Oil Prices Edge Up Amid U.S.-Iran Tensions and Global Economic Uncertainty

Oil prices rose slightly on Monday, with Brent settling at $65.54 and WTI at $62.69 per barrel, as stalled U.S.-Iran nuclear talks offset concerns over global economic headwinds. Hopes for increased Iranian oil exports faded after Iran’s Deputy Foreign Minister said talks would fail if the U.S. demands a halt to uranium enrichment. The potential return of 300,000 to 400,000 barrels per day of Iranian crude now seems unlikely. Meanwhile, Moody’s downgrade of the U.S. sovereign credit rating raised doubts about the economic stability of the world’s top oil consumer. Slowing industrial output and retail sales in China also pressured prices, though analysts called the impact modest. Tensions escalated further as U.S. Treasury Secretary Scott Bessent reiterated tariff threats, adding to market uncertainty. Analysts expect continued volatility in oil prices, driven by developments in tariffs, U.S.-Iran negotiations, and Ukraine peace talks. Russian President Vladimir Putin signaled openness to peace with Ukraine, which, if realized, could lift sanctions on Russian oil and increase global supply.

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EU to Push G7 to Lower Russian Oil Price Cap to $50 Amid New Sanctions

The European Union plans to propose lowering the G7 price cap on Russian seaborne oil from $60 to $50 per barrel during this week's finance ministers’ meeting in Canada. European Economic Commissioner Valdis Dombrovskis confirmed the proposal aligns with the EU's 18th sanctions package aimed at intensifying financial pressure on Moscow. The current cap, introduced in December 2022, bans trade and related services for Russian crude sold above $60, aiming to curb Russia’s war funding while maintaining global oil supply. Despite the cap, Russia has circumvented restrictions using a "shadow fleet" and non-Western insurance. EU officials believe the lower cap would better limit Russian revenue. The G7 includes the U.S., Canada, UK, France, Germany, Italy, and Japan, with EU representatives participating in discussions. Russian Urals crude has traded above the cap for most of the past year but fell below $60 in early April due to global economic concerns and U.S. tariff announcements. G7 members are expected to consider the EU’s proposal seriously in light of current oil market conditions.

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China's Refinery Output Drops 1.4% in April Amid Poor Margins and Maintenance

China's crude oil refinery throughput dropped by 1.4% year-on-year in April to 58.03 million metric tons, or about 14.12 million barrels per day (bpd), due to refinery maintenance and weak profit margins. The daily processing rate also fell 4.9% from March levels. State-owned refinery outages were 100,000 bpd higher than last year, significantly impacting April and May operations. Independent refineries in Shandong, known as "teapots," operated at reduced rates due to low gasoline and diesel demand driven by electric vehicle growth and housing sector weakness. April refinery utilization was 73.83%, the lowest since 2022. Shandong teapots’ average profit dropped to 270 yuan per ton, down 58 yuan from March. Despite April’s decline, total crude processing for January–April rose 0.8% year-on-year to 240.27 million tons (14.62 million bpd). Domestic crude oil production in April increased 1.5% to 17.72 million tons (4.31 million bpd), while natural gas output rose 8.1% to 21.5 billion cubic meters.

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Houthis Threaten Haifa Port in Renewed Escalation Against Israel

Yemen’s Houthi rebels have declared Israel’s Haifa port a military target, vowing to enforce a naval blockade in response to Israel’s ongoing military operations in Gaza. Houthi military spokesman Yahya Saree warned all shipping companies that vessels heading to or currently in Haifa are now at risk. This marks the first significant escalation since a ceasefire was reached with US forces on May 7. The Houthis stated that all support operations and maritime threats against Israel will end once the war in Gaza concludes and the blockade is lifted. While the Houthis have long targeted Israel-linked vessels, this is their clearest threat yet to maritime activity in the eastern Mediterranean. The rebels have attacked over 120 ships in the Red Sea and Bab-el-Mandeb since late 2023, causing major disruption to global shipping. Haifa lies outside the Houthis’ usual range, though the group has launched missiles that reached Tel Aviv and Ben Gurion Airport. Israeli ports, particularly Eilat, have already suffered economic losses due to these threats, and retaliatory Israeli airstrikes have damaged Houthi-held port areas.

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Potential US-Iran Oil Deal Fuels Tanker Market Hopes — But Aged NITC Fleet Poses Challenge

A potential US-Iran deal to ease oil sanctions could benefit global tanker markets, though the aging National Iranian Tanker Co (NITC) fleet remains a major hurdle. Only 12 of NITC’s 38 VLCCs are under 15 years old, raising issues around vetting, maintenance, and insurance required for mainstream oil trade. Analysts expect Iranian crude exports to rise from 1.6 million barrels per day (bpd) to 2 million bpd if sanctions are lifted, though still below post-2015 deal highs. If exports focus on Asia, VLCC demand could exceed 50 ships; if aimed at Europe and India, around 34 VLCCs may be needed. However, only a fraction of Iran’s current “shadow fleet” is eligible for legitimate trade, which could drive additional demand for at least 20 modern VLCCs. Past precedent suggests implementation would be gradual — the 2015 nuclear deal took nearly a year from framework to effect. Iran is likely to keep exporting crude to China using shadow tankers until sanctions are formally lifted. Meanwhile, concerns remain over uranium enrichment, floating storage logistics, and potential snapback sanctions by European nations.

