Economic Pressure Overrides Geopolitical Tensions in Oil & Bitumen Market

Highlights

1. Brent crude plunged to $61–65, steepest drop since 2021.
2. VG30 and VG40 bitumen in India fell by $7 and $8 respectively.
3. China’s industrial fuel demand weakened, impacting global oil outlook.
4. Iran port fire and currency dip add instability to bitumen prices.

Brent Crude Dips to $61–65, Marking Steepest Weekly Drop Since 2021

• During the past week, oil and bitumen prices reflected a strong downward trend, largely steered by economic rather than geopolitical factors. 
• Brent crude oil experienced a significant drop to the $61–65 range, marking its steepest weekly decline since 2021. 
• Singapore’s 180CST closed at $417, while bitumen prices were reported at $405 in Singapore, $385 in South Korea, and $370 in Bahrain. 
• In Europe, prices remained stable between $410 and $440. In India, VG30 and VG40 bitumen prices dropped by $7 and $8 respectively on May 1, a movement that aligned with falling oil prices and prevailing technical conditions.

China’s Industrial Slowdown Shrinks Share in Global Oil Demand Growth

• Despite heightened geopolitical tensions—ranging from scattered Israeli attacks on Gaza, Red Sea instability, to uncertainties in Iran-U.S. negotiations—the oil market showed minimal reaction. 
• Instead, economic fundamentals continued to dominate. The primary drivers of the price fall included rising oil inventories, expectations of increased production from OPEC+, and a notable decline in demand from China. 
• Contrary to earlier expectations for 2025, China's economy has recently slowed, with sharp drops in industrial fuel consumption, diminishing its share in global oil demand growth. These economic and structural factors appear to have overpowered any geopolitical influence on market behavior.

Iranian Currency Depreciation Causes Price Volatility in Bitumen Sector

• Adding to the market complexity, several key developments surfaced. In the U.S., President Trump’s second term was marked by intensified sanctions on Iran, a trade war with China, and pressure on OPEC+ to curb oil prices, along with unwavering support for Israel. 
• Meanwhile, a major diplomatic breakthrough came in the form of a new U.S.–Ukraine economic cooperation agreement. Signed after tense negotiations, the pact grants the U.S. access to Ukraine’s rare minerals, reinforcing its strategic interest in the region. Separately, in Iran, a tragic fire at the Shahid Rajaei port caused loss of life and significant damage to cargo, disrupting operations for two days. 
• Though the port has reopened, recovery is slow, and the full extent of the losses remains unclear. The incident, coupled with a depreciation of the Iranian currency, has led to inconsistent pricing trends in the country’s bitumen market.

Expert Opinion: Warn Oil Could Fall Below $60 if Imbalance Persists

The overall sentiment in the energy and bitumen markets remains bearish. Analysts caution that if the current supply-demand imbalance persists, oil prices could fall below $60. Bitumen prices, particularly in Iran, may see further volatility next week due to the aftermath of the port disaster and currency fluctuations.