Crude oil prices finished the week ending June 6 on a strong
note, with benchmark ICE Brent futures heading for a close above
$66 per barrel in a weekly gain of more than 3% – as fresh optimism
over potential US-China trade talks lifted market sentiment. China
ceased all imports of US crude in March but continues to source
from elsewhere; a far cry from the heady days of 2020 when Beijing
was importing 481,000 barrels per day (bpd) of US crude.
According to OilPrice, investors welcomed news that
diplomatic channels between Washington and Beijing appear to be
reopening albeit in the opinion of some, at glacial speed. As such,
though concrete outcomes remain uncertain, the prospect of resumed
negotiations helped buoy commodities markets, with Brent crude
responding favourably. However, ongoing geopolitical tensions –
particularly involving Iran and Russia – have helped to temper some
of the bullish enthusiasm.
Meanwhile, the already fragile US-Iran diplomatic track appears
to have broken down further and the effects this may have on
international supply chains and subsequently prices remains
unclear.
Of note on these price fluctuations, in the Middle East, Saudi
Aramco announced a modest reduction in oil prices for its Asian
customers. As such, prices for lighter crude grades were cut by
$0.20 per barrel, and Arab Medium was also reduced by $0.10 per
barrel; in effect pushing prices back down to the levels seen in
May. Aramco cited healthy regional demand as well as relatively low
inventory levels for the decision at this time.
North of the Aramco fields, meanwhile, tensions within Iraq also
made headlines affecting prices, as the national Oil Ministry
accused the Kurdish Regional Government of facilitating large-scale
oil smuggling OilPrice reports. While the US and China in
particular typically hold off on commenting on such issues –
Beijing citing its reluctance to get involved in domestic affairs –
there is some concern in Asia as to how this may play out even with
the figures said to be involved relatively small.
Baghdad estimates at least 150,000 bpd are being diverted
illegally. “We hold the Kurdish Regional Government legally
responsible,” said the Ministry, in a sharply worded statement,
underscoring the deepening rift between Erbil and Baghdad.
Meanwhile, China’s independent teapot refiners, often dependent
upon less popular suppliers for their own crude deliveries are
opting to reduce their intake of Iranian oil, with purchases
falling 20% from the first quarter of 2025. While the shift does
not initially appear to be driven by US sanctions, rather by high
pricing, Iranian crude is currently trading at a narrow discount of
around $3 per barrel compared to Brent; not quite enough to risk US
repercussions for most.
© 2025 bne IntelliNews, source Magazine
