Commodity Context

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Commodity Context
Commodity Context
Oil Context Weekly (W26)

Oil Context Weekly (W26)

Crude prices plummeted and the belly of the curve once again sank into contango as the Iran risk bubble popped, while prompt spreads strengthened further as tight markets persisted despite all odds.

Rory Johnston's avatar
Rory Johnston
Jun 27, 2025
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Commodity Context
Commodity Context
Oil Context Weekly (W26)
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Happy Friday, Oil Watchers!

Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.


In the latest episode of the Oil Ground Up Podcast, I spoke with Matt Reed, Vice President at Foreign Reports and one of my favourite people with whom to discuss Middle Eastern geopolitics and OPEC, to explore the motivations behind Israel's strikes, the U.S. response, and the reactions from Gulf Cooperation Council (GCC) countries.


Become a paid subscriber today to get the full Oil Context Weekly report every Friday and join me in my hunt for ever-deeper oil market context.

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Summary

Flat Prices fell nearly $10/bbl on the week and almost $14/bbl from Monday morning’s highs following the rapid de-escalation of the Israel-Iran-[US] war, with virtually all of that happening on Monday through Tuesday morning before Brent hugged tight to the $68/bbl mark for most of the rest of the week.

Timespreads at the front of the curve collapsed alongside flat prices on Monday before grinding higher through the week; the belly of the curve has, once again, slumped to reconstitute the rare smiley-faced curve discussed in Oil’s Wrinkle In Time.

Inventories data was mixed but the overwhelming focus remains on both continued aggressive stateside crude draws—which pushed US crude stocks to their lowest seasonal level in a decade—as well as still-plunging inventories of diesel, which fell across all three major tracked product hubs and are at extremely low levels in the US.

Refined Products markets continue to be dominated by the idiosyncratic strength of diesel crack spreads, which rose with the Iran shock but haven’t managed to fall back to earth (like crude) thanks to the combination of low stocks and lingering demand strength linked to regional Israel-Iran disruptions.

Market Positioning data confirmed that, as expected, speculators were large net sellers of crude futures and options contracts; the net reduction was only half as large as the gigantic liquidation in early April but was driven by more than twice the shorting volume as bearish bets were reinjected into the belly of the crude curve.

As Well As the popping of the Iran price bubble and murmurs of another “triple” 411 kbpd OPEC+ production hike for August.

What Happened This Week

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