Oil Price up as FEAR of the Tariff War is fading

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Optimism Returns to Oil Markets
By Michael Kern - Jun 10, 2025, 10:00 AM CDT

It appears that optimism is finally returning to oil markets due to a promising U.S. jobs report and signs that the China-U.S. trade war may soon start thawing.

- According to industry consultant Wood Mackenzie, the US Gulf of America (also known as the Gulf of Mexico before President Trump) will become the US’ main driver of oil supply growth this year.

- Whilst shale drillers are cutting back on exploration and the drilling of new wells as breakevens are close to the Permian’s $62-63 per barrel breakevens, the Gulf of America enjoys a much healthier breakeven of $30-40 per barrel.

- Moreover, Chevron’s most recent offshore additions are breaking even as low as $20 per barrel, with projects such as Ballymore (75,000 b/d capacity) no longer requiring a separate platform and tying back into existing infrastructure instead.

- Lack of exploration might impede future growth in the Gulf of America as licensing was virtually non-existent in Biden years, with the last big discovery coming from Shell’s 2017 Whale find, but the GoA will enjoy a sweet couple of years ahead regardless.

Market Movers

- US oil major ExxonMobil (NYSE:XOM) reported two new discoveries offshore Canada’s Newfoundland, boosting reserves in the Hibernia and Hebron production clusters by 75 million barrels.

- US investment firm Glenfarne Group attracted interest from more than 50 companies for contracts exceeding $115 billion for its Alaska LNG project, with an FID expected in Q4 2025.

- Italian oil major ENI (BIT:ENI) signed an agreement with Argentina’s YPF to become a strategic partner in the 30 mtpa Argentina LNG project, seeking to start exporting shale gas from Vaca Muerta by 2030.

Tuesday, June 10, 2025

Oil markets have responded positively to US-China talks in London, expecting a recovery in rare earth metal flows and global trade barriers. ICE Brent has been surprisingly stable above $67 per barrel this week so far, still buoyed by macro tailwinds following last week’s positive US jobs report that set up the Fed for an interest rate cut soon.

EU Unveils Yet Another Sanctions Pack Against Russia. The European Union proposed new sanctions on Russia’s Nord Stream pipeline, a lower oil price cap that would see a drop from $60 per barrel to $45 per barrel, as well as additional bans on 22 Russian banks in its 18th sanctions package.

China Offers Rare Earths Olive Branch to EU. China’s Commerce Ministry said it is willing to accelerate the approval of rare earth exports to EU companies, just as trade talks between Beijing and Brussels on Europe’s treatment of Chinese EV cars have entered their final stage.

US Bans Exports of Nuclear Components to China. The US Department of Commerce reportedly informed nuclear equipment suppliers that their contracted sales to China’s power plants would now be subject to government restrictions, impacting companies like Emerson and Westinghouse.

Chinese Oil Imports Dip on Turnarounds. China’s crude oil imports declined to 10.97 million b/d in May, a 3% month-on-month drop compared to April and yet another year-on-year decrease, as seasonal maintenance works, restricted Iranian imports, and high Saudi formula prices cut demand.

The Fight Is on for Namibia Oil. Defying recent write-downs from Shell’s Graff discovery, French oil major TotalEnergies (NYSE:TTE) is reportedly poised to outbid rivals such as Petrobras for a huge stake in Namibia’s Mopane discovery as Portugal’s Galp (ELI:GALP) is seeking a farm-in.

Solar Firms Start to Fall Like Dominoes. The US renewable energy industry is bracing for impact after residential solar company Sunnova Energy filed for bankruptcy Monday, fresh on the heels of a Chapter 11 filing of rooftop solar lender Solar Mosaic, amidst fears that there will be more to come.

Early Monsoon Slashes Asia’s LNG Appetite. With the monsoon season arriving in most parts of India, Thailand, and southern China two weeks ahead of its normal date of onset, lowering temperatures across the region, lowering LNG demand, and prompting India’s GAIL to resell 2 cargoes.

Germany Locks In Azeri Gas. Germany’s SEFE signed a 10-year pipeline supply deal with Azerbaijan’s national oil company SOCAR for 1.5 Bcm per year, starting from 2026, the company’s first pipe deal since Berlin nationalized Gazprom’s German subsidiary.

Platinum Prices Soar on Tight Supply. Spot platinum prices rose for the sixth straight session on Monday, reaching their highest level since May 2021 at $1,200 per ounce after a stellar 33% bull run this year to date, amidst fears of tight supply as 2025 is expected to record a 1 million ounce deficit.

Japan Imports First Russian Oil in Three Years. Japanese refiner has purchased a cargo of Russia’s Sakhalin Blend, the East Asian country’s first imports of Russian oil since the beginning of 2023, with the US exempting imports from the Sakhalin 2 until June 28 as Mitsui holds a 12.5% stake in it.

UK Doubles Down on New Nuclear. The government of the United Kingdom vowed to invest $19.3 billion to build the Sizewell C nuclear plant in southeast England, the second new nuclear unit to be built in two decades, with EDF’s Hinkley Point launching in 2029.

Nigeria to Get Giant Saudi Oil-Backed Loan. Saudi national oil firm Saudi Aramco (TADAWUL:2222) is in the final stage of extending a $5 billion oil-backed loan for Nigeria, although lower outright oil prices sparked price risk concerns amongst underwriters.

By Michael Kern for Oilprice.com