Iran’s threat to drive oil prices up to $200 a barrel may sound like hyperbole, but as the energy crisis persisted, that outcome already looked more likely than US President Trump’s prediction that oil prices would soon pull back to pre-war levels… The conflict involving Israel and the US against Iran entered its third week — and escalated into one spanning the entire Middle East — yet the global oil benchmark’s response so far was surprisingly “mediocre.” Brent crude oil was currently trading near $100 a barrel, up about 65 from the start of the year. Although that level would have been unimaginable just a few weeks ago, it still remained below last Monday’s brief peak of nearly $120. Given that since the conflict began, the effective closure of the Strait of Hormuz had trapped about one-fifth of global oil supply — roughly 20 million barrels a day — crude oil prices should, in theory, have been much higher. That seemed to suggest investors still retained a degree of trust in Trump , betting that the crisis would be resolved quickly and that the Strait of Hormuz would soon reopen — whether it was called the “Trump put,” the “TACO trade,” or “buy Trump,” many oil traders appeared to be wagering that the president would ultimately be able to limit the market damage. “When this is over, oil prices will come down very, very quickly,” Trump said on Monday this week. Yet that optimism looked increasingly difficult to reconcile with realities on the ground — whether on a battlefield where the conflict was intensifying, or in the physical oil market, where supply bottlenecks were steadily spreading. Signals Being Overlooked In fact, the physical crude oil market was sending an increasing number of stress signals, even though the international benchmark “paper oil” market had so far largely ignored them. Although trade had stalled under the impact of the Iran conflict, Middle Eastern crude benchmarks still surged to record highs, making them the most expensive crude in the world. The spike in these benchmark indicators, which are used to price millions of barrels of Middle Eastern crude sold to Asia, was raising costs for Asian refiners and forcing them to seek alternatives or make further production cuts in the coming months. S&P Global Platts said Dubai spot crude assessments for May-loading cargoes hit a record $157.66 a barrel on Tuesday, surpassing the previous all-time high of $147.5 set by Brent crude oil futures in 2008. That left Dubai crude’s premium to swaps at $60.82 a barrel, compared with an average premium of just 90¢ in February. Meanwhile, Oman crude oil futures hit a record high of $152.58 per barrel on Tuesday, with its premium to the Dubai swap set at $55.74 per barrel, versus an average premium of just 75¢ in February. Oman crude oil is exported from a terminal outside the Strait of Hormuz. This surge reflected massive uncertainty over actually available supply in the Middle East after Iran repeatedly attacked Oman's oil terminal and the UAE's major oil export terminal of Fujairah outside the Strait of Hormuz. Are Brent and WTI Failing to Reflect the "True Severity" of the Oil Market? As JPMorgan's head of commodities, Natasha Kaneva, pointed out in her latest research note on Tuesday , there was a clear mismatch between international benchmark crude pricing and the Middle Eastern geography of the supply disruptions. The core issue was that Brent and WTI are benchmark indicators at opposite ends of the Atlantic basin, while the current shock is concentrated in the Middle East. As a result, these benchmark crude prices were particularly influenced by relatively loose regional fundamentals—commercial oil inventory in both the US and Europe were ample in early 2026, and supply across the Atlantic basin was also relatively abundant in the short term. In addition, expectations for a release from the US Strategic Petroleum Reserve (SPR)—as well as a partial release that will soon materialize—further eased prompt tightness in Brent- and WTI-linked markets. By contrast, Middle Eastern crude benchmarks such as Dubai and Oman more accurately reflected the current dislocation in the physical market. Dubai and Oman spot prices were both trading above $150 per barrel, underscoring the severity of crude oil shortages originating in the Gulf region. These Middle Eastern oil prices were directly affected by export disruptions and therefore more effectively reflected marginal supply deficits than Atlantic-linked crude prices. Crucially, trade geography intensified this dynamic. Most of the crude transported via the Strait of Hormuz goes to Asia—before the outbreak of the Middle East conflict, about 11.2 million barrels of crude and 1.4 million barrels of refined products flowed through the strait to Asia each day. As a result, the direct physical shortage—and the surge in oil prices—was concentrated in Asian markets most dependent on Gulf crude. In fact, early signs of demand destruction had already emerged in Asia as product prices surged and spot crude became prohibitively expensive. JPMorgan noted that timing effects further reinforced this divergence. A typical voyage from Gulf