2025.01.20

Oil Prices Show Slight Dip Amidst Geopolitical Uncertainty and Demand Concerns

Oil prices experienced a slight dip on Friday but managed to secure their fourth consecutive weekly gain, with Brent crude rising by 1.3% and WTI adding 1.7%.(Brent crude $80.79 per barrel, . U.S. West Texas Intermediate crude $77.88 per barrel ) Concerns about potential disruptions in oil supply were heightened by the latest U.S. sanctions on Russian energy trade. President-elect Donald Trump’s return to power also raised speculation about tighter sanctions on Russian oil. Additionally, the market was closely monitoring the possibility of Houthi attacks on shipping in the Red Sea being halted following a Gaza ceasefire deal. Despite these factors, expectations for increased demand from the U.S. and China provided some support to oil prices. On the other hand, China's oil refinery throughput faced a decline for the first time in over two decades due to stagnant fuel demand and depressed margins. In the U.S., the oil rig count dropped by two, indicating a potential impact on future output. A blast of Arctic air was forecasted to hit the U.S. causing below freezing temperatures, which could lead to an increase in heating oil demand and potentially affect production operations in the sector.

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Houthi militant group ceases attacks on non-Israeli ships after Gaza ceasefire agreement

The Houthi militant group has announced a halt to their campaign against non-Israeli ships, following a ceasefire agreement for Gaza. They will no longer attack vessels operated by Israeli companies or ships heading to Israeli ports once the peace deal is fully implemented. However, Israeli-owned ships are still barred from certain sea routes. The announcement is a significant development after a year-long campaign that resulted in two sunk ships, four dead seafarers, and disruptions to shipping routes. This news has also led to a decrease in war risk insurance rates and discussions about ships returning to the region, although experts advise a cautious approach.

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US Energy Firms Cut Oil and Gas Rigs to Lowest Level Since December 2021

US energy firms reduced the number of oil and natural gas rigs operating to the lowest level since December 2021, with a total count of 580 rigs. sources reported that oil rigs decreased by two to 478, the lowest since November, while gas rigs also dropped by two to 98, the lowest since September. In specific regions, drillers cut two rigs in the Haynesville shale, four rigs in the Williston basin, and one rig in Louisiana. Despite a decline in rig counts over the past few years due to lower prices, the U.S. Energy Information Administration predicted an increase in crude oil production to 13.6 million barrels per day in 2025. On the gas side, EIA projected a 43% increase in prices would lead to increased drilling activity and gas output of 104.5 billion cubic feet per day in 2025.

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Colonial Pipeline Resumes Operations on Main Gasoline Pipeline After Leak in Georgia

Colonial Pipeline has resumed operations on its main gasoline pipeline after repairing a leak in Georgia. The pipeline, which delivers fuel from the Gulf Coast to East Coast markets, was shut down earlier in the week due to the leak in Paulding County. Market disruptions were minimal, but supply had tightened in some areas. It is expected to take some time for terminals to fully catch up after missing several days of batches. Demand may also slow down as terminals clear out extra inventory. Colonial Pipeline has completed repairs and is continuing remediation efforts in coordination with state and local agencies. Details on the cause of the damage and the amount of fuel released have not been provided.

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OPEC's Share in India's Crude Oil Imports Rises in 2024, Russian Supplies Expected to Drop

In 2024, OPEC's share in India's crude oil imports increased for the first time in nine years, reaching nearly 51.5%. This rise comes as Russian supplies to India are expected to drop in 2025 due to US sanctions targeting Russian producers. Despite this, Russia remained the top oil supplier to India in 2024, followed by Iraq and Saudi Arabia. The share of Middle Eastern oil in India's December crude imports also reached a 22-month high at around 52%. Indian refiners have been increasing purchases of Middle Eastern grades as Russian supplies decline. OPEC's share had previously been decreasing since 2016 as Indian refiners diversified their purchases to reduce costs.

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US Tanker Sanctions Disrupt China's Oil Shipments More Than India's, Impacting Global Energy Markets

Recent US tanker sanctions have caused more disruption in China's oil imports from Russia compared to India, affecting over 60% of tankers carrying Espo crude to China.The analysts highlighted broader implications of the sanctions on global shipping and energy markets, targeting networks enabling sanctions evasion. Blacklisting of vessels could lead to a shortage of legitimate tankers, increasing freight rates and posing challenges for operators worldwide.

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