Oil Prices Surge 2% to Two-Week High Amid Geopolitical Tensions and Supply Concerns

Oil prices rose about 2% to a two-week high, with Brent settling at $65.63 and WTI at $63.41, driven by intensifying geopolitical tensions involving Russia, Ukraine, Iran, and the U.S. Uncertainty over a Russia-Ukraine ceasefire and the delay in U.S.-Iran nuclear negotiations are expected to prolong sanctions on two major oil producers. Russia, OPEC+’s second-largest producer in 2024, and Iran, OPEC’s third-largest, both face extended restrictions. In Canada, wildfires have disrupted 344,000 barrels per day of oil sands production—around 7% of national output. Analysts expect a 1 million-barrel draw in U.S. crude inventories, following a five-year average decrease of 2.3 million barrels. Meanwhile, economic signals are mixed: Eurozone inflation eased, fueling expectations for ECB rate cuts, while U.S. job layoffs rose and the OECD downgraded global growth forecasts due to ongoing trade tensions.

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Global Oil Inventories Surge Amid OPEC+ Output Hike and Demand Uncertainty

Global oil stockpiles have risen by about 170 million barrels over the past 100 days, signaling potential oversupply as OPEC+ ramps up production. Analysts at Kayrros and OilX attribute the buildup to rising output, particularly from OPEC+, and slower-than-expected demand. China leads the increase, though stockpiles are growing worldwide. Despite seasonal refinery slowdowns, current inventory growth is the fastest since 2020. The International Energy Agency has warned of a supply glut, especially with added risk from U.S. trade policy. While crude inventories swell, refined fuel stocks, including U.S. diesel, remain tight, possibly prompting more refining activity in the coming months.

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Refiners Enjoy Short-Term Profit Boost from Tight Fuel Markets Ahead of Predicted Downturn

Global oil refiners are experiencing a short-term profit surge as tight fuel supply and resilient demand drive up refining margins. In May 2025, margins hit $8.37 per barrel—the highest since March 2024—despite crude oil prices falling to a four-year low. Unexpected refinery closures in the U.S. and Europe, along with unplanned outages in Panama, Nigeria, and Mexico, have squeezed supply ahead of the summer demand peak. While margins benefit from a tighter product market—especially for gasoline and diesel—analysts warn the rally may be brief. Global oil demand growth is expected to slow to 650,000 bpd in the second half of 2025, down from nearly 1 million bpd in Q1, as trade tensions and increased output weigh on profitability. Experts suggest refiners lock in gains now before margins soften.

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Venezuela Maintains Oil Exports as China Buys More Amid U.S. Sanction Changes

Venezuela’s oil exports held steady in May 2025 at 779,000 barrels per day (bpd), with rising shipments to China offsetting a drop in U.S.-authorized sales due to expiring sanctions. The U.S. revoked licenses that previously allowed companies like Chevron and Reliance to operate in Venezuela, prompting PDVSA to cancel some shipments. China received 584,000 bpd, up from 521,000 bpd in April, while U.S. deliveries rose slightly to 140,000 bpd. Venezuela also ramped up fuel imports to 159,000 bpd to support crude blending ahead of stricter enforcement of U.S. sanctions.

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BP Commits $2.9B to Expand Azerbaijan’s Shah Deniz Gas Field in Strategic Fossil Fuel Pivot

BP and its partners have approved a $2.9 billion investment to expand Azerbaijan’s Shah Deniz gas field, aiming to boost gas and condensate output amid the company’s strategic pivot back to fossil fuels. The Shah Deniz Compression Project will unlock low-pressure gas and is expected to add 50 bcm of gas and 25 million barrels of condensate over its lifetime. This comes as BP scales down its renewables focus and targets increased upstream production to 2.3–2.5 million boe/day by 2030. Separately, BP finalized offshore exploration deals with SOCAR and plans oil output at the Karabakh field by 2029. Azerbaijan, a key alternative energy supplier for Europe, aims to raise gas exports by 8 bcm by 2030.

