Oil Prices Dip on Upcoming U.S.-Iran Nuclear Talks and Bearish Inventory Data

Oil prices fell on Wednesday following news that the U.S. and Iran will hold a fresh round of nuclear talks this week, announced by Oman’s foreign minister. This offset earlier gains triggered by CNN’s report that Israel may be preparing to strike Iranian nuclear sites. Brent crude futures dropped $0.47 to $64.91, and U.S. WTI crude fell $0.46 to $61.57. Iran plays a crucial role in global oil flows, and any military escalation could disrupt exports, especially through the Strait of Hormuz. Analysts believe the talks eased immediate market fears, though geopolitical tensions still pose supply risk. Meanwhile, U.S. oil inventory data came in bearish, with crude, gasoline, and distillate stocks unexpectedly increasing, further pressuring prices. Additionally, Kazakhstan increased output by 2% in May, defying OPEC+ targets. Analysts say a potential supply hit from Iran of about 500,000 bpd could be managed by OPEC+ if needed.

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Surging Oil Inventories Signal Prolonged Pressure on Prices

Global oil inventories have surged, both on land and at sea, signaling weakening market fundamentals that may keep oil prices under long-term pressure. Prices have already fallen to around $65 a barrel, down from $82 in January, despite stable demand and strong refining margins in early 2025. The International Energy Agency (IEA) reported that total global oil inventories rose for a second straight month, reaching 7.7 billion barrels in March, with further increases expected throughout 2025 and 2026. Kayrros satellite data showed a 100 million barrel increase in onshore inventories from mid-April to mid-May, with China hitting a record high of 1.127 billion barrels. Floating storage has also jumped, with crude and refined products in tankers up 14% to over 160 million barrels, a two-year high. Iran and Russia contributed significantly to this rise, as sanctions and pricing caps have disrupted sales and delivery. This inventory build-up reflects rising supply outpacing demand, just as OPEC+ plans further production hikes. If these trends persist, oil prices may need to drop further before the market rebalances.

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OPEC+ Targets U.S. Shale with Output Hike Amid Market Share Battle

OPEC+ is ramping up oil production not only to discipline overproducing members but also to pressure U.S. shale producers and reclaim lost market share, according to insiders. The strategy recalls a failed price war from a decade ago, but this time U.S. shale is more vulnerable due to rising costs and market volatility. With shale breakeven prices around $65 per barrel, OPEC+—led by low-cost producers like Saudi Arabia and Russia—aims to push prices below $60 to undermine U.S. output. This move comes as prime shale reserves are depleting and inflation drives up drilling costs. OPEC+'s global share has dropped to under 25%, while the U.S. share has risen to 20%, prompting a shift in strategy to reverse the trend. U.S. shale firms are already scaling back forecasts and drilling activity, with signs of industry contraction amid price pressure. However, lower prices hurt all producers, including OPEC+ nations that rely on oil to fund budgets—Saudi Arabia needs $90+ and Russia $77 per barrel for fiscal balance. Still, Riyadh appears ready to withstand the pain in the short term to achieve long-term dominance, signaling a renewed showdown in global oil markets.

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Saudi Arabia’s Crude Exports Drop to 5.75 Million bpd in March Despite Slight Output Rise

Saudi Arabia’s crude oil exports fell to 5.754 million barrels per day (bpd) in March, down from 6.547 million bpd in February, according to official data. Despite the drop in exports, the country’s crude production rose slightly to 8.957 million bpd, compared to 8.947 million bpd the previous month. Domestic refinery throughput also increased to 2.944 million bpd, a rise of 323,000 bpd from February. Additionally, direct crude burning climbed by 100,000 bpd, reaching 383,000 bpd in March. The data comes from JODI, which publishes monthly figures provided by OPEC countries. The decline in exports could reflect stronger domestic consumption or inventory build-up. Earlier this month, OPEC+ agreed to accelerate output hikes for a second straight month, boosting June production by 411,000 bpd. Saudi Arabia’s role as a swing producer remains central amid ongoing global oil supply adjustments.

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India's Imports of Russian ESPO Crude Hit 10-Month High Amid Strong Refining Demand

India’s Russian oil imports are set to reach 1.8 million barrels per day in May — the highest in 10 months — as refiners ramp up purchases of light ESPO Blend crude. Demand remains strong ahead of July, with Indian refiners reportedly ordering over 10 cargoes of June-loading ESPO crude. The surge comes ahead of new EU and UK sanctions targeting Russia’s shadow oil fleet and financial services. Increased imports are linked to refinery maintenance shutdowns at major Indian players like Reliance Industries and MRPL, which has raised the need for light feedstock at catalytic crackers. Some deliveries are tied to long-term deals between Reliance and Russia’s Rosneft, especially at the Sikka port. Traders report ESPO is available at premiums of 50 cents to $1 per barrel over Dubai prices in India. Meanwhile, Chinese state firms are backing away from sanctioned crude, pushing more ESPO volumes toward India. As a result, spot premiums for ESPO cargoes to China have climbed to around $2 per barrel for July loadings.

