The Officials

While Trump and co go about their crusade sanctioneering and blocking free movement of goods and oil, their efforts seem misplaced. Sources told us the most recent target of sanctions, Shandong Shenxing Chemical Co, had already transferred its assets and is simply a shell company. He’s got the spirit to take on China, he just keeps missing the mark!

Headlines can only go so far and the Americans can only cry wolf so many times before the market doesn’t listen anymore. Yet more threats of culling Iranian crude exports to “zero” had Brent up to over $66.70 this morning.
Even if some people are taking their foot off the gas ahead of the long weekend, that certainly wasn’t the case in this morning’s extra early Dubai window. Of course, it was Vitol making the most noise and lifting PetroChina offers all over the shop. If PC had a stall at the market, Vitol would have picked up the whole thing and walked off with it while PC’s back was turned hitting Gunvor and Totsa bids. This saw Vitol earn another 2 convergences with PC – which declared 2 Murban cargoes. But even that wasn’t enough for Vitol, which also went after Hengli and BP offers – Reliance also got caught in Vitol’s rampage. Even so, the premium slipped 10c to $1.90 today.

The Jakarta futures exchange will use The Officials Brent Index (OBI) assessments to settle futures contracts. The listing is targeted to start in July 2025. Please see link: https://www.linkedin.com/feed/update/urn:li:activity:7318195273757855744/
We said in this morning’s Asia report that a 245% tariff on Chinese goods would essentially be an embargo, but now Trump reportedly wants to enforce an actual embargo. Reports suggest the US wants to negotiate over 70 nations into not accepting Chinese good shipments passing through their ports. Do not underestimate the significance of this: it would hit almost all commodity markets – copper would be whacked, petchem demand would get torpedoed and oil demand would be gravely stunted. Trump loves building walls – unfortunately this one is a brick wall in the road of economic development. The more likely result, however, is that Trump is laughed off for the ludicrous suggestion this is.

245% tariffs… I have a bigger stick than you. It sounds scary, but who really cares? China-US trade is already dead as a dodo and 245% would essentially be an embargo. Maybe Trump’s just increasing the number, until it reaches the White House phone number and Xi will finally get the hint and call him to make a deal.

The financial market meltdown that had been tearing through the world over the past couple of weeks seems to have abated somewhat. Equity and bond markets both calmed down as Donald showed a rare glimpse of restraint. Is he ok? US equities managed to hold their recent gains having bounced off the Trump tariff lows of last Monday and the 10-year treasury yield firmed up to around 4.31%. Still elevated above April’s lows, but nevertheless moving in the right direction for Donald’s debt
The market is tired… and who can blame it. It’s been a rollercoaster couple of weeks. At least the tariff reprieve has given investors a moment’s pause to gather their thoughts. Brent even managed a second consecutive daily change of less than a buck! It ended the European session at $64.50/bbl down.

In keeping with the robust growth seen last week, exchange traded futures volumes across contracts and tenors showed a material increase in the week ending 11th April as seen in our momentum table. Elevated volatility among rising tariff concerns, recessionary risks and OPEC supply release saw Brent futures volumes growing dramatically last week. For the June tenor, WTI contracts experienced the greatest rise at 42%, while the July and August tenors saw the gasoil contract climb the most by 60% and 46% respectively.

An onslaught of Murban! After declaring 2 Murban cargoes to Vitol yesterday, PetroChina declared another pair to Vitol today. But that wasn’t all! Gunvor and Exxon both earned themselves a convergence with the Chinese mega seller today and PC granted each of them a Murban convergence as well. That was Exxon’s first of the month and April’s total convergence tally now stands at 18 cargoes, all from PetroChina – of which 12 to Vitol.

48 mil bbl! Mega! A huge set of Saudi allocations to Chinese refiners. A record breaker in fact, at least since The Officials publication began in June 2024. That’s a lot of crude shifting to the East. Rongsheng got the biggest share with a 15 mil bbl allocation but it was Unipec’s monthly change that grabs the eye: from only 3 mil bbl in April, they’ve surged to 14 mil bbl for May!

