Oil Prices Dip as Market Awaits OPEC+ Output Decision and U.S.-Iran Talks Resurface

Oil prices fell slightly in thin trading ahead of an OPEC+ meeting, where eight member countries are expected to agree on another output increase of 411,000 bpd for August. Brent crude closed down 50 cents (0.7%) at $68.30 a barrel, while WTI also fell 50 cents (0.75%) to $66.50, amid sparse activity due to the U.S. Independence Day holiday. Analysts warn that further output hikes may swell global oil inventories in the second half of the year. Market sentiment was also weighed down by reports that the U.S. may resume nuclear talks with Iran, potentially easing sanctions and boosting Iranian oil exports. Investors are in a wait-and-see mode, also eyeing President Trump’s major tax and spending package and looming uncertainty over U.S.-EU tariff policy. Despite short-term pressure, Barclays raised its Brent crude forecasts to $72 for 2025 and $70 for 2026, citing improved demand outlook.

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OPEC+ Considers Larger August Oil Output Hike Amid Market Share Push

OPEC+ may decide to raise oil production for August by more than the current 411,000 bpd monthly increase, according to sources familiar with the matter. Eight key members — including Saudi Arabia, Russia, and the UAE — are set to meet online on Saturday to finalize the policy. The group began reversing its 2.2 million bpd output cut in April and has so far added 411,000 bpd in May, June, and July, totaling 1.37 million bpd, which is 62% of the original cut. Kazakhstan's recent overproduction, which reached an all-time high due to the Chevron-led Tengiz field ramp-up, has sparked internal tensions. Some sources believe the 411,000 bpd increase might still be approved, but a larger hike remains on the table. OPEC+ aims to regain market share amid rising competition from other producers, particularly the United States.

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Saudi Arabia Surprises Market with Oil Price Hike Amid Rising Output Confidence

Saudi Aramco raised the price of its flagship Arab Light crude for Asian buyers in August by $1 per barrel—significantly more than the expected 65 cents—signaling strong confidence in market demand. The increase to $2.20 above the regional benchmark comes as OPEC+, led by Saudi Arabia, plans to raise production by 548,000 bpd next month. This move accelerates the unwinding of 2.2 million barrels per day in voluntary cuts, a process now expected to finish a year earlier than scheduled. Despite geopolitical tensions and brief price spikes above $80 per barrel, crude prices have settled below $70 following a U.S.-brokered ceasefire between Iran and Israel. Analysts, including JPMorgan and Goldman Sachs, forecast a potential oil surplus later in the year, with prices possibly dipping to around $60 per barrel as demand cools post-summer.

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Navios Maritime Partners Terminates Contracts with VS Tankers Following U.S. Sanctions

Navios Maritime Partners is ending bareboat charters with Iraqi-controlled VS Tankers after U.S. Treasury sanctions targeted VS Tankers and related companies accused of disguising Iranian oil as Iraqi crude. The charters, involving the 313,000-dwt VLCCs Erbil and Baghdad, were part of a 2020 deal with Dubai-based VS Tankers (formerly AISSOT) and included sanctions clauses enabling contract termination. Although the Erbil and Baghdad themselves were not individually sanctioned nor involved in Iranian oil trade, Navios is moving swiftly to exit these agreements. The vessels, owned by Japanese company Shoei Kisen Kaisha, were chartered at $27,800 per day, with a separate three-year time charter deal at $53,800 per day made by Chinese firm Unipec. Additionally, Navios is expected to terminate management contracts for two other VS Tankers-managed VLCCs, Hillah and Basra. The sanctions and resulting contract terminations represent a significant disruption for VS Tankers amid increased scrutiny of Iranian oil shipments.

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Platts Removes Three Malaysian Floating Storage Units from Singapore Fuel Oil Pricing Process

S&P Global Platts has excluded three floating storage vessels—CS Innovation, CS Prosperity, and CS Brilliance—from its Market on Close (MoC) price assessment process for Singapore fuel oil and bunker fuel, effective July 3. These vessels, located off Tanjung Pelepas in southern Malaysia, were removed after Platts reviewed concerns over market participants’ ability to trade offers involving them. The exclusion reduces the number of approved floating storage units in the assessment process from 14 to 11. Sources suggest the decision was influenced by feedback indicating the vessels were carrying fuel blends that may include supply from Russia, Iran, or Venezuela—countries subject to western sanctions. The vessels are operated or managed by companies registered in the Marshall Islands and Panama, which have limited public contact information. Platts did not comment on the possible sanctions-related reasons behind the removal.