Cooperation Council (GCC) countries to Asia takes about 10 to 15 days, while cargoes bound for Europe via the Suez Canal require nearly 25 to 30 days, or 35 to 45 days if rerouted around the Cape of Good Hope. Therefore, the impact of disrupted Gulf flows would hit Asian markets sooner and more severely, while Atlantic Basin benchmarks such as Brent and WTI would enjoy a longer buffer because of surplus inventory and slower supply adjustments. The US, with crude oil production exceeding 13 million barrels per day, would be affected the least. JPMorgan believed that, in this context, the apparent price stability shown by Brent and WTI should not be taken as evidence of adequate global supply. It reflected a temporary buffer created by regional surplus inventory, benchmark composition, and policy intervention. In fact, for refiners, especially those in Asia, the current crude oil shortage had already become a serious problem. About 60% of the region’s crude oil imports depended on the Middle East, and the difficulty of finding alternative, timely supplies was rapidly becoming acute. The pressure had already forced many countries into painful adjustments. Refiners across Asia had begun cutting run rates to conserve dwindling inventory. Some countries had banned exports of refined products, a defensive move that could further tighten the global market. As the crude oil shortage worsened, refined product prices surged. Asian jet fuel prices were approaching $200 a barrel, near the record high of about $220 reached earlier this month. The Crisis Could Spread Further Ultimately, this crisis was expected to extend beyond Asia. Data from analytics firm Kpler showed that Europe accounted for about three-quarters of Middle Eastern jet fuel exports shipped through the Strait of Hormuz last year—about 379,000 barrels per day—but since the conflict began, no such cargoes had passed through the strait. Unsurprisingly, jet fuel barge prices in the Amsterdam-Rotterdam-Antwerp refining hub had surged to a record $190 a barrel, exceeding the previous peak set after the Russia-Ukraine conflict in February 2022. The comparison with the Russia-Ukraine crisis may be even more compelling. Before the outbreak of the Russia-Ukraine conflict in 2022, Russia supplied about 30% of Europe’s crude oil imports and one-third of its refined product imports. As traders feared Europe would lose supplies from one of the world’s largest oil producers, Brent crude rose to $130 a barrel after the Russia-Ukraine conflict—even though that worst-case scenario never fully materialized in the end. By contrast, according to Morgan Stanley, the physical disruption caused by the Iran conflict had already exceeded that level of concern by more than threefold. Even if the Strait of Hormuz were to reopen immediately, it would not bring immediate relief. According to the International Energy Agency, about 10 million barrels per day of production in the Middle East has been shut in since the conflict began. Restoring these flows will take weeks, if not months. To be sure, the oil market entered the Iran conflict in a relatively loose state, and the International Energy Agency had projected that global supply would exceed demand by about 3.7 million barrels per day. But that surplus has now been erased by the current turmoil. Last week, the International Energy Agency announced plans to release a record 400 million barrels from member countries' strategic petroleum reserves, which will help cushion the initial shock. But drawing down inventories cannot substitute for deliveries of new oil. In other words, the supply shock to the oil market is real and may persist. Once the Strait of Hormuz finally reopens, oil prices could initially plunge in a relief rebound, but given the harsh realities of the physical market, traders may need to think twice before betting that the return to normalcy promised by Trump is about to arrive…

[CPCA Secretary General Cui Dongshu: China's Auto Exports Reach 2.16 Million Units from January to April, with a YoY Growth Rate of 15%] CPCA Secretary General Cui Dongshu stated in an article that from January to April 2025, China's auto exports reached 2.16 million units, up 15% YoY compared to the same period in 2024. In April, China's auto exports reached 620,000 units, up 12% YoY and 36% MoM, showing a generally strong trend in both YoY and MoM growth. The main drivers this year remain the improvement in the competitiveness of Chinese products and the slight increase in the markets of Global South countries. However, the cycle in which international brands in the Russian market under the Russia-Ukraine crisis were comprehensively replaced by Chinese vehicles may come to an end, resulting in a significant reduction. (Finance Link) [Rio Tinto Plans to Invest Approximately $425 Million in the Development of the Salares Altoandinos Lithium Project in Chile] On May 22, Rio Tinto announced that it had been confirmed as the preferred partner by Chile's state-owned mining company (ENAMI) for the Salares Altoandinos lithium project on the salt flats in northern Chile. According to the proposed terms, Rio Tinto