Morning Highlights: Oil Gains on Tariff Ruling, Venezuela Disruptions, and OPEC+ Uncertainty

Market Snapshot (as of 06:30 EST)

🔼 Brent (July): $65.30/b (+$0.40)

🔼 WTI (July): $62.18/b (+$0.34)

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Key Themes Today:

• U.S. court blocks key Trump-era tariffs, boosting market sentiment

• OPEC+ to meet Saturday, likely to agree on July output hike

• Chevron halts Venezuela ops, ending 290,000 bpd exports

• API reports large U.S. crude draw ahead of EIA release

• Russian crude flows could face fresh sanctions

• Gasoline inventories remain below 5-year average

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Key Drivers:

🔸 Tariff Ruling Lifts Risk Appetite

A U.S. trade court struck down broad Trump-era tariffs on imports, ruling the president had exceeded his authority. While not affecting industry-specific tariffs (like autos or steel), the move alleviated trade tensions, supporting global growth and oil demand.

SEB’s Bjarne Schieldrop: “Less tariff headwind means more demand as the global economic engine runs more smoothly.”

City Index’s Matt Simpson: “Investors get a breather from the uncertainty they loathe.”

However, the Trump administration plans to appeal, making the relief potentially short-lived.

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🔸 OPEC+ Poised for July Output Hike

The OPEC+ alliance meets this Saturday, and expectations are coalescing around a third 411,000 bpd monthly output increase for July.

ING Analysts: “We expect similar hikes through Q3 as OPEC+ refocuses on defending market share.”

Russian officials say no final agreement has been reached, but market consensus expects more oil to return as the group unwinds the last of its 2.2 million bpd in voluntary cuts.

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🔸 Chevron Exit Rattles Venezuela Supply Outlook

Chevron has terminated operations in Venezuela, including 290,000 bpd of crude exports, after the Trump administration revoked its license.

The loss amounts to over a third of Venezuela’s total oil exports.

Chevron cargoes were already being cancelled in April over sanctions-related payment uncertainties.

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🔸 API Reports Surprise Crude Draw

Ahead of today’s official EIA report, the API estimated a large 4.236 million barrel draw in U.S. crude inventories for the week ending May 23. Analysts had forecast a 1 million barrel build.

API Inventory Summary (w/e May 23):

• Crude: ↓ 4.236M barrels

• Gasoline: ↓ 528K barrels (2% below 5-year avg)

• Distillates: ↑ 1.295M barrels (still 16% below avg)

• Cushing: ↓ 342K barrels

SPR inventories rose by 800,000 barrels to 401.3M, though still well below pre-withdrawal levels. The draw comes amid a seasonal pickup in gasoline demand, with refiners already tapping tight distillate stocks.

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🔸 New Sanctions on Russia, Wildfires in Canada

The market is also digesting reports of potential new U.S. sanctions on Russian crude flows, which could constrain global supply.

In Canada, wildfires in Alberta have led to evacuations and production shutdowns, though no specific volume losses have been confirmed.

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What’s Next:

• Today @ Noon EST: EIA Inventory Report

• June 1: OPEC+ Group of 8 (voluntary cutters) meet

• Ongoing: U.S.-Iran nuclear negotiations

• Watching: Trump admin’s appeal of tariff court ruling