Middle East crude benchmark spot premiums for Oman, Dubai, and Murban have decreased, reflecting concerns regarding rising supply levels and demand. The pressure on supply intensified last week when eight members of OPEC+ decided to expedite their plan to unwind oil output cuts by raising production by 411,000 barrels per day in May.
This increase is roughly three times what was initially expected and corresponds to about 0.4% of the total global supply. On a different note, oil prices witnessed a slight rebound on Tuesday, climbing about 1% after hitting near four-year lows.
These changes came amidst worries that U.S. tariffs could catalyze a global recession that would ultimately harm oil demand. Analysts, however, continue to caution that there are several downside risks still present in the market.
In terms of cash dealings in Singapore, the premium for Cash Dubai against swaps fell by 3 cents to $1.25 a barrel. Notably, PetroChina plans to deliver two cargoes of June-loading Upper Zakum crude, destined for Gunvor and Vitol, following recent transactions.
Furthermore, there was a significant uptick in trading volumes for Brent crude futures and options on the Intercontinental Exchange (ICE), which surpassed records seen during the COVID-19 pandemic. This increase in trading activity reflects investor anxiety over a potential global trade war and rising OPEC+ production rates.
According to a Reuters survey, OPEC’s oil output decreased in March prior to a scheduled production increase, with Nigeria tapering deliveries to local refineries and declining supplies from Iran and Venezuela influenced by new U.S. sanctions. In a related development, the governor of Russia’s central bank, Elvira Nabiullina, indicated that the sharp decline in global oil prices caused by U.S. tariffs poses risks to the Russian economy.
Meanwhile, Vitol, the world’s leading energy trader, reported a net profit between $8 billion and $8.5 billion for 2024, a significant drop from previous years but still competitive in the market.