2024.12.20

Israeli Air strikes on Yemen target oil and port facilities

Israeli air strikes on Houthi-controlled oil and port facilities in Yemen killed nine people and injured three, targeting locations in Sanaa, Hodeidah, and Ras Isa. The strikes were in retaliation for missile attacks on Israel, with one intercepted missile triggering sirens in central Israel. The attacks damaged multiple vessels and oil infrastructure, with maritime intelligence advising ships to adopt safety measures. Israel's defense minister issued a stern warning to Houthi leaders, while Houthi-run media shared footage of the strikes and alleged damage in Israel, though the group did not claim responsibility for the recent missile.

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China's oil demand to peak by 2027 amid energy transition : Sinopec

Sinopec projects China’s oil demand will peak at 800 million tons (16 million barrels per day) by 2027, driven by EV adoption and LNG-fueled trucks. Gasoline and diesel demand will drop 2.4% and 5.5% by 2025, while petrochemicals will dominate oil consumption by 2060. Natural gas use will plateau at 620 bcm by 2040, with trucking and power generation driving growth. Geopolitical risks, including potential U.S. sanctions on Iranian oil, add uncertainty. China’s carbon emissions are now expected to peak higher, at up to 11.12 billion tons before 2030.

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Sinopec's Zhenhai Refinery boosts capacity to 40 million tons

Sinopec's Zhenhai oil refinery has completed a major expansion, increasing its crude oil processing capacity from 23 million metric tons to 40 million metric tons annually (around 800,000 barrels per day). The $5.7 billion investment included 18 new units for processes like atmospheric distillation, catalytic cracking, and polypropylene production. The expanded facility aims to supply approximately 8 million tons of petrochemical products annually for industries such as automotive, household appliances, and textiles. Operations are expected to commence in late December or early January, with some units starting in the first week of January.

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US crude exports to Europe set to decline in January amid rising costs and tight margins

U.S. crude oil exports to northwest Europe, which hit a record high of 771,000 barrels per day in November, are expected to decline in January. The narrowing price spread between West Texas Intermediate (WTI) and Brent crude, now at a $3.40 discount, and rising freight costs—up to $3.80 per barrel—have made transatlantic shipments less profitable. U.S. crude inventories, including at the key Cushing, Oklahoma hub, have also dropped to a 17-year low, reducing export availability. Analysts highlight that a WTI discount of $4 or more against Brent is critical for sustaining high export levels. The changing economics reflect higher freight rates and WTI Midland's influence on Brent pricing, impacting shipments to key European markets like Amsterdam-Rotterdam-Antwerp.

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PDVSA and Reliance resume oil swap under US authorization

Venezuela's PDVSA and India's Reliance Industries have restarted an oil swap arrangement following U.S. authorization granted in July, after a prior broad license expired in April. Reliance recently shipped 500,000 barrels of heavy naphtha to Venezuela in exchange for 1.9 million barrels of Merey crude, with plans to pay cash for the remaining balance. Before sanctions, India was Venezuela's second-largest crude market, but U.S. restrictions redirected most exports to China. The current sanctions framework could change under the incoming U.S. administration, potentially disrupting Venezuela’s oil exports to the U.S. and further shifting flows toward Asia. Venezuela has criticized the sanctions as an "economic war" but claims resilience against their impact.

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BP and Iraq finalize terms for redeveloping Kirkuk oil fields

BP has reached a technical agreement with the Iraqi government to redevelop the Kirkuk oil and gas fields, following an August deal that includes power plant and solar capacity projects. Iraq, OPEC's second-largest oil producer with a capacity of nearly 5 million barrels per day, aims to finalize the contract by early 2025. Unlike previous contracts with minimal margins, new agreements may feature a profit-sharing model. The Kirkuk field, discovered by a BP-led consortium in the 1920s, holds an estimated 9 billion barrels of recoverable oil. BP also operates the southern Rumaila field, holding a 50% stake in the venture.

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EU's New Climate Rule to raise shipping fuel costs starting January

The EU's FuelEU Maritime regulation, effective January 1, will require a 2% reduction in greenhouse gas emissions from shipping fuels, raising the industry's fuel bills. To comply, shippers may incorporate biofuels like B30, potentially increasing fuel costs by $30 per ton. An alternative, pooling with other ships using low-emission fuels like e-methanol, could reduce compliance costs to under $20 per ton. Ships that ignore the rule could face penalties of $65 per ton. The regulation is expected to have a greater financial impact than the EU Emissions Trading System, particularly for vessels operating within the EU.