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Nigerian Firms Power Oil Sector Revival Amid Major Investments and Challenges

Nigeria’s oil and gas sector is entering a new growth phase led by local firms acquiring divested assets from global majors. Indigenous companies like Green Energy, Conoil, Renaissance Africa Energy, and Seplat are investing billions to revive dormant fields and expand infrastructure. Highlights include the launch of Nigeria’s first locally operated crude terminal at Otakikpo and new crude blends like Obodo. Local operators now contribute over half of Nigeria’s oil output, up from 40%. However, they face hurdles including security risks, oil theft, and outdated infrastructure. The shift supports Nigeria's goal of boosting oil production by 1 million bpd next year.

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US Trade Policies May Drive Norway Toward EU Membership

Knut Arild Hareide, CEO of the Norwegian Shipowners’ Association, warns that escalating geopolitical tensions fueled by shifting US trade policies could push Norway to join the European Union. Norway, a major player in shipping and energy, is caught between competing interests of the US, EU, and China. Hareide suggests a third referendum on EU membership could follow September’s national elections, with a growing likelihood of a “yes” vote. Recent US actions, including tariffs and port fees targeting non-US-built vessels, strengthen the case for closer EU ties. Security and preparedness concerns, rather than economic factors, are expected to drive Norwegian support for membership. While previous referenda in 1972 and 1994 saw 53.5% and 52.5% opposition respectively, a recent poll shows 41% favor joining and 63% support holding a new referendum.

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Panama Deregisters 650+ Ships to Enforce Sanctions and Tighten Maritime Rules

Panama has removed over 650 vessels from its ship registry since 2019, including 214 since 2023, as it strengthens compliance with U.S. sanctions and enforces stricter maritime regulations. The move follows criticism from watchdog group United Against Nuclear Iran (UANI), which said Panama had not done enough to stop Iran-linked oil shipments. Nearly 20% of ships suspected of transporting Iranian oil fly Panama's flag. In response, Panama has increased monitoring, penalized ships disabling tracking systems, and is enhancing controls on ship-to-ship operations. The country is working closely with the U.S. amid growing scrutiny over "dark fleet" tankers.

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Comoros Flag State Penalized Amid Surge in Shadow Fleet Registrations

The Comoros Islands have been flagged as a poorly performing ship registry due to a rapid influx of vessels linked to the shadow fleet, many evading sanctions. Its registry doubled in size in early 2025, including sanctioned Russian vessels. High rates of seafarer abandonments and lax oversight have raised concerns, prompting investigations by US authorities. Comoros is now one of the largest registries in its region but faces criticism for enabling sanction evasion.

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Airlines Reaffirm Net-Zero by 2050 Amid Green Fuel Supply Concerns

Global airlines concluded an IATA summit in New Delhi by reaffirming their commitment to net-zero emissions by 2050, despite growing concerns over the limited availability of sustainable aviation fuel (SAF) and delayed delivery of fuel-efficient aircraft. Meeting the goal is projected to cost $4.7 trillion, potentially raising ticket prices. While IATA avoided reopening debate on the target, it criticized energy companies and aircraft manufacturers for hindering progress. Airlines urged more government and industry support for SAF, warning that uneven supply and high transport costs are undermining efforts to decarbonize.

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VLCC Owners Lock in Charters as Spot Rates Tumble to $30,400/Day

Spot rates for VLCCs have slumped 27% in a week to $30,400 per day, prompting owners to secure period charters amid a bearish market. Charter activity is increasing, with contracts ranging from one to two years. Middle-aged scrubber-fitted VLCCs are securing rates near $50,000 per day—such as Asyad Shipping's Seeb (chartered by Cosco) and KMARIN’s VL Brilliant (chartered by Clearlake). Suezmax rates, in contrast, rose 8% to $33,100, and aframaxes are seeing rising interest at low $30,000s levels. Despite recent spot market weakness, analysts suggest OPEC+’s planned July supply hike of 411,000 bpd could improve VLCC utilization if realized.

