Oil Prices Dip as Market Weighs U.S. Tariff Ruling and Eyes OPEC+, Russia

Oil prices dropped over 1% on Thursday as investors assessed the implications of a U.S. court ruling that invalidated broad tariffs imposed by former President Trump, while awaiting OPEC+ output decisions and possible new sanctions on Russian crude. Brent settled at $64.15 (-1.2%) and WTI at $60.94 (-1.5%). Although prices initially rose on the court decision, sentiment cooled as officials signaled other legal options remain. Weak Chinese demand and geopolitical uncertainty involving Iran and Russia also pressured the market. Meanwhile, Chevron halted Venezuelan operations after losing its U.S. license, disrupting a major crude source. OPEC+ is expected to approve a 411,000 bpd production hike in July to protect market share. Despite near-term price weakness, Rystad Energy forecasts global liquids demand to exceed supply by 600,000–700,000 bpd from May to August. A surprise 2.8 million-barrel U.S. inventory draw and wildfire-related shutdowns in Canada helped limit losses.

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U.S. Oil Inventories Drop and Nigerian Crude Imports Surge to Six-Year High

U.S. crude and fuel inventories declined last week, while imports of Nigerian crude reached their highest level since October 2019, according to the EIA. Crude stockpiles fell by 2.8 million barrels, driven by a 794,000 bpd increase in U.S. crude exports to 4.3 million bpd. Gasoline and distillate inventories also dropped, reflecting strong pre-Memorial Day demand. Gasoline stocks declined by 2.4 million barrels, while distillate stocks hit their lowest level since April 2005. Imports from Nigeria surged to 364,000 bpd due to a temporary outage at the Dangote refinery. Despite the bullish inventory report, oil prices remained down slightly, with Brent at $64.34 and WTI at $61.20. Refinery runs fell by 162,000 bpd and utilization dropped to 90.2%. Net crude imports declined by 532,000 bpd to 2.05 million bpd.

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Dangote Refinery to Operate at Reduced Capacity Through October Amid Technical Setbacks

Nigeria’s 650,000 bpd Dangote refinery will run its gasoline-making unit at reduced rates until at least October following multiple operational setbacks, according to IIR Energy. The RFCC unit, currently at 70% capacity, faced two shutdowns in April and May due to damage and mechanical issues. A 40-day maintenance turnaround for catalyst replacement and reactor repairs is planned for October. Additional units are also facing issues: the continuous catalytic reformer will be shut for a week starting June 2 to fix leaks, while the alkylation and polypropylene units are scheduled to start commercial operations by mid- and late June, respectively. The refinery, which began full operations in January 2024, has been processing crude at about 80% capacity since mid-March. Despite early expectations of global market disruption, the startup has been hampered by reliability challenges.

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Nigerian Key Crude Exports to Decline by 9% in July Amid Lower Loadings

Nigeria’s crude oil exports from its four key grades—Qua Iboe, Bonny Light, Bonga, and Forcados—are expected to decline to an average of 694,000 barrels per day (bpd) in July, down 9% from 760,000 bpd planned for June, according to preliminary loading programs seen by Reuters. Qua Iboe exports will slightly dip from 127,000 bpd to 123,000 bpd (4 cargoes), while Bonny Light will decrease from 193,000 bpd to 187,000 bpd (6 cargoes). Bonga sees a notable reduction from 135,000 bpd to 102,000 bpd (3 cargoes), and Forcados will drop from 305,000 bpd to 282,000 bpd (9 cargoes). The total number of cargoes is also set to fall from 24 in June to 22 in July, indicating a tightening in Nigeria’s crude supply for the upcoming month.

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OPEC’s Renewed Price War Puts Pressure on U.S. Shale, but Deeper Cuts Needed for Lasting Impact

OPEC’s renewed oil price war is beginning to pressure U.S. shale producers, with U.S. drilling activity slowing and benchmark oil prices dropping nearly 25% to around $61 per barrel, a level at which many shale wells are no longer profitable. The number of active U.S. drilling rigs has fallen to 465—the lowest since November 2021—with the Permian Basin cutting three rigs to 279 and Frac Spread Count dropping 28% year-over-year to 186, signaling a likely decline in near-term production. Despite this, the U.S. still produces around 13.5 million barrels per day (bpd), and the Energy Information Administration forecasts modest reductions to 13.4 million bpd in 2025 and 13.5 million bpd in 2026. In the Permian alone, output is expected to rise from 6.3 million bpd in 2024 to 6.51 million bpd in 2025, despite a rise in drilled but uncompleted wells (DUCs) to 975. OPEC+’s recent move to unwind 2.2 million bpd in production cuts has pressured prices, but U.S. shale is more resilient than in 2014 due to greater consolidation, capital discipline, and the dominance of major firms like Exxon and Chevron. These firms now prioritize shareholder returns over production growth, with 2025 spending plans down 4% to $60 billion. As a result, OPEC+ will need to maintain or escalate its strategy for months to create lasting shifts in global oil market dynamics.

