Oil prices have remained elevated at the start of this week despite expectations that OPEC+ will approve another big production boost for September.
– Diesel was widely expected to be the main refined products underperformer this year but, defying Trump tariffs and lower Chinese demand, the middle distillate has been shining lately as Europe struggles to keep its refinery operations steady.
– The front-month diesel East-West price spread rose to more than $73 per metric tonne this week, the widest it has been since December 2023, just as the ICE gasoil crack soared to $23 per barrel.
– Several European refiners reported unplanned outages, including BP’s giant Rotterdam refinery, whilst the bankruptcy of the UK’s 113,000 b/d Lindsey refinery raised concerns the United Kingdom could experience fuel shortages over the upcoming weeks.
– On the other hand, Asian diesel prices have been relatively stable since the Israel-Iran conflict subsided, creating huge financial incentives to move Asian or Middle Eastern middle distillates to Europe, in turn mitigating the impact of supply disruptions.
Market Movers
– UK-based energy major Shell (LON:SHEL) has lowered expectations for its Q2 commercial performance, giving an output guidance of 900-940,000 boe/d and LNG production of 6.4-6.8 million tonnes LNG.
– Algeria’s national oil company, Sonatrach, signed a $1.35 billion hydrocarbon exploration deal with Italy’s ENI (BIT:ENI) to develop the Zemoul el Kbar oil field for the next 30 years under a production sharing contract.
– China’s national oil company CNPC (SHA:601857) has opened a representative office in Madagascar, suggesting state-owned Chinese firms will be bidding into the yet unannounced 2026 licensing round.
– The world’s largest container shipping company MSC is facing a high-profile lawsuit in India after authorities in the state of Kerala assessed oil spill damage from the capsizing of the ELSA 3 ship at $1.1 billion.
Tuesday, July 08, 2025
Oil prices have barely noticed OPEC+’s overtly aggressive policy of unwinding its production cuts, with ICE Brent remaining around $70 per barrel and even attempting a short price rally after the Houthis resumed striking commercial tankers in the Red Sea. Crude oil could remain rangebound for longer now that US President Trump postponed the July 9 negotiations deadline to August 1, giving some breathing space for oil companies in the meantime.
OPEC+ to Finish the Job in September. Following a surprise 548,000 b/d production hike agreed for August, OPEC+ countries are expected to approve another big production boost for September as they complete the full unwinding of 2.2 million b/d of production cuts, starting in April 2025.
The Houthis Strike Again. Two crew members of the Greek-operated bulk tanker Magic Seas were wounded, and two were missing following a suspected Houthi drone attack in the Red Sea, jeopardizing navigation through the Suez Canal again as Yemen’s militia claims to have sunk the ship.
Canada Wants a New Pipeline, But Who’s to Pay? The new Carney administration in Canada is eager to support a new pipeline connecting Alberta’s oil sands to the country’s Pacific coast, mirroring TMX, although the Natural Resources Ministry bemoaned the lack of commercial interest.
Glencore Keeps Bankrupt Refinery Alive. Amidst concerns that the UK’s bankrupt Lindsey refinery, heretofore operated by Prax, will be forced to shut down in less than three weeks with its 1.8 million barrels of oil in the tank, the UK government agreed to a bridge supply deal with the trading major Glencore.
Russia-Loading Ships Keep on Getting Bombed. The ammonia-carrying tanker Eco Wizard became the sixth tanker this year to have incurred damage after or during loading operations in Russia, with the Eurochem-chartered ship leaking ammonia into water after two blasts hit its engine room.
Cyprus Signals New Giant Gas Discovery. Cyprus’ government indicated ExxonMobil’s (NYSE:XOM) recent Pegasus-1 offshore well encountered a whopping 350 meters of gas-bearing reservoir in Block 10, prompting the island state to hold talks with the US major about future development plans.
China’s Power Consumption Hits Record High. According to China’s National Energy Administration, Chinese peak power load soared to an all-time high on July 4, reaching 1,465 GW or some 150 GW higher than a year ago, boosting gas power burn as extreme heatwaves scorch the country.
India Pitches Higher LPG Imports from US. As part of India’s proposals to seek trade alignment with the Trump administration, Delhi proposed to source at least 10% of the country’s cooking gas (LPG) needs from the US, equivalent to roughly 2 million metric tonnes of propane and butane.
Glencore Divests Struggling Filipino Smelter. Swiss-based global energy trader Glencore (LON:GLEN) sold its Pasar copper refinery in the Philippines to local real estate billionaire Manny Villar Jr., several months after it placed the smelter on care and maintenance amid a severe pricing crisis.
EU Approves Flexible Storage Targets. The European Parliament gave a green light to the EU’s revised gas storage targets, under which member states will be allowed to reach the 90% filling target at any point from October to December, getting rid of a stringent November 1 deadline.
BP Mulls Complete Libyan Return. According to Libya’s NOC, UK oil major BP (NYSE:BP) is set to reopen its office in Tripoli in Q4 2025 and double down on exploration in the country, preparing to drill the deepwater Matsola well in October, potentially this year’s largest gas discovery.
Trump Calls It Quits on Renewable Subsidies. Following the approval of Donald Trump’s One Big Beautiful Bill Act (OBBBA), the US President directed the Treasury Department to phase out tax credits for wind and solar projects, ending all federal support for unfinished projects after 2026.
Booming Chile Supply Caps Copper. LME copper cash settlement prices fell back below the 10,000 per metric tonne threshold as inventories started to rise for the first time this year, buoyed by Chile selling 4.67 billion worth of copper in June, its best month of export revenue so far this year.
By Michael Kern for Oilprice.com
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