July WTI crude oil (CLN26) closed up $4.80, or 5.49%, on Monday, while July RBOB gasoline (RBN26) closed up $0.0503, or 1.66%.
Iran’s Tasnim news agency reported that Iran’s government halted the exchange of messages with the U.S. regarding a draft ceasefire agreement, citing Israel’s stepped-up attacks on Lebanon.
Iran has consistently maintained that there would be no U.S.-Iran ceasefire without a truce in Lebanon, hardening the standoff between the two nations.
Some renewed hopes for a ceasefire emerged later in the day after President Trump said he had spoken with Hezbollah officials and Israeli Prime Minister Netanyahu.
Trump said both sides told him they would agree to stop attacking each other, and he claimed in a post that “talks are continuing, at a rapid pace” with Iran.
The International Energy Agency said in a monthly report released in May that global oil inventories declined at about 4 million bpd in March and April, and that the market will remain “severely undersupplied” until October.
Goldman Sachs estimates that crude output in the Persian Gulf has been curtailed by about 14.5 million bpd, and that the current disruption has drawn down nearly 500 million barrels from global crude stockpiles, which could hit a billion barrels by June.
Oil prices found additional support after Bloomberg reported that Russia banned jet fuel exports following Ukraine’s attacks on Russian oil refineries, which reached a record high in May.
Russia’s refinery runs in May fell 13% year-over-year to 4.58 million bpd, the lowest since October 2009, according to Bloomberg data, with U.S. and EU sanctions further curbing Russian oil exports.
On the bearish side, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September.
OPEC+ said it will boost its crude output by 188,000 bpd in June after raising production by 206,000 bpd in May, though any production hike now seems unlikely given that Middle East producers are being forced to cut output due to the ongoing conflict.
OPEC’s April crude production fell by 420,000 bpd to a 35-year low of 20.55 million bpd, underscoring the scale of supply disruption across the region.
Vortexa reported on Monday that crude oil stored on tankers stationary for at least seven days rose 8.8% week-over-week to 91.06 million barrels in the week ended May 29.
The most recent EIA report showed U.S. crude oil inventories as of May 22 were 2.0% below the seasonal five-year average, gasoline inventories were 5.5% below average, and distillate inventories were 10.8% below average.
Baker Hughes reported that the number of active U.S. oil rigs in the week ended May 29 rose by four to an 11-month high of 429 rigs, well above the 4.25-year low of 406 rigs posted in December.