will acquire an initial 51% stake in the project, with ENAMI holding the remaining shares. Both parties still need to sign a binding agreement, obtain all regulatory approvals, and meet other customary closing conditions. Rio Tinto stated that it will advance pre-feasibility and feasibility studies to ultimately make an investment decision. Rio Tinto will provide approximately $425 million in cash and non-cash contributions, including its direct lithium extraction (DLE) technology. The cash contributions will be disbursed in phases to fund pre-feasibility and further studies. (Finance Link) [China's First Large-Scale Lithium-Sodium Hybrid Energy Storage Station with 98% Green Electricity Put into Operation] China's first large-scale lithium-sodium hybrid energy storage station, the Baochi Energy Storage Station of China Southern Power Grid, was put into operation in Yunnan today. Covering an area equivalent to five football fields, the Baochi Energy Storage Station has an installed capacity of 400 megawatt hours (MWh) and can regulate 580 million kWh of electricity annually, equivalent to the annual electricity consumption of 270,000 households, with green electricity accounting for up to 98%. (CCTV News) [Two Matters under the EU Battery Regulation Postponed, Providing Buffer for Chinese Lithium Battery Companies' Exports to Europe] Due to adjustments in the global raw material supply chain and insufficient third-party investigation agencies, the EU's planned implementation of due diligence on battery supply chains, originally scheduled for August this year, is proposed to be postponed by two years. The original plan for companies to submit carbon footprint reports, scheduled for February this year, has also been postponed due to the lack of detailed rules, providing Chinese lithium battery companies with a buffer period for their exports to Europe. The postponement of these two matters is good news for China's lithium battery exports to the EU. The EU is China's largest export market for lithium batteries. According to data from China's General Administration of Customs, in the first four months of 2025, five EU countries—Germany, the Netherlands, France, Spain, and Hungary—accounted for nearly 30% of China's lithium battery export value. (Caixin) [Hainan Mining: 20,000 mt Battery-Grade Lithium Hydroxide Project Achieves Full Process Integration with Qualified Products Offline] Hainan Mining (601969.SH) announced that its 20,000 mt battery-grade lithium hydroxide project has achieved full process integration, with the first batch of lithium hydroxide products passing internal laboratory sampling inspections, confirming that product parameters meet design standards. This milestone lays the foundation for subsequent continuous mass production, marking a phased achievement in the company's industrial transformation and upgrading strategy. However, lithium resource price fluctuations may impact the project's economics, and uncertainties remain regarding the timeline for stable production, full production capacity attainment, and customer certification of the products. The company will promptly fulfill its information disclosure obligations. (Cailian Press) [Haisco Pharmaceutical: Solid-State Battery Adhesive Business Yet to Generate Orders] Haisco Pharmaceutical (300584.SZ) issued an abnormal stock trading volatility announcement, noting the recent high market attention on solid-state battery concepts. The company's involvement in the solid-state battery sector primarily revolves around its subsidiary Anqing Huichen's joint venture with Saike Power and others to establish Sichuan Luochen, which was incorporated on February 11, 2025, focusing on the development, optimization, and industrialization of adhesive materials for new energy batteries, including solid-state batteries. As of now, Sichuan Luochen is conducting small-scale process development for related adhesive products but has not yet delivered samples to customers or secured orders, with no significant impact expected on the company's annual profits. [Farasis Energy: Second-Generation Semi-Solid-State Battery Expected to Enter Mass Production in H2, Targeting High-Value Applications Like Low-Altitude Economy and Humanoid Robots] Farasis Energy stated on an interactive platform that its first-generation semi-solid-state battery entered mass production and vehicle installation in 2022. The second-generation semi-solid-state battery is expected to achieve mass production in H2, initially targeting high-value applications such as the low-altitude economy and humanoid robots, potentially boosting solid-state battery product revenue. In terms of customer collaboration, the company's solid-state battery products have gained recognition from leading clients across various sectors, including GAC, Dongfeng, Sany, FAW Jiefang, a top US eVTOL customer, a leading domestic flying car manufacturer, Shanghai Shidai, and Geely's Volocopter. (Cailian Press) Related Reading: April Battery Materials Import and Export Data Released: Spodumene and Lithium Carbonate Imports Rise, Latter Sees Surge in Exports! [SMM Special] Cobalt Product Quotes