Brent crude declined by almost 4% to below $74/bbl at the end of May following concern over the US debt deal, however steadied around $73.3/bbl on the first day of June after the debt deal was agreed. The OPEC meeting on June 5th saw Saudi Arabia pledge an additional output cut of 1 million barrels per day in July, bringing the country’s production to the lowest level in years, causing Brent crude to rise to $76.7/bbl. However, China’s economic recovery continued to falter in June, causing Brent crude to fall to $72.8/bbl mid-month, due to demand concerns. Despite peaking at $77.1/bbl on June 21st following higher demand, monetary policy tightening from central banks and political instability with the brief rebellion of the Wagner Group in Russia caused Brent crude to decline to around $73.7/bbl at the end of June.

GBP traded at $1.252 against USD at the beginning of June, however fell to $1.241 after the OECD stated the UK inflation rate will be the highest of any major developed economy this year, averaging at 6.9%. Despite this, Britain are expected to narrowly avoid a recession and data revealed that the UK unemployment rate fell to 3.8% between February and April, and the UK economy expanded by 0.2% in April after falling by 0.3% in March. By mid-month, GDP traded at $1.281, its highest level since April 2022. However, as inflation remained well above the 2% target at 8.7%, the Bank of England raised the key interest rate by 50bps to 5%, higher than expectations of a 25bps hike. The larger-than-expected interest rate hike increased recessionary pressures, causing GDP to decline to $1.264 by month-end.

The US house of Representatives overwhelmingly passed a bill to suspend the debt ceiling ahead of the 5th of June deadline, preventing a government default in the world’s largest oil consumer. Meanwhile, uncertainty over China’s post-COVID economic recovery continued, as several major banks cut their forecasts on China’s 2023 GDP growth, and China’s central bank lowered two key lending rates for the first time in almost a year, to attempt to support the economic recovery. Moreover, Russia President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman praised their level of cooperation within OPEC+ and attempts to “combat uncertainties and sentiment” in the oil market, after Saudi Arabia pledged to cut output by 1 million barrels per day. However, in the final week of June, markets were fixated on the turmoil in Moscow as Wagner Group mercenaries marched towards Moscow, before a sudden deal was agreed with the Russian government and tensions were deescalated.