Crude futures jumped about $5 per barrel on Friday after Israel launched airstrikes against Iran without U.S. support, stoking fear among investors that the conflict could spread to disrupt oil supplies in the Middle East. Oil traders viewed Israel’s attack as the most significant geopolitical event since Russia launched its full-scale invasion of Ukraine, with crude prices closing at their highest level since March 2022.
BKR Rig Count | The total active drilling rigs in the United States decreased by 4 last week, to 555. Oil rigs dropped by 3 to 439, and gas rigs decreased by 1 to 113. Rig count in the Permian Basin dropped by 2 to 273 | Jun 13 | BKR NAM Rig Count
US Crude Inventories, excluding those in the Strategic Petroleum Reserve (SPR), decreased by 3.6 MMbbl to 432.4 MMbbl (about 8% below the 5y average for this time of year). On the products side, gasoline increased by 1.5 MMbbl (2% below the 5y average). Distillate fuels increased by 1.2 MMbbl (17% below the 5y average). Total commercial petroleum inventories increased by 6.2 MMbbl | June 6 | EIA Weekly Report
Oil prices surged to their highest levels in over two months, driven by escalating tensions in the Middle East. US President Donald Trump's decision to relocate personnel from the region due to heightened security risks with Iran increased fears of potential supply disruptions late on Wednesday. On Friday after Israel launched airstrikes against Iran without U.S. support, fears raised among investors that the conflict could spread to disrupt oil supplies in the Middle East | June 13 | S&P, CNBC
Maritime chokepoints in the Middle East are going to tighten following Israel’s attack on Iran, but perhaps not in the Strait of Hormuz, the world’s busiest oil shipping channel. Multiple sources expect retaliation in the Red Sea, where roughly a third of the world’s seaborne crude passes daily. “Somewhat paradoxically, the risk of Iran trying to leverage its power to influence shipments through the Strait of Hormuz may have gone down, not up, if Iran sees the conflict as confined to Israel,” said Ole-Rikard Hammer, analyst at Arctic Securities. In May, Iran exported 1.8 mbpd of crude with June forecasted at 1.9mbpd for a five-year high, with much of that oil heading to China | Jun 13 | Upstream
Israel ordered the halt of the offshore Leviathan field operated by Chevron due to security concerns after it launched airstrikes against Iran, stopping supplies to import-dependent Egypt and raising concerns about fuel shortages there. The disruption to regional supply coincides with rising summer demand in Egypt. The North African nation sometimes has to resort to heavier use of fuel oil for power generation, if LNG is too expensive or at times of elevated demand. A prolonged period of lower Israeli supply may force Cairo to bring forward purchases of LNG, further tightening global markets. Gas prices in Europe rose as much 6.6% on Friday | June 13 | Bloomberg
Kazakhstan’s crude oil exports are set to hold near record levels again next month. Total exports of CPC Blend from Russia’s Black Sea port of Novorossiysk are expected to be between 1.65 mbpd and 1.75 mbpd in July. That would be close to — or could even surpass — the record of 1.7 million, set in February. The government says this year’s output will be higher than previously planned at 97 million tons, and it expects it to rise to 100 million tons in 2026 and to 105 million tons thereafter. Meanwhile, in the longer term, state-backed KazMunayGas National Co. is pushing for full development of the giant Kashagan oil field. About 90% of CPC shipments have Kazakh origin and the terminal handles about 80% of total crude exports from Kazakhstan. Russian contributes about 150,000 barrels a day | June 10 | Bloomberg
The European Commission has compiled a new package of sanctions targeting Russia's energy sector, including lowering the oil price cap on Russian oil exports from $60 to $45 per barrel, and banning future use of the Nord Stream gas pipelines. Oil exports still account for about a third of Russia’s government revenue. The EU also aims to sanction 77 more tankers linked to Russia’s shadow fleet, used to transport oil sold above the price cap, adding to the 342 vessels already sanctioned to date, and to ban imports of refined oil products made from Russian oil at plants outside of the EU. Companies in India and Turkey import large quantities of Russian crude and export diesel and other fuels to the European Union. In theory, refiners can buy cheap Russian barrels and sell fuels at the normal market rate — a boon for their margins | Jun 11 | Upstream, Bloomberg