Decline Across the Board: Refined Cobalt Drops by 6,200 yuan, Smelters' Willingness to Sell Increases [Weekly Observation] Spot Price of Refined Cobalt Falls [SMM Refined Cobalt Market Weekly Review] [SMM Weekly Review] Lithium Carbonate Prices Continue to Slide, Short-Term Market Remains Under Pressure [SMM Analysis] Can Iron Phosphate Doped with Titanium Become the Perfect Upgrade for High-End Applications? [SMM Analysis] China's lithium hydroxide exports reached 4,222 mt in April, basically flat MoM [SMM Analysis] Cobalt intermediate product imports increased slightly in April [SMM Analysis] Both China's unwrought cobalt exports and imports surged in April 2025 [SMM Analysis] China's domestic spodumene imports totaled 623,000 mt in April, up 16.5% MoM [SMM Analysis] Both artificial graphite imports and exports increased MoM in April [SMM Data] LiPF6 import and export data for April 2025 [SMM Analysis] Analysis of ternary cathode precursor exports in April [SMM Analysis] Ternary cathode import and export volumes for April released, with imports up 37% MoM and exports up 13% MoM [SMM Announcement] Adjustments to weekly lithium carbonate data points before and after the Labour Day holiday Driven by multiple positive factors! The auto parts sector surged with over 12 stocks hitting daily limits! [Hot Stocks] Refined cobalt quotes slightly recovered, while Co3O4 prices continued to decline. The market awaits the aftermath of the DRC's June ban. [Weekly Observations] [SMM Industry Insights] Global cobalt industry chain changes and Chinese market outlook post-DRC cobalt export ban - Key points from the special speech by Wang Cong, General Manager of SMM Industry Research Tariff suspension spurs lithium carbonate futures to rise over 3%. Can the expectation of a rush in exports help lithium carbonate "stand up"? [SMM Flash News] Passenger vehicle retail sales growth in April hit a decade-high, with auto production and sales exceeding 10 million units in the first four months! [SMM Special Report]

[Heavy to torrential rain in some areas; a new round of strong precipitation to hit south China starting from May 27] The cold air process that has been affecting most parts of China since May 21 is currently coming to an end. Today, rainfall will continue in Yunnan, Guangxi, Sichuan, and other regions. The Central Meteorological Observatory forecasts that starting from May 27, a new round of strong precipitation weather process will occur in south China. There is a high risk of meteorological disasters such as mountain torrents and geological disasters in regions like Guangdong and Yunnan.

When the "trade war" replaced the "Russia-Ukraine conflict" as the world's focus, Europe, which three years ago repeatedly stated that it could not rely on Russian natural gas, now seems to be undergoing a 180-degree shift in attitude: Many European companies are beginning to worry that dependence on the US has become a new weakness, and re-"buying Russian gas" seems to have become a more reasonable option under the current situation! Yes, even the most imaginative "screenwriter" three years ago during the Russia-Ukraine crisis might not have been able to write such a dramatic "script"... European executives want to buy Russian gas. It has been proven that although more than three years have passed since the outbreak of the Russia-Ukraine conflict, Europe's energy security remains fragile. During the energy crisis from 2022 to 2023, US liquefied natural gas helped fill the supply gap in Europe caused by the withdrawal of Russian gas to some extent. But as US President Donald Trump shook the post-World War II-established US-Europe relations and used energy as a bargaining chip in trade negotiations, European companies began to worry that dependence on the US has become a new vulnerability. Against this backdrop, many executives of large EU companies have recently made statements that would have been unimaginable a year ago: importing some Russian gas from state-owned energy giant Gazprom might be a wise move. This proposition means that Europe needs to make a major policy shift, as the Russia-Ukraine conflict that broke out in 2022 prompted the EU to commit to stopping Russian energy imports by 2027. But Europe's current options are extremely limited: negotiations with liquefied natural gas giant Qatar to expand supply have stalled, and although renewable energy deployment has accelerated, it is still not enough to make the EU feel secure. Didier Holleaux, Executive Vice President of French energy group Engie, said in an interview with the media that if peace in Ukraine is achieved, Russian gas supply could recover to 60-70 billion m³ (including liquefied natural gas). The French government owns part of Engie, which was previously one of Gazprom's largest customers. Holleaux said that Russian gas might meet 20-25% of EU demand in the future, lower than the pre-war 40%. Patrick Pouyanne, CEO of French energy giant TotalEnergies, warned Europe against over-reliance on US natural gas. He emphasized in an interview that supply channels must be diversified to avoid over-reliance on one or two sources. Pouyanne