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Atlantic MR Tanker Rates Plunge 17% as U.S. Gulf Coast Market Weakens

MR product tanker rates in the Atlantic basin dropped sharply on Tuesday, with average earnings falling 17% to $19,900 per day, according to the Baltic Exchange. This marks a 27% decline since last Wednesday’s peak of over $27,400 per day. The steepest drop came on the Houston-to-Amsterdam route (TC14), which fell by $3,107 to $9,597 per day. The Rotterdam-to-New York route (TC2) also declined by $2,310 to $11,300 per day. Futures markets echoed this bearish sentiment, with forward freight agreements for July on TC2 and TC14 both posting significant declines in WorldScale points. The rate collapse highlights weakening demand and growing pessimism in the transatlantic clean product trade.

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OPEC+ Output Hike May Yield Modest Tanker Market Gains Amid Seasonal and Geopolitical Factors

Opec+ announced an accelerated production increase of 411,000 barrels per day (bpd) for July, bringing total additional output since April to 1.23 million bpd, but analysts say the actual impact on tanker demand may be limited. Most Opec+ members, except Saudi Arabia, are already producing above quotas, so less than half of the announced increase will translate to real growth. Saudi Arabia is expected to add 167,000 bpd, with smaller contributions from Algeria and Oman, potentially generating demand for only four to five additional VLCCs. Despite this, Saudi crude exports remained flat in May, suggesting near-term tanker demand will mostly sustain steady flows rather than grow sharply. VLCC spot rates recently dropped 23% to $38,000 per day due to softer chartering, partly because buyers expect lower Saudi selling prices in July and are delaying bookings. Analysts note that Middle East seasonal demand and a narrowing price arbitrage are shifting some crude flows toward Europe, favoring suezmax and aframax tankers. However, limited growth in the compliant VLCC fleet and sanctions affecting the shadow fleet could tighten tanker supply in the second half of the year.

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OECD Warns of Sharp Slowdown in Global Trade as Tariffs and Uncertainty Rise

The OECD has warned that global trade growth is expected to drop to 2.2% in 2026, significantly down from 3.8% in 2024, as rising tariffs and trade tensions weigh heavily on economic activity. In its latest forecast, the organisation revised previous estimates, cutting expected 2025 trade growth from 3.6% to 2.8% and GDP growth from 3.1% to 2.9%. The slowdown is attributed to front-loaded activity ahead of tariff hikes, and growing uncertainty in trade policy, much of it stemming from the ongoing U.S. trade war launched under President Trump. OECD chief economist Alvaro Pereira warned that more protectionism would fuel inflation and further dampen global growth. He called on governments to avoid trade fragmentation and to pursue trade agreements and reforms to stimulate investment, growth, and job creation. Without such cooperation, the report suggests that global economic prospects could deteriorate further.

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Equinor Explores Electrification and Alternative Fuels for Deepsea Tankers

Equinor is investigating electrification options for its deepsea tanker fleet to reduce emissions, building on its success with electrified support vessels like those servicing the Dogger Bank offshore wind farm. Heidi Aakre, VP of Shipping, highlighted Norway’s abundant renewable electricity potential and ongoing discussions about applying electrification to tankers, particularly with onshore power solutions. The company is assessing newbuild projects with a focus on viable business cases balancing costs and emissions reductions. Equinor has experience with dual-fuel ships running on LNG or LPG, acknowledging operational challenges but overall benefits. It is also exploring biofuels, dual-fuel ethanol, and emerging fuels like methanol and ammonia, while hydrogen remains less emphasized. LNG is expected to remain a compliant fuel under EU maritime regulations until 2035, despite some environmental concerns over upstream production.