Markets

Saudi Arabia set the Official Selling Price (OSP) for its heavy grade for buyers in the Far East at $4.80/bbl above the Middle-Eastern benchmark for July—higher than the $3.00/bbl premium that had been in place for June but lower than May's record-high premium of $7.95/bbl (in data going back to 1970).

The steepest month-on-month jump among the grades and blends covered in the charts below was seen for the coking margin on a 50/50 blend of Louisiana Light Sweet and Heavy Louisiana Sweet in the US Gulf Coast (USGC).

Futures closing prices for European benchmark ICE Brent climbed by 6.4% from the end of March to the end of June, US benchmark NYMEX WTI rose by 5.5%, and Middle Eastern benchmark DME Oman edged higher by 3.3% over the three-month period.

The bears and bulls played tug-of-war throughout the week as traders shifted focus between ongoing concerns about aggressive fiscal policy causing an economic slowdown and ongoing concerns about tight supplies, with little indication that upstream output might increase any time soon.

NYMEX WTI and DME Oman futures prices lost ground over the week ending June 24 while ICE Brent was flat from the previous Friday as tightness on the supply side was overshadowed by concerns that a global recession could lead to demand destruction.

Crude futures prices were pulled down by concerns that aggressive fiscal tightening by central banks in the US, the UK, and Switzerland could lead to recessions in parts of the world.

Persistent projections that upstream producers as well as refiners will be unable to increase output rapidly enough to meet rising demand helped to push prices higher.

EU leaders finally hammered out an agreement to ban large volumes of Russian oil imports after weeks of negotiations.

The debate in Europe continued over how to get all EU member nations to agree to a bloc-wide ban on Russian oil imports, but sources indicated that the concerned parties were closing in on a deal during the week ending May 27.

Some analysts who are predicting a recession to occur either later this year or next year believe that the likely economic downturn would not be as severe as the 2008 or COVID-19-induced 2020 recessions, meaning that oil demand is likely to remain strong enough to support prices given the ongoing supply tightness.