Oil Prices Continue Climbing as Iran-Israel Conflict Fuels Supply Fears

Oil prices rose again Wednesday following a 4% surge the day prior, driven by mounting concerns that the ongoing Iran-Israel conflict could disrupt global oil supplies. Brent crude edged up 0.25% to $76.64 per barrel, while U.S. WTI rose 0.31% to $75.07. The U.S. is reinforcing its military presence in the region as President Trump demanded Iran's "unconditional surrender" on day six of the conflict. A collision and fire involving two oil tankers near the Strait of Hormuz added to market anxiety, especially amid reports of electronic navigation interference. Though Iran is OPEC’s third-largest producer, analysts believe other members could offset any potential output loss. Meanwhile, uncertainty around the conflict and slowing global growth could push the Federal Reserve toward an earlier interest rate cut, despite inflationary pressure from rising oil prices.

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Diesel Prices Spike Globally as Israel-Iran Conflict Tightens Market

Diesel prices continued to surge on Tuesday amid heightened concerns over supply disruptions from the Israel-Iran war, with European benchmark futures trading at a $20+ premium to crude. Tight global inventories, including two-decade lows in U.S. diesel stockpiles and refinery outages in Spain and the U.K., have compounded the pressure. The Middle East, now a critical supplier after Europe moved away from Russian diesel, faces rising delivery costs and logistical risks, especially through the Strait of Hormuz. An Israeli refinery shutdown and soaring shipping rates have already had direct market impacts. Traders are increasingly betting on tighter supply ahead, with diesel futures in steep backwardation, reflecting elevated short-term demand. Additional uncertainty looms with the EU’s proposed ban on products refined from Russian crude, potentially limiting diesel imports from India and Turkey.

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Frontline’s VLCC Catches Fire After Collision With Dark Fleet Tanker Near Strait of Hormuz

Frontline confirmed its VLCC Front Eagle caught fire after a collision with the Adalynn, a suezmax tanker linked to the "dark fleet," near Fujairah early Tuesday. All crew members aboard Front Eagle were reported safe, and no pollution has been detected, though the Adalynn suffered severe structural damage and a major fire. The incident occurred amid heightened regional tensions, but Frontline said the cause appears “navigational” and unrelated to the Iran-Israel conflict. The Adalynn, managed by Oceanpack and accused by Ukraine of dark fleet activity, was evacuated by the UAE Coast Guard. Experts point to increased GPS spoofing in the area as a likely contributing factor to the collision risk. Frontline CEO Lars Barstad reiterated his long-standing warning about the safety risks posed by the shadow fleet, calling for urgent global regulation and enforcement.

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VLCC Rates Surge as Tanker Owners Demand Risk Premiums for Middle East Voyages

Charterers are struggling to secure VLCCs in the Middle East Gulf as shipowners demand higher freight rates due to rising geopolitical risks from the Israel-Iran conflict. Spot rates surged to $51,700 per day, with some fixtures exceeding $57,000 daily, reflecting a tightening market where owners now have pricing power. Only a few fixtures were recorded early this week, amid growing safety concerns tied to shadow fleet activity and AIS spoofing, especially after a collision involving a Frontline VLCC near Fujairah. Meanwhile, the IEA forecasts global oil supply capacity to outpace demand by 2030, with Chinese consumption expected to peak in 2027 due to rising EV adoption. Despite falling investment, US output will remain the largest non-OPEC+ supply driver.

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Fuel Tanker Rates Skyrocket Amid Israel-Iran Conflict, Impacting Global Shipping Costs

Shipping costs for refined oil cargoes from the Middle East surged sharply on Tuesday as tensions between Israel and Iran heightened market uncertainty. Rates for transporting fuel from the Persian Gulf to Japan nearly doubled, reaching over $55,000 per day, according to Baltic Exchange data. Costs also climbed significantly on routes to East Africa and northwest Europe. Torm Plc, a major product tanker operator, noted strong demand for short-term cargoes centered on the Middle East, with possible knock-on effects in other regions if the trend continues. Some tanker operators have paused offering vessels as they evaluate the risks involved. The spike in shipping rates is expected to ripple through petroleum markets, impacting exports of diesel, naphtha, liquefied petroleum gas, and fuel oil from the Persian Gulf, which amount to millions of barrels per day.

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Formosa Plastics Eyes VLCC Orders After Booking MR Tankers in China

Formosa Plastics Marine Corp is expanding its tanker fleet with four new 50,000-dwt MR product tankers ordered from China’s state-owned Guangzhou Shipyard International at $48 million each, including premium coatings for hazardous cargoes. Deliveries are set for 2028. The Taiwanese shipowner, returning to China’s shipyards after eight years, opted for Chinese builders over higher-priced South Korean options. Formosa is also exploring the purchase of two new VLCCs (300,000-dwt), initiating price inquiries for a potential future tender. This comes as global interest in VLCC newbuilds rises, with competitors like Pan Ocean recently securing new orders. Formosa’s current fleet includes 12 MR tankers, 7 VLCCs, and various other vessel types, totaling 46 ships.

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Exxon, Chevron Win Brazil Oil Blocks in Environmentally Sensitive Amazon Basin

U.S. oil giants Exxon Mobil and Chevron have entered Brazil’s Foz do Amazonas basin, acquiring offshore blocks in an area considered both highly promising for oil and environmentally fragile. In a government auction, Exxon and Petrobras jointly secured 10 blocks, while a Chevron-led group, including China’s CNPC, acquired nine. The move sparked protests from Indigenous and environmental groups concerned about potential damage to ecosystems near the Amazon River's mouth. Despite the controversy, Brazil’s energy minister hailed the auction as a success and a step toward reducing poverty in northern Brazil. The Foz do Amazonas is geologically similar to oil-rich Guyana, adding to its exploration appeal. Although regulatory hurdles remain, Petrobras expects to receive drilling approval by the second half of July, increasing pressure on Brazil’s environmental agency to expedite permits.

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IEA: China’s Soaring EV Adoption to Trigger Early Peak in Global Oil Demand

The IEA now expects China’s oil demand to peak by 2027 — two years earlier than previously forecast — driven by rapid EV growth and cleaner transport like high-speed rail and gas-powered trucks. Global oil demand is projected to peak in 2029 and decline afterward, leading to a prolonged supply surplus. While India and emerging markets will drive future demand, the U.S. remains a key producer despite slowing investment. Some, like Vitol and Bank of America, predict demand will stay strong beyond 2030. OPEC sees longer-term growth but may struggle to maintain market share amid rising competition.