Oil Prices Surge $7 Amid Global Tensions; UAE, BP, and Policy Shifts in Focus

Oil prices surged by $7 per barrel this week, according to OilPrice.com, as tensions with Iran and a lack of substantive progress from the Xi-Trump summit in Beijing overshadowed bearish demand forecasts from OPEC and the International Energy Agency.

The summit between the U.S. and Chinese leaders provided "little hope for any short-term market normalization," OilPrice.com reported. However, Chinese President Xi Jinping expressed interest in resuming U.S. crude oil imports, which had halted in late February 2025. This comes as China seeks to boost inflows after a 20% year-over-year drop last month, according to the White House.

Geopolitical risks are rising. Iran announced it had 'no trust' in the United States and was ready to go back to fighting, denting hopes for a swift re-opening of the Strait of Hormuz. In response, the United Arab Emirates is accelerating construction of a new oil pipeline bypassing the strait to double its export capacity. National oil company ADNOC announced the pipeline will be operational by 2027, according to both OilPrice.com and Rigzone.

Meanwhile, OPEC lowered its forecast for global crude demand growth in 2026 by 200,000 barrels per day to 1.17 million b/d, while hiking its 2027 outlook to 1.54 million b/d.

In corporate news, BP is weighing a potential sale of some of its natural gas assets in Egypt as part of a restructuring drive under new CEO Meg O'Neill, Reuters reported via OilPrice.com. BP has invested over $35 billion in Egypt and, through partnerships, produces about 60% of the country's natural gas. The company also recently announced a significant gas and condensate discovery offshore Egypt in the Temsah Concession.

European Union energy ministers have started discussing a region-wide tax on energy companies' windfall profits from surging prices linked to the U.S.-Iran conflict, potentially replicating the UK’s 38% Energy Profits Levy.

Other global developments include Cuba warning of an impending energy collapse, having run out of diesel and fuel oil reserves. India has asked the United States to extend its waiver on Russian oil imports for at least another month beyond May 16 to prevent a collapse in its crude imports. Japan's Eneos has agreed to buy Chevron’s refining and lubricant subsidiaries in Southeast Asia and Australia for $2.17 billion.

For Bakken operators, the weekly price surge provides a stronger revenue backdrop despite the lowered OPEC demand forecast. The potential resumption of U.S. crude exports to China represents a significant future market opportunity for North Dakota crude. However, the discussion of new windfall taxes in Europe signals ongoing regulatory risks for internationally active companies, while the accelerated UAE pipeline project highlights global efforts to mitigate the persistent risk to crude flows through the Strait of Hormuz.