Oil Hits Two-Week High on Lower U.S. Output Forecast and Red Sea Tensions

Oil prices climbed to a two-week high on Tuesday, with Brent crude settling at $70.15 per barrel (+0.8%) and WTI at $68.33 (+0.6%), following the EIA’s revised forecast lowering 2025 U.S. oil output to 13.37 million bpd. Renewed Houthi attacks in the Red Sea—including one that killed three crew members—have increased shipping risks and costs, supporting prices. U.S. President Donald Trump’s 50% copper tariff announcement added bullish momentum across commodities, while short covering above the key $70 Brent level further propelled oil upward. Refining margins strengthened, with the diesel crack spread at its highest since March 2024 and the 3:2:1 crack spread hitting a six-week peak. Analysts expect a 2.1 million-barrel draw in U.S. crude inventories last week, marking the sixth draw in seven weeks, compared to a 3.4 million-barrel draw the same week last year.

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Four Crew Killed, Several Wounded in Latest Houthi Attack on Greek-Operated Ship in Red Sea

Four seafarers aboard the Liberian-flagged, Greek-operated bulk carrier Eternity C were killed in a drone and speedboat attack 50 nautical miles southwest of Yemen’s Hodeidah port, marking the first deadly Red Sea shipping incident since June 2024. The vessel, carrying 22 crew (21 Filipinos and 1 Russian), was struck by sea drones and rocket-propelled grenades, leaving it adrift and listing; at least two other crew members were wounded, with one more injured crew member reportedly dying on board. This attack brings the total seafarer deaths from Red Sea assaults since November 2023 to eight, amid Houthi militia targeting ships linked to Israel in the Gaza conflict. Meanwhile, the Magic Seas, another Liberia-flagged, Greek-operated bulk carrier attacked hours earlier and reportedly sunk, had all crew rescued safely, according to Djibouti authorities. Shipping traffic in the Red Sea has dropped roughly 50% since Houthi attacks began, but maritime experts believe recent incidents will not drastically change current shipping routes amid ongoing elevated risks.

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EIA Cuts 2025 U.S. Oil Output Forecast Amid Price and Policy Uncertainty

The U.S. Energy Information Administration (EIA) now expects crude oil production to reach 13.37 million bpd in 2025, down from the previous forecast of 13.42 million bpd, due to falling oil prices and cautious producer activity. The forecast for 2026 remains unchanged at 13.37 million bpd, still marking a record high. The EIA raised its Brent crude price forecast for 2025 to $68.89 per barrel, up from $65.97, citing geopolitical risk premiums tied to U.S.-Iran tensions, though it expects prices to fall to $58.48 in 2026 amid global inventory builds. U.S. WTI prices are now forecast at $65.22 in 2025, up from $62.33, but seen dropping to $54.82 in 2026. Domestic oil demand is projected to rise slightly to 20.4 million bpd in 2025, holding steady into 2026.

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BP Delays Crude Unit Closure at German Refinery Amid Strong Diesel Market

BP has decided to keep operating a crude-processing unit at its Gelsenkirchen refinery in Germany, reversing a previous plan to shut it down in 2025 due to market profitability. While a vacuum distillation unit and visbreaker are still scheduled for closure, the crude unit and hydrotreater will remain online "for the time being," BP confirmed in a statement Tuesday. The decision comes amid high European diesel demand and refinery shutdowns across the Atlantic, which have tightened the fuel market. Gelsenkirchen is BP’s larger German plant and part of a broader asset sale strategy announced last year, which remains ongoing. The move also highlights the refinery’s resilience in facing high operating costs and rising competition from fuel imports from Asia and the Middle East.

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Dangote Refinery to Fully Shift to Nigerian Crude by End of 2025

Dangote Industries expects its 650,000 bpd refinery near Lagos to process 100% Nigerian crude by the end of 2025, up from 53% in June, according to Vice President Devakumar Edwin. In June, the refinery sourced 47% of its supply from the U.S., while currently processing 550,000 barrels per day. As long-term foreign supply contracts expire, Nigerian producers will sell more locally, aided by improved relations between the refinery, traders, and the government. The shift could eliminate the need for Nigeria — Africa’s largest oil producer — to import refined fuels, as the country becomes a net exporter. Dangote is set to receive five cargoes (about 5 million barrels) from Nigeria’s state oil company in both July and August, supporting the local transition.

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Black Sea Crude Flows Pivot to Europe as Rising Freight Rates Undermine Asia Trade

Kazakhstan’s CPC crude exports via Russia’s Novorossiysk remained robust in June, nearing record levels previously seen in February and March, according to Sentosa Ship Brokers. However, exports to Asia have dropped sharply since April, while June saw record CPC volumes redirected to Europe. Rising freight rates contributed to this shift, with suezmax and aframax spot rates reaching $35,700 and $29,200 per day respectively—down 13% and 10% from the prior week but still elevated from Q1 levels. The Brent-Dubai price spread exceeded $3 per barrel on June 18—the widest since September 2023—making CPC barrels less competitive in Asia compared to increasingly accessible Middle Eastern supply. Tonne-mile demand from CPC trades halved in June compared to March-April peaks, though global suezmax and aframax usage stayed within historical norms, with aframax tonne-miles hitting their highest monthly level since December 2023.

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UK Challenges Dozens of Suspected Shadow Tankers Monthly Over Insurance in Channel

UK maritime authorities have challenged 343 vessels — roughly 40 per month — since October 2024 over their insurance status while transiting the English Channel, amid concerns over shadow fleet tankers carrying Russian oil. The effort is primarily aimed at gathering intelligence for future sanctions, though detentions remain rare. One notable case, the LR2 tanker Ksena, was sanctioned after failing to disclose insurance details. EU data shows that around 20% of ships transiting the Channel during a recent three-month period also withheld insurance information. Despite increased scrutiny and monitoring powers, officials note that most vessels do provide insurance details when asked, and some, like the Marathon, have altered routes to avoid further challenges.

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Tankers International Sees Strong VLCC Market Ahead Amid Tariffs, Tensions, and Trade Shifts

Tankers International projects a strong second half of 2025 for the VLCC market, driven by geopolitical tensions, shifting trade patterns, and rising oil exports. Despite recent rate normalization following the Iran-Israel ceasefire, the firm expects demand to grow as OPEC+ unwinds production cuts and additional barrels enter global markets. Tariffs have redirected crude flows, especially from the U.S. to South America, increasing long-haul routes and boosting tonne-miles. Regional Middle East demand has temporarily masked rising output, but exports are expected to rise as seasonal consumption eases. Heightened tensions in chokepoints like the Strait of Hormuz and reduced sanctioned tanker trades into China may further tighten mainstream tanker supply, supporting rates.