Oil Daily | U.S. Crude Hits Record in May; Middle East Price Surge Opens Asia WTI Arbitrage

【Global Oil Supply and Demand】

U.S. crude oil production reached a new monthly record in May 2025, averaging 13.488 million barrels per day, driven by Texas and New Mexico. Growth remains concentrated in a few states, highlighting diverging trends across regions, influenced by infrastructure and drilling programs.

The European Commission plans to pool demand for U.S. LNG purchases to meet its $750 billion energy trade deal with Washington, though the goal is deemed unrealistic due to constraints in U.S. energy export capacity and competition from Asia.

China certified 147 million barrels of shale oil reserves in the Fuxing shale play, aiming to boost domestic output. However, extraction remains challenging due to complex geology, representing only 1% of domestic production.

Rising Middle Eastern crude prices have opened an arbitrage window for West Texas Intermediate to flow to Asia, benefiting from lower freight costs and diversifying away from costlier Middle Eastern supply.

【Oil-Producing Countries Dynamics】

Saudi Arabia's economy grew nearly 4% in Q2, with non-oil activities driving growth. Rising oil production followed the unwinding of OPEC cuts, with the IMF forecasting continued growth backed by domestic and government-led projects.

【Latest Oil Policies】

Following a trade deal, Pakistan will import its first U.S. crude cargo in October, diversifying its predominantly Middle Eastern supply. The deal includes joint development of Pakistan's oil resources.

New Zealand reverses its 2018 ban on offshore oil and gas exploration, aiming to strengthen energy security and alleviate the cost of living crisis. The move is seen as a pragmatic step towards utilizing domestic reserves.

【Industry News】

Intense competition led Chinese solar power companies to shed a third of their workforce. Overcapacity caused bankruptcies and financial strain, prompting calls for industry consolidation and tighter quality standards to address these issues.

Cnergyico will import 1 million barrels of American crude, marking Pakistan’s first U.S. crude purchase, aimed at diversifying its supply and potentially leading to monthly imports.

【Company News】

Chevron will transfer part of its Venezuelan oil production to the Maduro government, following a U.S. sanction exemption. The deal involves royalty payments in crude, complicating U.S. efforts to prevent Venezuelan financial gains.

A California court ruled Phillips 66 must pay $800 million to Propel Fuels for stealing trade secrets to build a biofuels business. The ruling follows a lawsuit filed after Phillips 66's acquisition attempt proved to be a ploy.

【Others】

Interior Secretary Doug Burgum is optimistic about rising energy demand from AI data centers, predicting growth in the U.S. energy industry. He emphasizes increasing demand and cutting red tape to support shale producers.

Saudi Arabia may accelerate borrowings or defer investments in mega projects like Neom due to swelling deficits from lower oil export proceeds, requiring oil prices around $90 per barrel to balance its budget.