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Asia’s Jet Fuel Exports to U.S. West Coast Surge to One-Year High Amid Refinery Outages

Asia’s jet fuel exports to the U.S. West Coast are projected to reach nearly 600,000 metric tons (4.28 million barrels) in May—the highest in over a year—due to refinery outages in California that have driven up local prices and demand. The disruption, affecting refineries operated by PBF Energy and Valero, coincides with the start of the U.S. summer travel season, with air travel demand rising 2% year-over-year during Memorial Day weekend. In April, a favorable arbitrage spread of over $17 per barrel incentivized Asian exports, with shipping costs around $5.50 per barrel, making U.S. sales highly profitable. China’s jet fuel exports hit a 13-month high in April, with over 2 million tons expected in May, contributing to oversupply in Singapore and redirecting South Korean exports to the U.S. Although refinery utilization on the West Coast rose to 82.6% in mid-May, import demand may stay elevated. Looking ahead, the closure of two West Coast refineries by end-2025 could increase jet fuel imports by up to 100,000 tons per month.

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Singapore Fuel Oil Stockpiles Rise to Four-Week High Despite Import Drop

Singapore’s onshore fuel oil stockpiles rose by 3.9% to 22.34 million barrels (3.52 million metric tons) as of May 28, reaching their highest level in four weeks despite an 18% drop in weekly imports to 686,000 tons, according to Enterprise Singapore. The increase was largely due to tepid bunker demand, which limited inventory drawdowns. Most of the imports came from Russia (238,714 tons), while exports rose 7% to 331,000 tons, primarily heading to China. Net imports for the week totaled 355,042 tons, with Malaysia notably recording net exports of 132,721 tons. Despite softer low-sulphur fuel oil differentials, high-sulphur differentials slightly recovered. Asia remained well-supplied in May, with total arrivals reaching 5.5 million tons, an increase from April, as per LSEG Oil Research. The data suggests a near-term oversupply, likely keeping pressure on spot prices.

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Arctic LNG Shadow Fleet Delayed by Heavy Sea Ice as Sanctioned Ships Shift Tactics

Unusual sea ice coverage is delaying the 2025 Arctic sailing season along Russia’s Northern Sea Route (NSR), impacting LNG shipments from Novatek’s Yamal LNG project. Over 200 vessels, including Arc7-class LNG carriers, have received NSR passage approval, yet significant ice buildup on the eastern NSR side is slowing movement, according to Eikland Energy. Several sanctioned LNG carriers—such as Arctic Mulan, Iris, and Arctic Metagaz—are maneuvering around restrictions and have changed names and ownership, with some transferring from Dubai-based White Fox Shipmanagement to Russian entities. Currently, four renamed vessels remain off Russia’s Barents Sea coast, while three others are stationed in Asia. Meanwhile, the Arctic Metagaz is anchored off Egypt. Industry attention is also on the under-construction Arc7 LNG carrier Alexey Kosygin, potentially Russia’s first domestically built LNG ship. Mitsui OSK Lines' CEO criticized the EU for sanctioning three of its Arc4 LNG carriers used for non-sanctioned Yamal LNG cargoes, calling the move unfair.

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Russian Rouble Hits Two-Year High Amid Peace Talk Prospects

The Russian rouble surged past 78 per U.S. dollar, reaching a two-year high of 77.95 after Moscow proposed new peace talks with Ukraine for June 2 in Istanbul. The rouble has appreciated over 40% against the dollar this year, supported by easing geopolitical tensions, notably with U.S. President Donald Trump, and tight monetary policy by Russia’s central bank. Trump’s reluctance to impose further sanctions on Russia helped boost investor confidence. A completed draft peace memorandum and rising Brent crude prices—up 1.2% to $65.68 per barrel—also strengthened the rouble. Exporters’ end-of-month conversion of foreign currency to roubles for tax payments added further support. The rouble also rose 1% to 10.90 against the Chinese yuan, which remains the most traded foreign currency in Russia. Analysts say geopolitical optimism and oil market stability are currently outweighing traditional currency supply concerns.

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Sinopec Launches $690 Million Hydrogen Venture Fund to Boost Clean Energy Investments

Chinese energy giant Sinopec has launched a 5 billion yuan ($690 million) venture capital fund focused on hydrogen energy, marking the largest hydrogen-dedicated investment fund in China. The fund will target early-stage ventures in key materials, core equipment, and proprietary technologies with high growth potential across the hydrogen value chain. Managed by Sinopec Private Equity Fund Management Co, the initiative also involves Shandong New Growth Drivers Fund Management Co and Yantai Guofeng Investment Holding Group Co as partners. Sinopec has already invested in 13 hydrogen-related companies and built 11 hydrogen supply centers and 144 refueling stations across the country, signaling strong national support for hydrogen as part of China's clean energy transition.

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Ammonia and LNG Emerge as Front-Runners in Shipping's Green Transition under New IMO Rules

Ammonia and LNG are expected to be the most cost-competitive alternative marine fuels under the International Maritime Organization’s (IMO) new decarbonization policies, according to a Global Maritime Forum report. Ammonia is projected to overtake LNG after the mid-2030s as the preferred fuel due to its long-term emission reduction potential. The new IMO framework includes a global fuel-intensity cap and penalties through remedial units, pressuring the industry toward net-zero greenhouse gas emissions by 2050. The study, based on UMAS International modelling, suggests future compliance will heavily rely on scalable zero-emission fuels like e-ammonia and e-methanol. Shipowners plan to focus on cost optimization between 2028–2030, the initial compliance phase. However, early e-fuel adoption is critical and must begin before 2030 to meet targets. The report warns that delays in scaling synthetic green fuels could hinder progress, urging stronger financial incentives and higher remedial unit pricing to motivate early movers.