More forecasters are bringing down their price expectations. The latest was Golman Sachs who is seeing Brent averaging at $63/bbl over the rest of this year. The weight of the tariff dislocations will lower US’ GDP by 1.4% as seen by The Havard Business Review. This will naturally result in potentially less demand for oil while OPEC is boosting output. Team Trump appeared to want to soothe some worries and massage the market’s angst. But it has royally backfired as Lutnick’s comments on recategorization of tariffs by sector has poured gasoline onto the bonfire of confidence in American policy. First, Apple was surely kicking itself for chartering hundreds of tonnes of iPhones from India into the US to escape the tariffs before electronics were granted an exemption. Then, others were probably wishing they’d copied that move as Lutnick revealed a whole new way of categorising and segmenting tariffs into “buckets” that simply compounds the chaos of the original announcements. Talk of buckets makes us think of a child at the beach building a sandcastle to protect himself from the rising tide…

Things are getting ugly, folks! Angola just got whacked with a $200 million margin call by JP Morgan. The landslide begins with small stones and ends with the whole mountain collapsing… Even so, Team Trump continues to insist that the tariff plan is going well and the economy will be bouncing once the teething problems pass. Yeah, right… US Energy Secretary, Chris Wright, is wearing a tin hat, oblivious to reality. He called the market’s panic “misplaced”. But listen to him and you’ll hear that the long-term oil demand growth outlook is unchanged – get your head out of the sand!

The Asians were in a good mood this morning and the positive vibes spread to flat price, which rose from barely $63 at the open to above $64.30. But then China got fed up and slapped the US with 125% tariffs and prices fell back by $1! Multi-dollar swings within minutes are becoming the norm… Get to safety! Gold is flying and hit a new all-time high of over $3230/troy ounce this morning. Talking of flying, capital is taking flight from the US as investors panic about Trump tantrums and the bond market is in a full rout – see more on the next page!

Don’t worry everyone! It’s all “going to work out very well”. The man said so… And yet the Trumpster is pushing his enemies to make friends with his former friends. The EU and China are beginning negotiations to abolish tariff son Chinese EVs. How will Germany’s car industry survive an onslaught of cheap, competitive Chinese EVs without the protection of a nice tariff blanket? BMW, Mercedes-Benz and Volkswagen are surely quaking in their boots right now! They’re also still smacked with Trump’s 25% auto tariffs… International relations are all about tariff negotiations now. And promises to buy more US energy products keep raining down from countries keen to avoid tariffs. But US supply is being pulled in all directions! Domestic demand is growing, up over 1.7% y/y YTD, according to The Officials calculations based on EIA data, while the most recent data (referring to January) shows exports of crude and products down over 1% y/y and Kpler saw crude exports down nearly 4% YTD. As production is lacklustre and domestic demand is growing, where does Trump hope to find the extra slack to boost exports? It’s not like he can just drain the SPR to sell that abroad, as Cushing inventories are down almost 34% from their 5-year average – and that wouldn’t be popular anyway.

The ‘Trump indicator’ (also known as flat price) went on a barnstorming rally last night after the 90-day reciprocal tariff delay. Trading with Trump is like playing poker with somebody who goes all in on every hand and then suddenly folds when he realises just how close to the cliff he’s teetering. As long ago as… Tuesday… Trump rebuffed questions about tariff pauses to allow negotiations for reconciliation. Until Wednesday afternoon!

The Blink that Shook the World! Trump pauses most tariffs except against China. And Trump’s blink triggered massive short covering across markets from oil to equities. Trump wanted to buy the dip! “THIS IS A GREAT TIME TO BUY!!!” He told followers earlier today. He’s been spanked by the bond and equity market and to be fair by his moneyed followers who have lost trillions with his attack on free trade. The 90-day delay to the reciprocal tariffs (at 10%) made the market bounce – regardless of the upped tariffs on China to 125%. Brent jumped back up to $64.50 and US equities surged. There have been lots of bids buying the dip this week. However, nobody in the North Sea window wanted to do the same and we didn’t see a single bid! Nor was there an offer.

Folks, we crashed through to the FIFTIES!!! It finally happened! The first time since February 2021. Serious times ahead as the market signals a collapse in demand not oil but anything else! A trade war is a disaster for everybody. The front spread fell to 34c briefly this morning but after the September tenor, the structure fell into contango! It only took a global trade war of colossal scale kicked off by one man’s whimsy and fancy to smash the global economy! And China hit back with 84% tariffs on the US today.