2024.12.10

Oil Prices Rise Over 1% Amid Syrian Unrest and China's Loosened Monetary Policy Signals

Oil prices increased over 1% on Monday, driven by heightened geopolitical tensions after the overthrow of Syrian President Bashar al-Assad and China's plans to implement looser monetary policies to stimulate economic growth.

Brent crude rose by 1.4% to $72.14 per barrel, while WTI climbed 1.7% to $68.37.

The fall of Assad's regime has raised concerns about increased instability in the Middle East, potentially disrupting oil markets. Syria's geopolitical significance, despite its minimal oil production, stems from its ties with Russia and Iran.

Early signs of disruption were noted as an Iranian oil tanker reversed course in the Red Sea.

China, the world's largest oil importer, announced unconventional measures to boost domestic demand and consumption as part of its economic recovery strategy. Analysts predict a commodity price surge if China implements significant stimulus.

Additionally, Saudi Aramco's price cuts for Asian buyers and anticipation of U.S. inflation data, which could lead to interest rate reductions, were factors weighing on market sentiment. Lower rates are expected to boost economic activity and oil demand.

[SLOW] Oil Market

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Iranian Tanker Reverses Course Amid Fears of Fuel Shortages Following Assad's Fall

The Iranian-owned tanker Lotus (160,000 dwt, built 2000) reversed its course in the Gulf of Suez, abandoning a delivery of 750,000 barrels of crude oil to Syria after the fall of President Bashar al-Assad's regime.

The vessel now appears to be heading back to the Persian Gulf, raising concerns about fuel shortages in Syria.

The ousting of Assad by Hayat Tahrir al-Sham forces has disrupted Iran’s long-standing oil and financial support to Syria.

Iran had been delivering 60,000 to 70,000 barrels per day to Syria, alongside extensive military aid, throughout the civil war. Assad's regime owes Iran between $30 billion and $50 billion, according to Iranian sources.

Assad’s fall also jeopardizes Iran’s use of Syria as a corridor for supplying weapons to Hezbollah in Lebanon. Analysts suggest the shift may embolden Western efforts to constrain Iran's oil exports and apply further economic pressure on Tehran.

[SLOW] Flow

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ExxonMobil Secures Lower VLCC Charter Rates Amid Market Weakness

ExxonMobil has fixed two VLCCs from Yasa Tankers—the Yasa Scorpion (314,000 dwt, built 2013) and Yasa Southern Cross (318,400 dwt, built 2012)—on one-year charters at $41,500 per day, reflecting a sharp drop in rates from the $80,000 per day paid in early 2023. The contracts include delivery in Asia and northern Europe this month and allow for three-month extensions.

The VLCC market faces downward pressure as spot rates fell 9% last week to just above $30,000 per day, with brokers reporting term charter rates also trending lower. Limited activity, coupled with OPEC+ production cuts, has pushed more vessels westward, seeking better prospects in the Atlantic.

On the clean tanker side, charter rates remain stable but show signs of softening. A five-year deal for the Elytis fell through, with the vessel later fixed to Vitol for a shorter term. Other charters, such as the Proteus Ingrid, secured rates near $36,000 per day. Analysts see limited reasons for a near-term market rebound amid current fundamentals.

[SLOW] Daily VLCC Market

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Search Underway for Missing Crew Member After Tanker Liquid Gem Grounds in Taiwan

Authorities are searching for a missing 47-year-old Chinese crew member after the Hong Kong-controlled product tanker Liquid Gem (5,400 dwt, built 2015) ran aground on a breakwater near Taichung, Taiwan. The incident occurred after the vessel dragged its anchor in bad weather, drifting 500 meters to the shore and listing to port.

Of the 15 crew members, 12 were airlifted to safety, and two others were rescued after jumping overboard. The grounded tanker, carrying 110 tonnes of fuel oil, poses no immediate risk but has raised concerns about potential damage and oil leaks. Precautionary booms have been deployed around the vessel.

The Liquid Gem, operated by Grand Dragon Shipping, had been anchored at Taichung Port since November, awaiting clearance to unload diesel cargo. Previous inspections found deficiencies in safety and engine equipment. The search for the missing seafarer continues.

[SLOW] Flow

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Argentina Set to Surpass Colombia as South America’s Third-Largest Oil Producer

Argentina's surging oil output, driven by a shale boom in the Vaca Muerta region, is on track to surpass Colombia and secure its place as South America’s third-largest crude producer, behind Brazil and Venezuela. Shale oil now represents 60% of Argentina’s crude production, supported by pro-business policies under President Javier Milei, which have spurred investments in drilling and infrastructure.

In contrast, Colombia faces declining oil and gas reserves and reduced drilling activity due to President Gustavo Petro’s push for a green agenda, including halting fracking projects. The drop in investments and production threatens Colombia’s tax revenue targets, despite recent offshore gas discoveries.

While Brazil remains the regional leader with over 3 million barrels of daily production, Venezuela, once a dominant producer, has shown slight recovery in output, securing its position as South America’s second-largest oil producer.

[SLOW] From Argentina To World Monthly Trade Flow (CRUDE,CO)

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U.S. Gasoline Prices Drop Below $3 a Gallon for First Time Since 2021

The average U.S. gasoline price fell to $2.97 per gallon on Monday, the lowest level since May 2021, marking a relief for consumers amid years of inflation. The decline follows a steady drop in fuel prices since the end of the summer driving season, with Oklahoma recording the lowest average price at $2.42 and Hawaii the highest at $4.48.

Improved global refining capacity, including new plants in Nigeria and Mexico, alongside stable demand growth, has alleviated supply constraints that had caused gasoline prices to surge past $5 per gallon in 2022 during the Russia-Ukraine conflict. Experts predict prices may decrease further by 10-15 cents by Christmas, continuing to support consumer spending.