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Russian Urals Oil Discount to India Narrows to Smallest Since 2022 Amid Strong Demand

The discount on Russian Urals crude oil shipped to Indian ports for August delivery has tightened to $1.70–2 per barrel below dated Brent, the smallest gap since 2022, driven by high demand and shrinking spot supply. In July, the discount ranged from $2 to $2.50 per barrel, signaling a rising price for Urals oil despite Western sanctions and a $60 per barrel price cap. India and Turkey, the largest buyers of Urals crude, continue to support prices with Turkey’s imports reaching their highest since May 2024 in June. However, Urals loadings are expected to decline in July and August due to higher Russian refinery runs and a maintenance shutdown at the Sakhalin-1 oil project. Many Indian refiners are finding spot market supplies tight as large volumes are tied up under a long-term deal between Reliance Industries and Rosneft. To enhance energy security, India is also exploring three new strategic oil reserves.

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UK’s Lindsey Refinery Avoids Immediate Shutdown with Limited Glencore Crude Deal

The insolvent Lindsey oil refinery in the UK has secured a limited crude supply agreement with Glencore, allowing it to continue operations temporarily, the UK energy ministry confirmed. Located on Britain’s northeast coast, the 113,000 bpd refinery faced imminent shutdown after entering insolvency, with control handed to an official receiver. The deal reportedly only includes 1.8 million barrels already in storage, which consultancy Wood Mackenzie estimates could sustain the refinery for up to three weeks. There is currently no agreement for future crude deliveries, raising concerns about the site's long-term viability. Despite the crisis, the government assured that UK fuel stock levels remain normal. The UK remains a net fuel importer, averaging nearly 700,000 bpd of mainly jet fuel and diesel in 2024, while exporting around 370,000 bpd, one-third of which is gasoline.

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Petroecuador Declares Force Majeure as Pipeline Suspensions Cut Production by 133,000 bpd

Ecuador’s state oil company, Petroecuador, declared force majeure on all operations, including crude exports, after heavy rains forced suspension of two key pipelines—SOTE and OCP—threatening critical infrastructure in the Amazonian Napo province. The suspensions led to a crude production drop of approximately 133,000 bpd. To safeguard assets, Petroecuador has begun shutting down oil wells in the affected region. The erosion causing these disruptions started in 2020 along the Coca River and has since worsened, endangering oil infrastructure, roads, and the Coca Codo Sinclair hydroelectric plant. Temporary bypasses are being constructed to resume pipeline flow, while permanent rerouting studies are underway to prevent future impacts. The situation underscores significant operational risks to Ecuador’s oil sector from environmental factors.

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Suezmax and Aframax Tankers Poised to Benefit from South Sudan Crude Export Rebound

Sudan and South Sudan's crude exports now make up roughly 14% of all Red Sea oil shipments, with resumed flows of Dar and Nile blends offering new opportunities for suezmax and aframax tankers. The recovery in exports is attributed to technical pipeline repairs—not political resolutions—following disruptions caused by Sudan’s ongoing civil war. Nearly 60% of the volumes have been loaded onto aframaxes, with the rest handled by suezmaxes, and primary destinations include the UAE and Malaysia. The 158,450-dwt suezmax Toska (built 2024) was among the first vessels to load after the lifting of force majeure. Analysts say if the pipeline network remains stable, this trade could provide sustained employment for tankers in the Red Sea region. Despite this positive development, Clarksons reported a recent decline in daily earnings: suezmaxes averaged $38,100/day (down 17% week-on-week), while aframaxes fell to $30,300/day (down 8.3%).

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Crude Cannibals Return: Okeanis VLCC Loads Gasoil on Backhaul, Pressures Product Tanker Market

Crude tankers, particularly VLCCs, are re-entering clean product trades, as shown by Okeanis Eco Tankers’ 319,000-dwt Nissos Keros (built 2019) loading gasoil for TotalEnergies in the Middle East Gulf after delivering U.S. crude. This "backhaul" strategy allows crude carriers to profit on their return voyages, presenting renewed competition for traditional clean product carriers like LR2s. VLCCs and suezmaxes offer cost advantages due to economies of scale. Spot earnings for VLCCs on Asia-bound trips from the region are at $24,500/day, slightly below LR2s at $26,800/day. Though the trend had subsided by Q1 2025—with Hafnia noting crude tankers handled just 1–2% of product cargoes—owners like Okeanis have resumed repositioning large vessels for refined cargoes. Analysts now warn of a partial return to “cannibalisation,” as crude tankers encroach once again on product tanker territory during weak crude freight conditions.

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Samsung Heavy Industries Expands Shipbuilding Reach into Vietnam via PetroVietnam Partnership

Samsung Heavy Industries (SHI) has partnered with state-owned PetroVietnam to expand its shipbuilding capacity by enabling PetroVietnam’s shipyard (PVSM) to build tankers up to suezmax size. The cooperation focuses on technology transfer, workforce training, and modernizing Vietnam’s shipbuilding industry through SHI’s advanced skills and detailed assembly plans. This strategic alliance mirrors SHI’s prior approach in China with PaxOcean Zhoushan, where SHI subcontracted newbuildings rather than making direct investments like competitors Hyundai and Hanwha Ocean. The collaboration aims to strengthen PVSM’s capabilities and enhance Vietnam’s position in global shipbuilding without SHI making direct capital investments.