predicted, "Europe will not return to the pre-war Russian gas import level of 150 billion m³, but it might rebound to about 70 billion m³." German public support. It is worth noting that France, with its large amount of nuclear energy, is one of the most diversified countries in Europe in terms of energy supply. Germany, which relied heavily on cheap Russian gas to drive its manufacturing industry before the Russia-Ukraine conflict, now has fewer options... The Leuna chemical park in eastern Germany is one of the largest chemical parks in Germany, with companies such as Dow Chemical and Shell having factories here. Previously, the Nord Stream pipeline (destroyed in 2022) met 60% of the local energy demand. Christof Guenther, General Manager of InfraLeuna, the park's operator, said, "We are in a serious crisis and can't wait any longer." He pointed out that the German chemical industry has been laying off workers for five consecutive quarters, something that has not happened in decades. "Reopening the Russian gas pipeline would lower prices more than any current subsidy plan." "This is a taboo topic," Guenther added, but many of his colleagues believe it is necessary to use Russian gas again. In the federal election in February this year, nearly one-third of Germans voted for Russia-friendly parties. In Mecklenburg-Western Pomerania (where the Nord Stream pipeline lands after crossing the Baltic Sea from Russia), 49% of local residents hope to restore Russian gas supply. "We need Russian gas, we need cheap energy—no matter where it comes from," said Klaus Paur, General Manager of Leuna-Harze, a medium-sized petrochemical manufacturer located in the Leuna park. "We need the Nord Stream 2 pipeline because we have to control energy costs." Daniel Keller, Minister of Economy of Brandenburg, said that the industry hopes the federal government can find cheap energy. Brandenburg is home to the Schwedt refinery, which is co-owned by Russian oil companies but managed by the German government. Keller said, "We can imagine that after peace in Ukraine is achieved, Russian oil will resume imports or transportation." The US is no longer reliable. According to statistics, last year, US natural gas accounted for 16.7% of EU natural gas imports, second only to Norway's 33.6% and Russia's 18.8%. Considering the closure of the Russian gas pipeline through Ukraine at the beginning of this year, the share of Russian gas this year may drop to less than 10%—the rest mainly comes from liquefied natural gas exported by Novatek. EU Trade Commissioner Maros Sefcovic said last week that it is certain that we will need more liquefied natural gas. Currently, as Trump wants Europe to reduce its trade surplus with the US, buying more US liquefied natural gas is indeed one of the options the EU might try to appease the White House. However, Tatiana Mitrova, a researcher at Columbia University's Center on Global Energy Policy, said, The tariff war has also greatly exacerbated Europe's concerns about relying on US natural gas. Mitrova added, "It is increasingly difficult to see US liquefied natural gas as a neutral commodity: To some extent, it may become a geopolitical tool." Arne Lohmann Rasmussen, Chief Analyst at Global Risk Management, also said that if the trade war escalates, there is a risk that the US will slightly restrict liquefied natural gas exports. A senior EU diplomat who wished to remain anonymous also agreed. He pointed out, No one can rule out the possibility of the Trump administration "using this leverage." Warren Patterson, Head of Commodities Strategy at ING, said that if US domestic natural gas prices soar due to rising industrial and AI demand, the US might reduce exports to all markets. In any case, under Trump's leadership, the US, which has clearly become "no longer reliable," Europe may need to prepare for "two hands" in advance...

[Cui Dongshu from CPCA: Lower Battery Loading Rate for EVs in 2024, Battery Production Outpaces Loading Growth] Cui Dongshu, the secretary-general of the China Passenger Car Association (CPCA), said in a recent article that the proportion of battery loading in the current battery production is constantly decreasing. In 2021, the battery loading rate for EVs reached 70%, 54% in 2022, 50% in 2023, and dropped to 47% from January to June 2024. With the development of energy storage industries, especially the global energy crisis triggered by the Russia-Ukraine crisis, the demand for batteries in energy storage industries has grown rapidly, resulting in a more significant decline in the proportion of batteries loaded into vehicles. Both EV batteries and energy storage batteries are facing relatively high pressure due to overproduction and inventory issues. The growth rate of EV batteries in 2021 and 2022 was lower than that of the overall vehicle market, and the battery loading rate for EVs is expected to be lower in 2024, while battery production is expected to outpace the loading growth.

If the Russia-Ukraine crisis is eased with Chinese President Xi Jinping's visit to Russia, it is expected that the pace of overseas production resumption may speed up.