Investors: ExxonMobil and Chevron are set to report Q1 earnings amid growing investor concern over falling oil prices, which threaten their ability to maintain dividends and share buybacks in 2025. The companies have prioritized returning cash to shareholders, but weakening oil demand—exacerbated by global tariff fears has pressured prices and forecasts. Analysts believe Exxon is better positioned to sustain shareholder returns due to surplus cash and lower production costs, while Chevron may be forced to scale back its $10–20 billion buyback plan. Spending cuts may come in future quarters, particularly in shale and energy transition projects, as both companies adapt to sustained lower oil prices.

Saudi: Saudi Arabia, the world's top oil exporter, may raise its crude prices for Asian buyers in June for the first time in three months, following a recent rise in benchmark oil prices. Refiners expect the price of Arab Light crude to increase by 10 to 30 cents per barrel, after prices were previously slashed to near four-year lows. The earlier cuts were tied to OPEC+’s decision to accelerate output hikes, adding 411,000 barrels per day in May—three times the initial plan—amid demand concerns stemming from the U.S.-China trade war. Falling prices spurred Chinese buying, particularly of Middle Eastern oil, with added support from restocking and uncertainty around Iranian supply. While further OPEC+ output increases are being considered for June, they could limit additional price gains, though Saudi Arabia’s pricing decisions will continue to influence a large portion of Asia-bound crude.

China: In March, China's refineries processed 14.85 million barrels per day (bpd) of crude the highest in a year yet the country still recorded a surplus of 1.74 million bpd, the most since June 2023, due to a surge in imports. This surplus followed a rare inventory draw in the first two months of 2025, when higher oil prices had previously curbed import activity. Imports from Iran and Russia rose significantly, driven by expectations of new U.S. sanctions and efforts to bypass existing ones, while overall global oil prices had dropped below $70 by early March, encouraging Chinese refiners to stock up. Domestic crude production also hit a multi-year high, contributing to the oversupply. The strength of March’s activity may indicate improving demand or may reflect temporary buying ahead of sanctions and in response to falling prices, but further refinery strength will depend heavily on how China's economy weathers escalating U.S. trade tariffs.

Market Overview: Oil prices remained steady on Monday as investors weighed uncertainties surrounding U.S. China trade talks and a potential increase in OPEC+ oil supply. West Texas Intermediate crude shed 16 cents, or 0.25%, to $62.86 a barrel, with the trade war being the dominant factor influencing market sentiment. Mixed signals from U.S. and Chinese officials have added to volatility, with Beijing denying that any new negotiations are taking place despite claims from President Trump. At the same time, OPEC+ is expected to discuss accelerating supply increases during its May 5 meeting, raising concerns about cartel unity and future price stability. Geopolitical risks also linger, including ongoing U.S.-Iran nuclear negotiations and a deadly explosion at Iran’s Bandar Abbas port, though these have been overshadowed by trade-driven demand fears.

Small U.S. shale producers are cutting back drilling activity as falling oil prices and high construction costs—driven largely by steep tariffs on steel—undermine profitability. This slowdown threatens to cap future output growth, even though overall U.S. oil production is still projected to hit a record 13.7 million barrels per day in 2025. Both the U.S. Energy Information Administration (EIA) and International Energy Agency (IEA) have lowered their growth forecasts due to price volatility and trade-related cost pressures. Companies like Blackridge Resources and Arena Resources are delaying projects, while service providers such as Halliburton are facing tighter margins due to rising material costs. Still, a few firms, including Tall City IV Exploration, view the downturn as a strategic opportunity to acquire assets and position for an eventual market recovery.

U.S. crude prices fell to $62.05 a barrel, down $0.97, as investor sentiment remained heavily influenced by uncertainty surrounding U.S.-China trade talks. Analysts noted that the stalled negotiations are weighing more heavily on oil markets than nuclear talks with Iran or internal OPEC+ tensions. Conflicting messages from Washington and Beijing have fueled volatility, with traders unsure whether demand from China will rise or fall. Meanwhile, some OPEC+ members are expected to push for another production increase at their May 5th meeting, raising concerns about oversupply and cartel cohesion. Adding to geopolitical tensions, Iran is facing instability following a deadly explosion at its key oil port in Bandar Abbas, while ongoing U.S.-Iran nuclear talks continue with little clarity.