Oil Prices Rise Slightly Amid U.S.-China Trade Talks and OPEC Uncertainty

Oil prices inched higher as Brent crude rose by $0.12 to $67.16 per barrel and U.S. WTI increased by $0.13 to $65.42, with WTI reaching its highest level since April 4. This uptick is driven by optimism surrounding ongoing U.S.-China trade negotiations in London, where President Trump reported positive progress. A successful trade agreement could stimulate global economic growth and boost oil demand. However, geopolitical tensions remain, with Iran preparing a counter-proposal to the U.S. regarding its nuclear deal, potentially affecting oil supply if sanctions are lifted. An OPEC production survey revealed that oil output rose modestly in May, with Iraq producing below target and minor increases from Saudi Arabia and the UAE. Analysts warn that if OPEC+ continues increasing supply, the market could face a significant surplus in the second half of 2025, likely pushing prices lower.

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China’s Crude Imports Dip in May Amid Refinery Maintenance and High Oil Prices

China's crude oil imports fell to a four-month low in May, totaling 46.6 million metric tons (10.97 million barrels per day), down 3% from April and 0.78% from May 2024. The drop was attributed to extensive refinery maintenance affecting 129.9 million tons/year of capacity—about 2.6 million bpd—up 19.2 million tons from April. Analysts noted that high earlier crude prices and significantly reduced long-term contract volumes from Saudi Arabia, combined with weak Iranian oil arrivals, further suppressed imports. Despite the May slowdown, total imports from January to May reached 229.61 million tons (11.1 million bpd), a 0.3% year-over-year increase. Refined fuel exports also declined 17.62% year-over-year to 4.41 million tons, while natural gas imports fell 10.8% to 10.11 million tons due to high LNG prices and subdued industrial demand. Imports are expected to rebound in June with increased shipments from the Middle East and Brazil, though Iranian crude arrivals may stay low.

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Japan Resumes Russian Crude Imports Using Sanctioned Tanker

Japan's Taiyo Oil Co. has imported 600,000 barrels of Russian Sakhalin Blend crude via the Voyager, a tanker blacklisted by both the U.S. and EU, marking Japan’s first Russian crude shipment in over two years. The delivery, approved under Japan’s energy security waiver and supported by its Ministry of Economy, Trade and Industry (METI), highlights a growing global comfort with circumventing sanctions amid ongoing energy needs. The Voyager, sanctioned by the U.S. Treasury and EU earlier this year, offloaded its cargo at Kikuma port on June 10. METI confirmed it consulted with U.S. officials and was told Japan could use sanctioned vessels under the existing waiver, which has been extended to June 2026 by the EU. Since Trump’s return to power, the global enforcement of sanctions appears to have relaxed, with sanctioned ships delivering over 20 Russian crude cargoes to China, India, and Syria in recent months. The move underscores how geopolitical shifts and practical energy demands are reshaping compliance with Western sanctions regimes.

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California Fuel Imports Surge to 4-Year High Amid Refinery Outages and Shrinking Local Capacity

California’s petroleum product imports soared to 279,000 bpd in May—its highest level since June 2021—due to multiple refinery outages and declining in-state refining capacity. Nearly 70% of these imports came from Asia, especially South Korea, as California turned to traditional partners and unconventional trade routes to meet fuel demand. Imports from the Bahamas hit a record 38,000 bpd, despite high transport costs, due to workarounds on U.S. shipping laws and strong demand for blending components like alkylate. Fuel shipments from India also increased to 39,000 bpd, the highest since January 2024. With major refineries by Phillips 66 and Valero set to close next year, analysts predict California will face long-term dependence on fuel imports, potentially raising prices. Already, retail gasoline prices in California averaged $4.68 per gallon—well above the $3.12 national average—though expanded trade routes may help buffer against future price shocks.

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VLCC Freight Rates Hit Five-Month Lows as Market Weakness Deepens

VLCC spot market rates have plunged to a five-month low, with Middle East-to-China earnings dropping to $19,000 per day—down $5,000 from last week. West Africa-to-Asia rates fell $3,000 to $28,000 per day, while US Gulf-to-Asia routes dipped $1 million to a lump sum of $6.2 million ($24,000/day). Singapore-based Sentosa Ship Brokers and UK’s Gibson noted that the market appears to have bottomed out, but ongoing weakness persists amid sluggish chartering activity and the Eid holiday slowdown. Clarksons reported VLCC fleet averages fell 20% week-on-week to $25,344 per day, highlighting widespread market pressure. With 30–35 cargoes left to be booked for late June and July loadings due soon, brokers warn delays could tighten availability and firm up rates. Meanwhile, Suezmax and Aframax sectors saw 10% gains, while product tanker earnings slipped 12% to $21,694 per day.

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Suezmax ‘Crude Cannibals’ Shake Up Clean Tanker Market, Threatening LR2 Rates

A surge in suezmax tankers entering clean product trades is reshaping tanker market dynamics, with at least 10 suezmaxes fixed to load refined oil cargoes in June. Shipbrokers report that some are newbuildings on maiden voyages, while others have cleaned up from crude service—displacing as many as 22 LR2 cargoes so far, including upcoming fixtures. Brokers like Sentosa warn this influx could cap LR2 freight rates and deter more vessels from switching from dirty to clean due to high cleaning costs and weak market earnings. While suezmax spot rates rose 9% week-on-week to $34,500/day, the oversupply in the Middle East still weighs heavily on the sector. Contrastingly, BRS believes more LR2s could move into clean trades amid new vessel deliveries and tighter Russian cargo handling due to sanctions. However, Sentosa disagrees, citing the limited economic incentive, even as aframaxes currently earn about $3,000/day more than LR2s, narrowing last year’s rate gap.