arabia’s broader Vision 2030 goals amid evolving market dynamics.

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Cosco Shipping Energy Offloads $220M in Tankers Amid Profit Slump

China’s Cosco Shipping Energy Transportation (CSET) is selling two VLCCs and two LR2 product tankers with a combined market value of around $221 million, according to a stock exchange filing. The VLCCs include the Xin Dan Yang (built 2013) and likely the Yuan Hua Hu (built 2015), valued at $72 million and $75 million respectively. The LR2s are the Tao Lin Wan (2012) and Yang Mei Hu (2010), worth $40 million and $34 million. Additionally, CSET is scrapping the 1996-built LPG carrier Fu Rong Yuan, valued at $1.1 million, through a domestic auction limited to Chinese recycling yards. These asset sales follow a 43.3% year-on-year drop in Q1 net profits, which fell to $98.2 million due to weaker tanker market earnings. Despite a 22.1% quarter-on-quarter rise in international oil shipping gross profit, annual figures show a sharp 55.9% decline. VLCC time-charter equivalent earnings averaged $39,404/day from January to March, above historical Q1 norms but about 10% below the same period in 2024. CSET’s total fleet, comprising 113 tankers and one gas carrier, is valued at nearly $5.4 billion.

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Eneos Boosts LNG and SAF Investment, Scales Back Hydrogen Plans Amid Energy Transition Rethink

Eneos Holdings, Japan’s largest oil refiner, announced plans to significantly increase investment in liquefied natural gas (LNG) and sustainable aviation fuel (SAF) while slowing its efforts in hydrogen under a new three-year plan through March 2028. The company will invest ¥1.56 trillion ($10.7 billion), with ¥740 billion allocated to strategic spending on low-carbon and decarbonised energy, including renewables and carbon capture. Of this, ¥310 billion will go to low-carbon energy, ¥250 billion to decarbonised energy, and ¥180 billion to oil and chemicals, while ¥820 billion is reserved to maintain refinery operations. CEO Tomohide Miyata noted that demand for LNG is expected to grow until around 2040, prompting expansion in this area. Eneos has removed its prior target of supplying up to 4 million metric tons of hydrogen by 2040, citing slower momentum in global energy transition efforts and rising concerns over energy security and decarbonisation costs. The company may consider investments in U.S. LNG projects, such as Alaska LNG, if financially attractive. Despite the pivot, Eneos still aims to increase its refinery utilization rate to 90% by 2027 from 78% in 2024. The shift underscores a pragmatic approach to energy diversification, balancing decarbonisation goals with economic and security realities.