The Commodities Feed: Oil falls further
Per the full note [ING Think], oil's fourth consecutive decline reflects market pricing of a full Strait of Hormuz reopening after the US-Iran agreement, with WTI touching its lowest since March and Brent below $83/bbl. The desk highlights that this supply-risk unwind is reinforced by China's refinery throughput falling 9.1% YoY to a three-year low, while US SPR stocks at 340mn barrels mark a 40-year trough, suggesting potential rebuilding ahead. No consensus data is available from internal coverage, and no upcoming calendar events are flagged, leaving the focus squarely on demand-side metrics and geopolitical follow-through.
What the desk is arguing
The desk argues that oil's selloff is structurally driven by the unwinding of geopolitical risk premium following the US-Iran deal, rather than a pure demand scare. The commentary notes that ICE Brent is trading below $83/bbl, more than 30% below its conflict peak, as expectations for a full Strait of Hormuz reopening shift the supply calculus.
Supporting this view, the note cites Chinese refinery throughput dropping 9.1% YoY to 53.7 million tonnes in May, the lowest since 2022, while US SPR inventories sit at ~340 million barrels—the lowest since 1983—implying that further withdrawals may slow as rebuilding begins. The desk implicitly rejects the alternative read that this is a global demand collapse, instead framing it as a normalization of risk and supply.
What the calendar says
No high-impact events are scheduled in the next 30 days, leaving price action to be driven by ongoing supply normalization signals.
Key takeaways
- 01Oil prices fell for four consecutive sessions on Strait of Hormuz reopening expectations; WTI at lowest since March, Brent below $83/bbl.
- 02China refinery throughput fell 9.1% YoY to 53.7mt in May, the lowest since 2022, on weak crude imports.
- 03US Strategic Petroleum Reserve declined to ~340mn barrels, lowest since 1983, with potential for slower drawdowns and stock rebuilding.
- 04Aluminium prices fell 4.4% to ~$3,380/t on easing supply concerns, while natural gas rose on LNG demand and cooler weather caps.
Market implications
Watch for continued downside in Brent below $80/bbl if the Strait of Hormuz fully reopens and Chinese import data remain weak. A break below $75/bbl would expose the March lows, with the SPR rebuild offering a potential floor.
Risks to this view
A re-escalation in the Middle East, particularly any disruption to tanker traffic through the Strait of Hormuz, could reverse the decline abruptly. Conversely, a sharper-than-expected slowdown in Chinese or global demand would accelerate the selloff.
Articles The Commodities Feed: Oil falls further 08:20 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices continued to decline on growing expectations that the Strait of Hormuz could reopen. Meanwhile, the US Strategic Petroleum Reserve remains at multi-decade lows following sustained drawdowns Ewa Manthey and Warren Patterson Energy – Oil declines on Hormuz reopening expectations Oil prices fell for a fourth consecutive session, with NYMEX WTI dropping to its lowest level since March on expectations of a full reopening of the Strait of Hormuz and a possible deal later this week. ICE Brent was trading below $83/bbl on Tuesday morning, leaving prices more than 30% below their peak during the height of the conflict.
China refinery throughput fell 9.1% year-on-year to 53.7mt in May, the lowest level since 2022. Year-to-date activity declined 2.2% over the first five months. The drop reflects weaker crude imports – at an eight-year low – due to disruptions from the Persian Gulf.
State-owned refiners operated at an average run rate of 66.3%, the lowest since late 2021. US Energy Department data shows the Strategic Petroleum Reserve has declined to around 340m barrels, the lowest level since 1983, following continued drawdowns as part of a 172m barrel release to ease fuel prices during the Iran conflict. With supply risks easing after the US-Iran agreement, withdrawals could slow, with a shift towards rebuilding stocks.
US natural gas prices rose for a second consecutive session, with front-month Henry Hub settling above $3.1/MMBtu. Gains were driven by stronger flows to LNG export terminals as facilities ramped up after maintenance, tightening domestic supply. However, forecasts of cooler weather limited upside by weighing on power demand.
Metals - Aluminium prices fall on easing supply concerns LME aluminium fell more than 4.4% day-on-day to around $3,380/t, its lowest level since late March, on expectations that the US-Iran interim agreement could allow shipments through the Strait of Hormuz to resume. While broad terms have been agreed, final details are still under negotiation, with reopening expected once a deal is signed on Friday. Even as disruptions ease, the recovery of production is likely to be gradual, with smelters needing time to secure inputs, stabilise power supply and restart operations.
Middle Eastern output – around 10% of global supply – fell 35% YoY in April, although higher production in China may partly offset losses. Additional downside risks include a potential release of regional inventories once the Strait reopens, as well as rising output from Indonesian smelters. NBS data shows China’s primary aluminium output rose 1.7% YoY to 3.9mt in May, supported by strong margins that encouraged higher smelter utilisation and partly offset Middle East disruptions.
Cumulative output increased 3.5% YoY to around 19.2mt over January – May. While production ramped up to support exports after the conflict began, further growth has been constrained by government capacity caps. In other metals, crude steel output declined 2.7% YoY to 84.4mt in May, largely due to maintenance at major mills.
Year-to-date production fell 3.9% YoY to 415.5mt over the first five months. Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London. She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore.
He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house… In this article Energy – Oil declines on Hormuz reopening expectations Metals - Aluminium prices fall on easing supply concerns
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