Geopolitical Shifts and Supply Constraints Stir Volatility in Global Oil and Bitumen Markets

Key Highlights:

1. Brent crude fell to $64/barrel due to higher U.S. inventories and weak demand outlook. 
2. Bitumen prices rose in Singapore but dropped in India due to monsoon forecasts. 
3. Iran’s supply faces disruption from port explosion and power shortages.
4. OPEC+ to add 411,000 bpd from June, raising oversupply concerns.

Weekly Crude and Bitumen Price Overview

The global energy market saw mixed price movements over the past week. Brent crude oil prices declined, closing around $64 per barrel, mainly due to a larger-than-expected increase in U.S. crude inventories and reduced global demand forecasts by EIA and IEA.

In the bitumen segment:

1. Singapore 180CST increased by $6, reaching $441.
2. Bitumen prices in Singapore and South Korea stood at $405 and $385, respectively.
3. Bahrain bitumen remained steady at $370, unchanged for two months.
4. In Europe, prices softened to a range of $380–$425.

In India, bitumen prices dropped by $1.5 on May 15, attributed to upcoming monsoon season and cash flow issues.

In Iran, prices are expected to spike due to operational disruptions, including power outages, energy shortages, and container unavailability caused by a Bandar Abbas port explosion.

Regional Supply Shifts and Demand Slowdown

• India's demand is tapering due to the approaching monsoon season, which typically slows construction activities. A further drop in prices may occur in early June if rains arrive sooner than expected.
• Iran faces severe supply constraints. Water and energy shortages, alongside frequent power failures, are impacting bitumen production, especially due to an expected vacuum bottom shortage. Export logistics have also been disrupted due to damaged containers, limiting availability in the export market.
• On a global scale, OPEC Plus announced a production hike of 411,000 barrels/day starting in June, which raises concerns of oversupply, despite OPEC's own reduced forecast for non-OPEC supply.

Geopolitical Events Impacting Energy Markets

• In the Middle East, escalating military action by Israel in Gaza has heightened geopolitical instability, raising concerns over the region’s energy infrastructure.
• Russia and Ukraine have resumed peace talks in Istanbul with Turkish mediation, but repeated ceasefire violations continue to strain progress.
• In the U.S., President Donald Trump, during his second term, announced partial sanctions relief on Syria and sealed over $1 trillion in deals with Gulf nations, focusing on energy, infrastructure, and security.
• A significant development came from U.S.-China relations, where both agreed to gradually reduce tariffs. However, the oil market has yet to react strongly, as global economic slowdown concerns and weak Asian demand weigh heavily on sentiment.

Market Expectations: Price Outlook Amid Volatility and Disruptions

The market is expected to remain volatile in the short term. Oversupply risks from OPEC+, monsoon-driven demand reductions in India, and logistical issues in Iran may create pricing imbalances. However, geopolitical tensions and constrained supply in specific regions could lend support to prices, particularly in the bitumen segment. Stakeholders should brace for fluctuating prices and regional disparities in the coming weeks.