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Brazil’s Crude Export Landscape Shifts: Europe and Nigeria Rise as China’s Share Dips

China, currently purchasing about 44% of Brazil’s crude exports, may lose its top buyer status as European countries and Nigeria increase their imports. This shift is driven by OPEC+ output cuts and a widening Brent-Dubai spread, making Brazilian grades less attractive to Asian refiners. As a result, demand for VLCCs and suezmax tankers on the Brazil-to-China route—typically 50-day voyages—may decline. Brazil is increasing crude output rapidly, surpassing 3.6 million barrels per day (bpd) in March and setting an export record of 2.1 million bpd in April. Production is expected to reach 3.8 million bpd by 2026 as more FPSOs, like the recently launched Sepetiba, come online. Europe, already accounting for 11% of Brazil’s exports via Spain, is positioned to absorb more of this growing supply. Notably, Nigeria is emerging as a new destination: its Dangote Refinery is set to receive Brazil’s Mero crude on May 24. The crude was shipped via a suezmax and transferred mid-sea to a VLCC, signaling growing logistical links between Brazil and West Africa.

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Beyond Shipmanagement Expands VLCC Fleet with Cut-Price Cosco Tanker Acquisition

Singapore-based Beyond Shipmanagement has acquired the 297,000-dwt VLCC Xin Ning Yang (built 2005) for $27.71 million at auction, well below the $34 million market valuation. The vessel, renamed Rising Sun 1, was sold by China’s Cosco Shipping Energy Transportation (CSET) as part of a broader asset disposal move. This purchase adds to Beyond Shipmanagement’s growing fleet, now comprising at least four VLCCs, one reportedly used for storage. Last year, the company made headlines by acquiring the massive 442,000-dwt Oceania from Euronav. CSET recently approved the sale of two VLCCs and two LR2 tankers, with total values exceeding $220 million. The second VLCC involved is believed to be the 308,000-dwt Yuan Hua Hu (built 2015), though not explicitly confirmed. CSET also plans to scrap a small LPG carrier amid fleet restructuring. Meanwhile, Japan’s Mitsui OSK Lines is testing the resale market for its 314,000-dwt M Star (built 2008), valued at $51 million.

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TotalEnergies Inks 20-Year Deal for Canadian LNG, Buys Stake in Ksi Lisims Project

TotalEnergies has signed a 20-year agreement to purchase 2 million metric tons of liquefied natural gas (LNG) annually from the Ksi Lisims LNG project in British Columbia, Canada. The project is being developed by Western LNG, in partnership with the Nisga’a Nation and Rockies LNG, a consortium of Canadian gas producers including Ovintiv Inc. TotalEnergies will acquire a 5% stake in Western LNG with an option to raise it to 10% pending a final investment decision. The Ksi Lisims facility is expected to produce 12 million tons of LNG per year. This move supports Canada’s goal to become a global LNG supplier amid growing energy demand from data centers, AI, and Europe’s shift from Russian gas. The agreement follows a similar deal Shell signed with Western LNG in 2024. Total’s investment bolsters its global LNG portfolio and presence in North America. Canada’s first major LNG export terminal, LNG Canada, is set to begin operations this year.

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South Korea’s Top Shipbuilders Compete for ONGC’s $500M Ethane Carrier Contract

India’s ONGC is negotiating a $500 million order for three very large ethane carriers (VLECs), with only three South Korean shipyards—HD Hyundai, Samsung Heavy Industries (SHI), and Hanwha Ocean—invited to bid. The vessels, each around 100,000 cubic meters, are needed to transport 800,000 tonnes of ethane annually starting May 2028 for ONGC’s petrochemical plant in western India. Japanese companies NYK and MOL, and Malaysia’s MISC Berhad, are shortlisted as potential shipowners; MOL is reportedly leading the race with a strong proposal. ONGC plans to charter the ships via a new joint venture under long-term agreements. SHI and HD Hyundai are currently the most experienced, with 11 and 7 VLECs built respectively, while Hanwha Ocean has no prior experience. Chinese shipyards were excluded due to Indian government policy and risk concerns. VLECs typically cost between $157 million and $168 million each, depending on size and builder. The global VLEC orderbook currently stands at 66 vessels, with Chinese yards holding the majority but recent orders concentrated in South Korea.