## Oil Prices Surge as Trade Optimism Boosts Market Sentiment

Brent crude oil futures are on track to finish the week above the $66 per barrel mark, reflecting a notable boost of over 3% in the past week as hopes for renewed US-China trade talks lift market sentiment. Meanwhile, persistent geopolitical tensions and shifting risks from wildfires continue to contribute to supply concerns.

Amid escalating tensions between the US and Iran due to stalled nuclear negotiations, the US Department of Treasury has imposed new sanctions targeting 10 individuals and 27 entities from Iran. These recent sanctions come after Tehran's refusal to transfer its enriched uranium stockpile. Additionally, the Saudi Arabian oil company, Saudi Aramco, has reduced its July prices for Asian buyers by $0.20 per barrel for lighter crude grades and by $0.10 per barrel for Arab Medium, signaling strong demand and low regional inventory levels.

Canada's wildfire situation in Alberta showed some signs of improvement earlier this week with received rainfall but the threat of resurgence remains as forecasts predict heatwaves in June, keeping the supply risks pertinent.

The commodities market has also seen significant movements with copper prices climbing to their highest level in two months. The three-month futures contract on the London Metal Exchange (LME) surged to $9,810 per metric tonne, driven by dwindling inventories in LME-registered warehouses, which have halved since the start of the year.

In precious metals, spot silver prices have hit a 13-year high, surpassing $36 per ounce. This spike is attributed to strong industrial demand and silver's safe haven appeal, making it one of the standout performers of 2025 with a 24% increase so far this year.

Chinese independent refiners, known as teapots, have significantly reduced their intake of Iranian crude oil by around 20% from the 1.6 million barrels per day average recorded in the first quarter of 2025. This decline is primarily due to high asking prices rather than sanctions, with Iranian oil priced at a $3 per barrel discount to Brent.

In the US, regulatory hurdles have impacted ethane exports. Enterprise Products stated that the US Commerce Department denied their request to ship 2.2 million barrels of ethane to China, following a license application submitted immediately after receiving guidance from the Bureau of Industry and Security in May.

On the Russian front, discounts on its flagship Urals grade oil have narrowed, with July cargoes showing a discount of $2.25 per barrel to Brent. This adjustment comes as flat prices remain close to the $60 per barrel price cap level instituted in the wake of the Russia-Ukraine conflict.

Lastly, US LNG export operations have experienced a temporary dip, with feedgas flows to major LNG plants decreasing to 13.8 billion cubic feet per day in June. This decline is attributed to planned maintenance at the Sabine Pass LNG facility and preparatory activities for new units at the Plaquemines plant, impacting Henry Hub natural gas prices which are capped at $2.86 per million British thermal units.