Oil Prices Jump Above $118 as Supply Losses and Iran Tensions Intensify

Oil prices surged over 6%, with Brent crude settling at $118.03 per barrel and briefly hitting $120, while WTI rose 7% to $106.88. The rally is driven by stalled U.S.-Iran talks and supply disruptions from the Iran war, which have already removed over $50 billion worth of crude supply from the market. U.S. inventories further tightened, with crude stocks falling by over 6 million barrels versus expectations of just ~200,000 barrels, alongside declines in fuel supplies ahead of peak demand season. While the UAE exit from OPEC has limited short-term impact, it raises longer-term risks of oversupply and price volatility.

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Headlines

· Oil Prices Jump Above $118 as Supply Losses and Iran Tensions Intensify

· Trump Rejects Iran Deal, Maintains Blockade as Oil Surges Above $118

· Trump Welcomes UAE Exit from OPEC, Says Move May Ease Prices

· US Oil Exports Surge Above 6M bpd

· Pentagon: U.S. Iran War Costs Reach $25 Billion

· Iran Revives 29-Year-Old Tanker as Storage Crisis Deepens

· OPEC+ Eyes 188,000 bpd Output Hike

· Russia Stays Committed to OPEC+

· Hormuz Traffic Collapses to ~6 Ships Daily

· U.S. Moves to Forfeit Seized Iran-Linked Oil Tankers

· China Signals Cooperation on Jet Fuel Exports to Australia

· Oil Majors Return to Canada with $16.4B Shell Deal Amid Middle East Turmoil

· TotalEnergies Says Middle East Energy Flows May Take Up to Three Months to Normalize

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Trump Rejects Iran Deal, Maintains Blockade

Donald Trump said the U.S. will maintain its naval blockade on Iran until a nuclear agreement is reached, rejecting proposals to reopen the Strait of Hormuz. He described the blockade as more effective than military strikes, while reports suggest the U.S. is also preparing potential short-term targeted airstrike plans. The standoff has intensified pressure on Iran, limiting oil exports and pushing its storage and infrastructure toward critical limits. Iran has warned of “unprecedented measures” if the blockade continues, signaling rising geopolitical risks.

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US Crude Oil Exports Surge Above 6M bpd

U.S. crude exports jumped to a record over 6 million bpd, surpassing the previous ~5.3 million bpd peak, as buyers replace disrupted Middle Eastern supply during the Iran war. Total U.S. oil and fuel exports exceeded 14 million bpd, while domestic inventories dropped by over 13 million barrels, tightening supply further. Despite acting as a global backstop, the U.S. faces limits in sustaining exports, with gasoline prices rising above $4 per gallon and diesel over $5 per gallon.

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OPEC+ Eyes 188,000 bpd Output Hike Despite War Disruptions and UAE Exit

OPEC+ is likely to approve an oil output increase of about 188,000 bpd, even after the exit of the United Arab Emirates and ongoing supply disruptions. The move follows a previous 206,000 bpd hike and signals a “business as usual” approach despite the Iran war and the closure of the Strait of Hormuz. OPEC+ crude production averaged 35.06 million bpd in March, down 7.70 million bpd from February due to export constraints affecting key producers like Saudi Arabia and Iraq.

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Russia Stays Committed to OPEC+

Russia reaffirmed it has no plans to leave OPEC+ following the United Arab Emirates decision to exit after six decades of membership. Russia and Saudi Arabia remain the alliance’s key leaders, with officials stressing OPEC+’s role in stabilizing markets during the Iran war. Russia’s crude output stood at 9.167 million bpd in March, about 407,000 bpd below its allowed quota, limiting its incentive to leave the group. Despite concerns, other members are not expected to follow the UAE, though its exit could weaken OPEC’s ability to manage global oil supply.

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Goldman Sees UAE Exit from OPEC Boosting Medium-Term Supply to 4.5M bpd

Goldman Sachs said the United Arab Emirates exit from OPEC poses greater medium-term upside risk to oil supply than immediate impact. The bank estimates UAE production could reach over 4.5 million bpd by February 2026, above its base case of 3.8 million bpd by October 2026 and pre-war levels of 3.6 million bpd. Current output remains constrained by the closure of the Strait of Hormuz amid the Iran war, with cumulative Gulf supply losses projected at 1.83 billion barrels by end-2026. Meanwhile, ADNOC aims to expand capacity further to 5 million bpd by 2027, reinforcing longer-term supply growth potential.

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China Signals Cooperation on Jet Fuel Exports to Australia

China has agreed to cooperate with Australia on jet fuel exports, raising hopes of easing supply tightness caused by disruptions in the Strait of Hormuz. Australia—heavily reliant on imports and previously sourcing about one-third of its jet fuel from China—has faced shortages since the Iran war. Beijing had restricted fuel exports since March to protect domestic supply, but is now expected to approve around 500,000 metric tons of exports for May, nearly double April levels, though still below historical averages.

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Ukraine Hits 37,700-dwt Tanker with Drone Strike in Black Sea Escalation

Ukraine used two naval drones to strike the 37,700-dwt Marquise tanker in the Black Sea, about 210 km southeast of Tuapse. The vessel, sanctioned by the EU and UK, had its AIS turned off and was likely awaiting a ship-to-ship transfer when hit near its stern. The attack is part of Ukraine’s campaign to disrupt Russia’s energy trade, though it has raised safety and environmental concerns among regional states like Turkey.

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PDVSA Containing Fire at Cardon Refinery Cracker

PDVSA is working to contain a fire at the 310,000 bpd Cardon refinery, specifically at its fluid catalytic cracker, with no injuries reported so far. The incident occurred as the company attempted to restart units following recent power outages, underscoring persistent operational instability. The refinery had been running at only ~76,000 bpd, a fraction of capacity, reflecting broader issues of aging infrastructure and frequent disruptions. Such outages are common across Venezuela’s refining system, where power failures and maintenance challenges continue to limit fuel production.