Oil Prices Hold Steady Amid Global Shifts

As May draws to a close, uncertainty continues to shape the oil and gas industry. Geopolitical tensions, shifting production trends, macroeconomic pressures, and changing seasonal demand are keeping prices steady while reshaping global supply expectations.

This morning, Brent crude was trading around $65.28/b, down 25 cents, while WTI June futures sat near $64.60, with the more active July contract at $61.95/b. Although prices rallied briefly on Monday, they pulled back ahead of the WTI June contract expiry.

The market saw modest fluctuations after Iran’s Supreme Leader, Ayatollah Ali Khamenei, signaled that a nuclear deal with the U.S. is unlikely. This casts doubt on the potential return of 300,000–400,000 bpd of Iranian oil to the global market. While prices initially responded to the headlines, gains were quickly pared, as a broader sentiment turned cautious.

Markets also reacted to the surprise announcement from former U.S. President Donald Trump, who claimed ceasefire talks between Russia and Ukraine would begin “immediately.” While a resolution could eventually bring more Russian barrels to market, most analysts consider this scenario speculative and unlikely to alter short-term fundamentals.

Meanwhile, European Commission officials are proposing a tighter G7 oil price cap on Russian seaborne crude, currently set at $60/b, which would add further friction to Russian export flows.

In the U.S., the Permian Basin continues to show signs of cooling. Drilling and frac spreads are down 14% and 22% year-over-year, respectively, signaling tighter production activity. Producers have already trimmed 2025 capex guidance, and Goldman Sachs now expects U.S. Lower 48 crude production to decline by 400,000 bpd by Q4 2026.

ConocoPhillips CEO Ryan Lance added that U.S. shale output will likely plateau unless prices remain in the $65–$75 range. If crude drops into the $50s, he warns, investment could shrink significantly, affecting both supply and global energy reliability.

Following OPEC+’s recent decision to increase output by nearly 1 million barrels per day, Saudi Arabia is poised to burn more of its own crude for summer power generation. This shift is partially driven by record-high high-sulphur fuel oil (HSFO) cracks, making crude a more economical choice for domestic energy needs. Wood Mackenzie estimates Saudi crude burn this summer could reach 470,000 bpd, easing oversupply fears by keeping more barrels off the export market.

Weak macroeconomic data out of China, the world’s largest crude importer, is also pressuring sentiment. Sluggish industrial output and soft retail sales raised concerns over near-term fuel demand. However, Goldman Sachs pointed to a late-week rebound in China trade flows, partially driven by a 90-day tariff pause between the U.S. and China, offering a glimmer of optimism.

Currently, the oil industry is caught in a tug-of-war between bearish supply signals and bullish geopolitical developments. With U.S. shale retrenching, OPEC+ supply adjustments underway, energy markets are undergoing a realignment that may cap price volatility in the short term, though uncertainty remains high.