Energy – US Tightens Sanctions on Iranian Oil Exports
Oil prices saw a significant rally yesterday, with ICE Brent crude closing more than 1.7% higher at US$72 per barrel, marking the highest close this month. This bullish momentum continued into early morning trading in Asia.
A key driver of this price strength has been the U.S.’s tightening of sanctions on Iranian oil exports. The U.S. Treasury Department sanctioned Chinese refiner Shandong Shouguang Luqing Petrochemical Co., Ltd. for purchasing Iranian crude. In addition, the CEO of the refinery was also targeted, and an oil terminal in China that handles Iranian oil was sanctioned, along with several tankers linked to a shadow fleet transporting Iranian oil. These actions underscore the U.S.’s commitment to reducing Iranian oil exports, with President Trump aiming to lower Iran’s crude exports from approximately 1.4 million barrels per day (b/d) in February. The enforcement of these sanctions is considered a significant upside risk to the oil market.
In a related development, OPEC+ members have outlined a schedule for oil output cuts to compensate for overproduction, with cuts ranging between 189,000 b/d and 435,000 b/d until June 2026. While this schedule aims to balance the market, there is skepticism about whether all members will adhere to their targets, as some have consistently produced above their agreed limits.
US Natural Gas Market
Meanwhile, U.S. natural gas prices experienced a sharp decline, with the front-month Henry Hub contract settling 6.4% lower. This downward pressure continued this morning after the U.S. Energy Information Administration (EIA) reported a 9 billion cubic feet (bcf) increase in U.S. natural gas storage for the week, surpassing the expected 5 bcf rise. Despite the higher-than-expected storage increase, total U.S. gas storage levels remain tight at 1.71 trillion cubic feet (tcf), down 26.8% year-on-year and 10% below the five-year average.
Agriculture – Global Grain Production Estimates Raised
The International Grains Council (IGC) released its initial forecasts for the 2025/26 crop year, projecting a rise in global corn production from 1,217 million metric tons (mt) in 2024/25 to 1,269mt in 2025/26. This is due to expected increases in production from major exporters like Brazil, Argentina, Ukraine, and the U.S. At the same time, global demand for corn is forecast to increase to 1,263mt from 1,238mt. As a result, corn ending stocks are expected to rise slightly from 274mt to 280mt.
The IGC also forecasts growth in global soybean production and consumption. Soybean production is expected to rise 2.2% year-on-year, reaching 427mt, while consumption is projected to increase by 4.2% to 426mt. Ending stocks for soybeans are expected to grow from 82mt to 83mt.
For wheat, the IGC anticipates a slight production increase from 799mt in 2024/25 to 807mt in 2025/26, with the EU and UK expected to contribute to this rise. However, wheat ending stocks are still projected to decline, from 265mt in 2024/25 to 259mt in 2025/26.
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