2024.12.11

Oil Prices Rise on China’s Stimulus Plans and European Supply Concerns

Oil prices edged higher on Tuesday, driven by optimism surrounding rising Chinese crude imports and concerns about potential supply tightness in Europe during the winter. Brent crude closed at $72.19 per barrel, and U.S. West Texas Intermediate (WTI) settled at $68.59.China's announcement of a potential easing of monetary policy in 2025, the first such shift in 14 years, bolstered market sentiment. Additionally, November saw the first annual growth in Chinese crude imports in seven months, though analysts noted this increase stemmed from stockpiling rather than immediate demand.In Europe, speculation about winter demand spurred hedge fund buying. Meanwhile, developments in Syria, including efforts by rebels to establish governance and reopen the oil sector, were seen as unlikely to cause broader disruptions in Middle Eastern oil supply.Market participants also eyed potential impacts from the U.S. Federal Reserve's upcoming interest rate decision, which could further stimulate demand in the world's largest economy if a rate cut materializes.

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Hengli Buys 12M Barrels of Mideast Oil Amid Tight Iranian Supply

Hengli Petrochemical purchased 12 million barrels of Middle Eastern crude, mainly from TotalEnergies, using its expanded 2024-2025 import quota. The move comes as Iranian oil supplies to China tighten due to reduced discounts and stricter U.S. sanctions. Hengli denied buying Iranian crude previously, despite reports. This shift highlights the challenges Chinese refiners face as they turn to costlier non-Iranian oil.

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Eastern Pacific Shipping to Equip MR Tanker with Wind Sails for Decarbonization

Eastern Pacific Shipping (EPS), backed by Idan Ofer, has partnered with Spanish cleantech firm Bound4Blue to install three suction sails on a new MR tanker under construction at New Times Shipbuilding in China, slated for delivery in late 2025. This marks EPS's second collaboration with Bound4Blue, following a prior deal to retrofit suction sails on the Pacific Sentinel.

The initiative is part of EPS’s broader decarbonization efforts, which also include carbon capture technology and graphene-based coatings across its fleet. Bound4Blue currently has suction sail orders for 14 vessels, signaling growing industry interest in wind-assisted propulsion systems (WAPS). EPS’s newbuilding program extends through 2029, with six MR tankers on order at New Times Shipbuilding.

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US Projects Small Oil Deficit for 2025 Amid Outlook Shift

The U.S. Energy Information Administration (EIA) has revised its 2025 global oil market forecast, predicting a 100,000-barrel-per-day deficit, reversing last month’s projection of a 300,000-barrel-per-day surplus. This shift follows OPEC+ delaying planned production increases, which the EIA expects will tighten supply.The International Energy Agency (IEA), however, maintains a contrasting view, forecasting a 1 million-barrel-per-day surplus for 2025. Analysts suggest the revised EIA outlook reflects reduced bearish sentiment but may not significantly impact market trends, as OPEC+ decisions are already priced in.West Texas Intermediate crude remains rangebound, trading above $68 per barrel, with forecasts suggesting prices will stay within the $65–$75 range. Meanwhile, Saudi Arabia's price cuts for Asian buyers highlight ongoing concerns over weak demand and rising non-OPEC production.

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Dynacom Tankers Expands Suezmax Fleet to $1.5bn with New Orders in China

Dynacom Tankers is set to expand its suezmax fleet by ordering four new 163,000-dwt crude carriers from Qingdao Beihai Shipbuilding in China. This deal will increase Dynacom's suezmax orderbook to 18 vessels, worth around $1.5 billion, with deliveries scheduled for 2027-2028. Qingdao Beihai is entering the suezmax market after focusing on bulkers. This follows previous orders by Dynacom for suezmaxes from Samsung Heavy Industries and New Times Shipbuilding. Strong demand for suezmax tankers is linked to long-haul Russian oil exports and higher time-charter returns.

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Iranian Seizure of VLCC Sparks Legal and Political Battle

Iran's year-long detention of the Greek-owned VLCC Niovi (309,000 dwt, built 2005) over a cargo dispute has drawn sharp criticism for violating international maritime laws. The tanker was seized by the Islamic Revolutionary Guard Corps (IRGC) in Oman’s waters in May 2023, allegedly under a politically motivated pretext.

The ship's owners, Grand Financing Co., and managers, Smart Tankers, are suing insurers who denied a $43.75m claim, citing non-compliance with advice to attend an Iranian court hearing. UK-based Iranian law expert Mohammad Nayyeri criticized Iran's judicial actions, describing them as politically driven and dictated by IRGC Intelligence.

The insurers argue that US sanctions rules complicate payment, while the ship’s owners contend the seizure violates Iranian and international law under the right of innocent passage. The case highlights broader tensions involving Iran’s use of ship seizures in disputes often tied to sanctions.

The International Maritime Organization has engaged Iranian officials on the fate of multiple seized vessels, but details remain limited.

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