Oil Prices Fall After Surprise U.S. Crude Inventory Build

Oil prices declined on Wednesday following an unexpected rise in U.S. crude stockpiles, raising concerns over excess supply. Brent crude fell 54 cents to $66.09 a barrel, while U.S. WTI dropped 52 cents to $63.15. The pullback came after both benchmarks had hit two-week highs in the previous session, buoyed by temporary U.S.-China tariff cuts. The U.S. Energy Information Administration reported a crude inventory build of 3.5 million barrels, defying analyst expectations of a 1.1 million-barrel draw. API data also showed an even larger 4.3 million-barrel stock build. The increase in U.S. net crude imports by 422,000 barrels per day contributed to the supply overhang. Meanwhile, OPEC+ is continuing to boost output, although it trimmed its forecast for non-OPEC+ supply growth. A stronger U.S. dollar further pressured oil prices by making dollar-denominated commodities more expensive for foreign buyers.

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OPEC Lowers 2025 Non-OPEC+ Supply Growth Forecast Amid Falling Oil Prices

OPEC has cut its 2025 forecast for oil supply growth from non-OPEC+ producers by 100,000 barrels per day (bpd), now expecting an increase of 800,000 bpd, citing recent oil price declines. The group also anticipates a 5% year-on-year drop in upstream investment by non-OPEC+ firms, reversing the $3 billion rise seen in 2024. Slower growth from rivals—particularly U.S. shale producers—would help OPEC+ balance the market more effectively. Brent crude prices have been under pressure, recently dipping below $66 a barrel and nearing a three-year low. OPEC maintained its global oil demand growth outlook for 2025–2026, after downgrades last month linked to weak Q1 data and trade tensions. The group sees the recent U.S.-China tariff truce as a step toward easing trade disruptions, though elevated tariffs may persist. Meanwhile, OPEC+ crude output fell by 106,000 bpd in April to 40.92 million bpd, largely due to reduced production from Kazakhstan. Despite OPEC+'s plans to raise output through mid-2025, some members, including Kazakhstan, Libya, and Nigeria, are still grappling with compliance and supply adjustments.

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VLCC Rates Dip but Summer Rally Expected as OPEC Boosts Output

VLCC crude tanker rates have dropped 17.5% over the past week to $45,600 per day, while suezmax and aframax rates also declined, according to Clarksons. However, analysts expect this slump to be temporary. Frode Morkedal of Clarksons Securities noted that steady fixing activity and the release of June cargoes could lift rates soon. OPEC’s decision to fast-track production hikes—adding 411,000 barrels per day in May and June—is expected to boost tanker demand this summer. This accelerated plan contrasts with the original 18-month gradual unwind of 2.2 million bpd in cuts. Analyst Omar Nokta of Jefferies believes it could take up to three months for the VLCC market to fully respond to these changes. If trends hold, a rare counter-seasonal rally may occur during the typically slow mid-year period. The faster restoration of cuts suggests full reversal could come by November 2025.

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EU Adds 189 Vessels to Sanctions in Major Crackdown on Russia’s Shadow Fleet

The European Union has expanded its sanctions against Russia by blacklisting 189 additional vessels linked to Moscow's shadow fleet, aiming to curb energy exports that fund the Ukraine war. European Commission President Ursula von der Leyen confirmed the update, part of the EU’s 17th sanctions package. The list, though not publicly disclosed, is expected to overlap with U.S. and U.K. sanctioned vessels. Despite widespread Western sanctions, Russia continues to export oil and gas to non-aligned nations like China, India, and Brazil. EU officials are also preparing legislation to block Russian ships in key European waters on environmental grounds. Moscow has protested these moves, hinting at possible military escorts for its commercial vessels. The EU, under its REPowerEU Plan, aims to phase out all Russian gas imports by 2027. The sanctions come just before potential peace talks between Russia and Ukraine in Istanbul — the first since 2022.

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Russian ESPO Crude Premiums Slip for June Amid Rising OPEC+ Supply

Spot premiums for Russia’s ESPO Blend crude declined for June-loading cargoes as increased OPEC+ output weighed on the market. Traders reported premiums of $1.50–$1.70 per barrel over ICE Brent for deliveries to Chinese ports, down from up to $2.50 in May. The decline follows OPEC+’s early May decision to raise production by 411,000 barrels per day in June. ESPO Blend, a light crude shipped from Russia’s Kozmino port, remains a favorite among Chinese independent refiners. However, demand for June-loading cargoes was muted due to high springtime stockpiling. One trader described the $1.50 premium as a “reasonable” level given market conditions. Regional pressure was also noted in declining Murban crude prices amid broader supply increases. Traders expect demand for ESPO to improve after Asia’s summer holidays boost fuel consumption.

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Nigeria’s Dangote Refinery Cancels June Gasoline Unit Maintenance After Early Completion

Nigeria's Dangote oil refinery has canceled planned maintenance in June for its 204,000 barrels-per-day gasoline-making unit after completing the work during an unplanned shutdown from April 7 to May 11, according to IIR. The outage allowed the refinery to conduct necessary maintenance ahead of schedule, avoiding the originally planned 30-day June closure. During the downtime, Dangote increased exports of residual products like straight run fuel oil, while shipments of finished fuels such as jet fuel and gasoil declined. Nigeria’s gasoline imports jumped 24% in April to 157,000 bpd, partially compensating for reduced domestic supply. The refinery, capable of processing 650,000 bpd, began operations in January 2024 and started producing gasoline in September. It is the largest refinery in Africa and a key part of Nigeria’s energy independence strategy. A Dangote executive confirmed that the RFCC unit is now fully operational. The early maintenance completion may help stabilize refined product output heading into the summer demand season.