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Shipping Costs for Russian Crude to India Drop as Tanker Supply Surges

Freight costs for shipping Russian crude to India have dropped from previous highs due to an influx of tankers, including both sanctioned and non-sanctioned vessels, entering the trade for the first time. Notable recently sanctioned ships include the 105,300-dwt LR2 Chen Lu, 105,500-dwt aframax Lefkada, 113,800-dwt aframax Fiora, and 115,400-dwt LR2 Sea Fidelity, while the growing presence of non-sanctioned tankers is expected to further ease India’s concerns about sanctions. India’s imports of Russian ESPO crude have surged sharply, rising from 70,000 barrels per day (bpd) in March and 98,000 bpd in April to 183,000 bpd as of May, with Sokol crude imports also resuming in April after a six-month hiatus. To further secure its crude imports, India has approved three more Russian insurers—Sberbank Insurance, Ugoria Insurance Group, and ASTK Insurance—to provide coverage for ships at Indian ports, joining five previously approved Russian providers on a list of 19, even as the first five have been hit by UK sanctions. The new insurance approvals are valid through February 2026 and are intended to boost the security of India’s crude shipments. 

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South Africa Sets $100 Oil Price Target Before Selling More Strategic Reserves

South Africa will wait until global oil prices reach around $100 per barrel before selling more of its strategic crude reserves, according to Godfrey Moagi, CEO of the South African National Petroleum Company. The country had originally planned sales to recover revenue lost from a temporary fuel levy cut in 2022, when Brent crude averaged $99. Current prices, however, hover around $66 per barrel, making sales economically unattractive. Moagi emphasized the importance of maintaining strategic stocks rather than selling at low prices that would “empty the tanks.” The National Treasury had forecast receiving 4 billion rand ($223 million) from reserve sales by March 2026, but that target is in doubt unless prices rise significantly. South Africa’s strategic reserves currently stand at about 7.7 million barrels, down from previous levels due to past sales to companies like Sasol and TotalEnergies. So far, 2 million barrels have already been sold, generating partial revenue. The reserves are managed by the Strategic Fuel Fund Association, a division of the national energy company.

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Poland Scrambles Military as Russian 'Shadow Fleet' Ship Spotted Near Baltic Power Cable

Poland's military intervened after a Russian “shadow fleet” ship, the Sun, was observed making suspicious maneuvers near an undersea power cable linking Poland and Sweden. Polish Prime Minister Donald Tusk confirmed the sanctioned vessel was scared off and later sailed to a Russian port. The 600-megawatt cable, crucial for cross-border electricity exchange, was unaffected and continued supplying power to Sweden. Defence Minister Kosiniak-Kamysz emphasized the growing threat in the Baltic Sea, now a hotspot for cable sabotage and maritime incidents. NATO has increased surveillance in the region since Russia’s 2022 invasion of Ukraine, which triggered a rise in undersea infrastructure attacks. The Polish Navy’s ORP Heweliusz was deployed to the area, and Sweden has confirmed it is monitoring the situation. The vessel sailed under an Antigua flag and is part of Russia’s covert fleet used to evade sanctions. Poland and NATO have pledged a strong response to any further threats to critical infrastructure in the region.

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Japan's Mitsui O.S.K. Evaluates EU Sanctions Impact on LNG Ships Linked to Russia

Japanese shipping giant Mitsui O.S.K. Lines (MOL) is assessing the impact of the EU's 17th sanctions package on three of its LNG vessels—North Moon, North Ocean, and North Light—due to their connections with Russia's Yamal LNG project. The ships were flagged in the new EU sanctions targeting Russia’s shadow fleet amid the ongoing Ukraine conflict. MOL stated it would cooperate with EU and Japanese authorities and uphold all legal and regulatory commitments. All three vessels were built in 2024 and have transported Russian LNG to Asia via ship-to-ship transfers with the icebreaking vessel Nikolay Urvantsev. The North Ocean delivered a cargo to Taiwan in April, while North Moon and North Light made deliveries to China in March and April. As of now, North Moon and North Light remain en route to Asia with LNG cargoes. The sanctions raise questions about the future compliance and operations of these vessels under EU scrutiny. MOL has said it will take “appropriate measures” based on its rights and obligations.