2025.01.21

Oil Prices Decline as Market Awaits President Trump's Energy Executive Orders

Oil prices declined as the market awaited President Trump's executive orders on energy. New US sanctions impacted supply and ship availability, while analysts anticipated Trump might relax restrictions for a deal on Ukraine. A ceasefire between Israel and Hamas also contributed to stabilizing prices. Trump's inauguration brought promises of a national energy emergency, filling strategic reserves, and expanding US energy exports. His focus on expedited approval for energy projects sparked a decline in Brent and WTI crude (Brent crude at $80.15 // U.S. West Texas Intermediate crude at $76.58 / bbls) . Trump plans to sign executive orders related to Alaska and trade reform, potentially lifting the moratorium on LNG export licenses. Recent price gains may depend on Trump's actions, especially regarding Russian sanctions in response to the Ukraine conflict. Putin congratulated Trump before his inauguration, expressing willingness to engage in dialogue on Ukraine and nuclear arms. The Middle East ceasefire between Hamas and Israel, along with Yemen's Houthis indicating they will only target Israel-linked vessels after the ceasefire, contributed to keeping oil prices in check.

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Extreme Cold Weather Causes 12% of North Dakota's Oil Production to Shutdown

About 12% of North Dakota's oil production has been impacted by extreme cold weather, causing a shutdown of between 125,000 to 150,000 barrels per day. This represents about 12% of the region's total oil output, which is 1.1 million barrels per day. The state's natural gas production has also been affected, with a decrease of 11%. However, temperatures are expected to rise in the coming days and most of the lost production is anticipated to be back online within the next four to seven days, according to Justin Kringstad, Director of North Dakota Pipeline Authority.

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China's Crude Oil Imports from Russia Hit Record High in 2024, Surpassing Saudi Arabia

In 2024, China's crude oil imports from top supplier Russia reached a new high, increasing by 1% compared to the previous year. This record high was driven by refiners seeking discounted Russian supplies to offset weakened margins. Meanwhile, imports from Saudi Arabia decreased by 9% in 2024. Seaborne supplies from Russia were supported by demand from independent refiners and state oil majors, as well as government stockpiling mandates. Saudi Arabia, the largest OPEC producer, saw its market share in China decline due to competition from cheaper Russian and Iranian oil. Total crude oil imports into China declined by 1.9%, marking the first annual fall not related to pandemic-induced factors. Malaysia, a trans-shipment hub for sanctioned oil, saw a 28% increase in imports to China. Despite pressure from thinning margins and weak demand, purchases from Iran and Venezuela remained limited in 2024. Imports from Brazil rose significantly, while imports from the U.S. declined.

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Indian Refiners Seek Pricing from ADNOC on Delivered Basis amid Surging Freight Costs

Indian state refiners are requesting ADNOC to provide pricing for crude oil on a delivered basis as well as freight costs soar due to sanctions disrupting supplies. India, as the world's third-largest oil importer, has been heavily impacted by rising global oil prices and shipping rates, leading to a shift back to traditional Middle East sources after relying on discounted Russian oil. State-owned refiners are seeking DAP price quotes from ADNOC in addition to FOB quotes to potentially secure better pricing amid increasing freight rates. While ADNOC typically sets prices on an FOB basis, the Indian refiners are looking to negotiate DAP terms with other Middle East suppliers as well. This change would make Indian companies liable for the cargoes only after they are discharged, allowing for more flexibility in managing costs. With the possibility of increased purchases in the next fiscal year, Indian state refiners are evaluating their options to ensure the most cost-effective procurement strategy.

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Trafigura Leads Resurgence in VLCC Time-Charter Market

The VLCC time-charter market has seen a resurgence this year, with Trafigura being the most active charterer. The Singapore-based trader has secured three out of seven period charters for large crude oil tankers. Trafigura chartered the Olympic Trophy, Nave Synergy, and Landbridge Glory, all equipped with scrubbers and eco-designed. Other deals include Olympic Lady to Unipec and Nave Buena Suerte to Mercuria. Last week, Almi Tankers chartered Almi Titan and Almi Atlas to Sinokor Maritime for three years at a rate slightly lower than market assessments. The market is showing signs of activity and improvement, with Trafigura leading the way.

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Canadian Oil Prices Rise on Relief of Potential Trump Tariffs

Canadian oil prices have risen as a result of indications that newly-elected US President Donald Trump will not immediately impose tariffs on Canadian crude. The discount on Western Canadian Select crude compared to West Texas Intermediate oil has narrowed, suggesting a positive outlook for the Canadian oil industry. However, while tariffs may not be implemented on Trump's first day in office, they could still be introduced in the future following a review of trade policies with China, Canada, and Mexico. Alberta Premier Danielle Smith's warning about potential tariffs on Canadian exports contributed to the weakening of Canadian crude prices last week. Nevertheless, there are signs of recovery as the discount on light Canadian crudes has also decreased. Overall, the outlook for the Canadian oil industry seems hopeful despite the ongoing trade war threats and uncertainties.

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