Oil prices surged $7 this week as Iran tensions, Hormuz risks, and weak signals from the Xi-Trump summit overshadow bearish OPEC and IEA demand forecasts.
Friday, May 15, 2026
In a week that started off with both OPEC and the IEA slashing their demand forecasts for 2026, oil prices are set for a hefty $7 per barrel week-on-week gain. The much-anticipated Xi-Trump summit in Beijing provided little hope for any short-term market normalization, turning out to be quite thin on commodity-relevant substance. Iran has added fuel to the oil market’s bullish cause by announcing it had ‘no trust’ in the United States and that it was ready to go back to fighting, denting hopes for a swift re-opening of the Strait of Hormuz.
OPEC Cuts 2026 Demand Forecast. Publishing its monthly oil market report this week, OPEC lowered its forecast for global crude demand growth in 2026 by some 200,000 b/d from a month ago, now predicting consumption to rise by 1.17 million b/d this year, hiking its 2027 outlook to 1.54 million b/d.
Brussels Wants to Tax Energy Companies. Energy ministers of European Union countries have started to discuss the creation of a regionwide tax on energy companies’ windfall profits from surging prices on the back of the US-Iran conflict, potentially replicating the UK’s 38% Energy Profits Levy that runs until 2030.
Cuba Warns of Impending Energy Collapse. The island nation of Cuba has run out of diesel and fuel oil, according to its energy minister Vicente de la O Levy, stating that the country is in a ‘critical condition’ with no reserves left, with its domestic output of 40,000 b/d covering only a third of Cuba’s needs.
UAE Expedites Pipeline Infrastructure Boost. The United Arab Emirates will accelerate the construction of a new oil pipeline bypassing the Strait of Hormuz to double its export capacity from the current 1.8 million b/d capacity, with national oil company ADNOC announcing it would be operational by 2027.
China Suggests Resuming US Crude Imports. According to the White House, Chinese President Xi Jinping expressed interest in resuming US crude oil imports after Beijing’s purchases came to a complete halt in late February 2025, seeking to boost inflows of crude after a 20% year-over-year drop last month.
Japan Takes Over Singapore Refining. Japan’s leading refiner Eneos (TYO:5020) has agreed to buy Chevron’s refining and lubricant subsidiaries in southeast Asia and Australia for $2.17 billion, including a 50% stake in the 290,000 b/d Jurong Island refinery in Singapore, co-operated by Petrochina.
Delhi Asks for Extension of Russia Waiver. India has asked the United States to extend its waiver on Russian oil for at least another month, with the current OFAC authorization running until May 16, seeking to prevent a collapse in Indian crude imports, down 800,000 b/d compared to pre-war levels.
Airlines Warn of UK Jet Supply Risks. Several European airlines have voiced concerns about jet fuel supply in the United Kingdom, potentially the most fragile of global aviation hubs, as it only holds 1 month’s worth of stocks, with seaborne imports accounting for 65% of the country’s jet consumption.
Embattled Iraq Fires Oil Minister. Iraq has named Mohammed al-Khudair as its new oil minister, taking over from Hayan Abdul Ghani as part of a wider government shake-up that followed the swearing in of Prime Minister Ali al Zaidi, marking the first political victim of the ongoing US-Iran conflict.
Ukraine Continues Drone Warfare on Russia. Ukraine’s army claimed to have struck Rosneft’s Ryazan refinery this week, marking the 16th plant to be targeted this year, with media reports suggesting some 700,000 b/d of Russian downstream capacity was offline in January-May 2026 due to continuous strikes.
Refinery Fires Prompt Pemex Shake-up. Another refinery fire at Pemex’s Oaxaca refinery seems to have prompted the Mexican President Claudia Sheinbaum to demand the state oil company’s CEO Victor Rodriguez leave, nominating the firm’s chief financial officer Juan Carpio to replace him temporarily.
US Allows Year-Round Sales of E15 Gasoline. The US House of Representatives has passed legislation that would allow nationwide year-round sales of gasoline containing 15% ethanol, a major win for biofuel producers, however the bill still requires Senate approval and Trump’s final signature.
India’s Fuel Prices Keep on Rising. India’s state-owned refiners announced the first increase in diesel and gasoline prices since March 2024, up by $0.03 per gallon, as the Asian country’s downstream segment pushes Delhi to close the gap between global prices and government-capped domestic ones.
Turkey Eyes $1.2 Billion Military Lifeline to Europe. Ahead of NATO’s upcoming July summit in Ankara, Turkey has proposed building a $1.2 billion product pipeline to Europe that would feed the military alliance’s Eastern European flank, planning to connect Romania and Bulgaria to Turkish refineries.
Zinc Prices Spiral Out of Control. Zinc prices jumped to their highest since August 2022, surpassing $3,600 per metric tonne on Thursday, greatly boosted by this week’s suspension of operations at the largest zinc smelter in Latin America, Peru’s Cajamarquilla, following a widespread fire incident.
By Tom Kool for Oilprice.com
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