The outcome of the OPEC+ meeting at the beginning of the month pressured prices, causing Brent crude to fall to a five-month low of $77.5/bbl. Despite extending 3.66 million bpd of cuts into 2025, and 2.2 million bpd of further voluntary cuts led by Saudi Arabia and Russia were prolonged into Q4 2024, members indicated that cuts were to be relaxed towards the end of the year. This weighed on oil prices, over concerns of a surplus of supply. In response, it clarified its position that it would only do so ‘if market conditions allowed’, allaying fears. After reaching the low, oil prices trended upwards for the remainder of the month. The US Energy Information Administration revised its oil demand growth outlook upwards ahead of the US summer driving season, and OPEC+ maintained its bullish 2.2 million bpd prediction. Persistently high interest rates have underpinned demand concerns, and improved inflationary data caused more optimism. Increasing geopolitical tensions also supported prices, as Israel’s intention to move troops to its northern border renewed fears that its relationship with Iran could deteriorate. The International Energy Agency (IEA) reported that China’s crude oil throughput fell to near Covid-era levels in May, due to growing oversupply in the region and weak demand weighing on refining margins. As a result, its crude imports dropped to 8% year-on-year. Crude oil finished the month at $84.8/bbl, increasing over 4% during June.

Beginning the month trading at $1.277, the pound rose to a three-month high of $1.284 against USD by mid-month. Weak US PCE and labour market data indicated that the Federal Reserve may have to move faster than previously anticipated in cutting rates. Furthermore, the general election campaign continued to constrain the Bank of England’s policy direction, which voted to maintain rates at their June meeting, although the decision was described as “finely balanced” for many policymakers, offering the dollar support. Additionally, UK inflation fell to 2% in May, in line with the BoE target, with all but two of 65 economists polled by Reuters predicting an August reduction. Data also showed that the UK economy stalled in April, with GDP growing at 0%. This willingness to move faster in cutting rates pressured the pound, after Fed Chair Jerome Powell stated that they expect rate cuts to be pushed back pending evidence that inflation is dropping to its 2% target. This should result in an additional cut in 2025 than previously planned, according to the chief policymaker. Market signals remain balanced, however, as US consumer confidence during May was revised downwards, adding some pressure on the hawkish Fed to stimulate the economy by reducing rates faster. Sterling finished the month at $1.264 against USD, after a downward trend following the intra-month peak.

The beginning of June brought optimism that a ceasefire between Israel and Hamas could be found, supported by the international community. White House officials suggested that they expected Israel to accept the deal, which would begin with a six-week ceasefire to facilitate further negotiations, however this would not come to fruition. Towards the middle of the month, Ukraine increased the intensity of its bombing campaign on Russian oil infrastructure, with an overnight attack on four refineries utilising as many as 100 drones central to the operation. Tensions also increased after Putin’s state visit to North Korea which resulted in a joint defensive pact being signed, a threat to Chinese influence in the region. Russia also blamed the United States for the deaths of four people and 150 more injured in occupied Crimea, after officials claimed that a Ukrainian strike used US-supplied missiles which were programmed by US specialists with markets awaiting a response. Towards the end of the month, Prime Minister Netanyahu turned his back on a permanent ceasefire in Gaza, stating that he was “committed to continue the war after a pause” if an agreement could be found. Furthermore, Netanyahu vowed to commit troops to the border as the Rafah offensive nears completion, which could spark renewed tensions with Iran and increase the likelihood of the conflict spreading throughout the region, threatening supply.