The World Bank is reconsidering its ban on financing upstream projects, such as natural gas exploration and production, amid a push to bolster the power sector. On Tuesday, its board lifted a ban on nuclear power financing. President Ajay Banga called rising global electricity demand one of the most “urgent and complex development challenges.” While upstream gas investments are under consideration, there is “not yet agreement” from the Board and “further discussions” are needed, suggesting the bank is not pursuing a blanket reversal | Jun 12 | Upstream
Looking ahead
EIA Sees Oil Output Falling in 2026 in Blow to Trump’s Agenda | Output is now expected to slip to 13.37 million b/d in 2026 from about 13.42 million b/d from 2025, according to the EIA’s June Short-Term Energy Outlook. The production forecast for next year represents a drop of 120,000 b/d from the previous projections in May. Trump has said American oil producers would “drill, baby, drill” and declared an energy emergency early in his second term in a bid to boost production. But several shale companies have warned that weak oil prices would take a toll on output, with drillers including Diamondback Energy saying production has already peaked. With fewer active drilling rigs, US operators will drill and complete fewer wells through 2026. Already, the number of rigs drilling for crude in the US plummeted to the lowest in about four years as shale explorers brace for weakening global oil demand. US shale production will be about 11.09 million b/d next year, down from a previous projection of 11.25 million, driven by a slowdown in the prolific Permian Basin. In another sign of slowing activity in the shale patch, operators expanded their supply of pre-drilled wells for a fourth straight month, marking the longest streak of expansion for drilled-but-uncompleted wells since the early days of Covid five years ago. Meanwhile, offshore output is set to grow to 1.85 million b/d in 2026, up roughly 40,000 barrels from last month’s forecast, mitigating the impact of reduced activity in other crude-producing regions. Global oil demand for this year is expected to grow more slowly. Consumption will increase by 800,000 b/d to 103.5 million b/d, versus a previous forecast for demand to grow 1 million b/d. In another sign of a pending glut, the EIA also projects an inventory buildup of more than 800,000 b/d this year. That’s the largest since it began publishing an estimate for 2025, in January last year | June 10 | EIA PR
WoodMac, US Tariffs impact on energy in three scenarios | No energy sector planner will forget 2 April 2025, when President Trump announced ‘Liberation Day’ trade tariffs, upending years of investment planning. With a 90-day pause on reciprocal tariffs underway and uncertainty ongoing, companies must adapt to a shifting landscape. Wood Mackenzie’s latest Horizons insight outlines three tariff scenarios assessing impacts on the global economy and energy sectors—oil, LNG, power, renewables, and metals. The Trade War scenario (downside) is based on full tariffs averaging 30%, triggering a global recession with GDP 2.9% lower by 2030. The Trade Tensions scenario (middle) has tariffs rising to 10%, reducing GDP by 1.1% in 2030. The Trade Truce scenario (upside) has trade barriers returning to early 2025 levels, with GDP growing 2.7% annually through 2030. Oil is most vulnerable with lower GDP growth weakening demand while withheld OPEC+ supply returns. Under trade truce, Brent stays around low $70/bbl; under trade war, a supply glut drops Brent to $50/bbl in 2026 before partial recovery. LNG remains tight short-term as Europe rebuilds stocks despite weak Asian demand. From 2026, new supplies cause prices to fall under all scenarios, more sharply in a trade war with oversupply and weaker demand leading to unlifted cargoes. On the power markets, tariffs dampen US power demand growth from data center expansion and manufacturing revival. Uncertainty delays crucial investments in generation and infrastructure. Battery storage suffers most in a trade war due to China’s supply chain dominance; renewables face greater impact than conventional generation. Despite a tariff pause, President Trump’s move to raise steel and aluminum tariffs to 50% signals ongoing aggressive trade policy. WoodMac highlighted "We think trade tension is most likely, but it’s extremely difficult to call” | Jun 5 | WoodMac
