2025.01.31

U.S. Tariffs on Canadian and Mexican Crude Imports Limiting Oil Prices

Oil prices are being limited by threatened U.S. tariffs on Canadian and Mexican crude imports. (Brent crude $76.87 a barrel. U.S. crude at $72.73 a barrel) President Trump has warned of a 25% tariff if fentanyl shipments are not stopped. Winter storms have impacted U.S. demand, causing crude oil stockpiles to rise. Sanctions on Russia are also affecting crude oil exports. OPEC+ is set to meet on Feb. 3 to discuss U.S. oil production and potential price wars. However, analysts believe a price war with the U.S. is unlikely as it could harm both parties.

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VLCC Evgenia I Loads First Crude Shipments for Nigeria's Dangote Refinery from Cameroon

VLCC, the Evgenia I, became the first ship to load crude in Cameroon for Nigeria's Dangote refinery. The tanker took on two 1 million-barrel cargoes from floating storage and production units. The cargoes consisted of Lokele crude and Doba blend, both destined for Dangote and marked Cameroon as the refinery's second West African supplier. With Dangote's crude imports projected to reach 464,000 barrels per day in January, the refinery is moving towards its full 650,000 bpd capacity target. The state-owned Port Harcourt refinery has also resumed operations, contributing to Nigeria's refining recovery. Nigeria's crude runs are expected to exceed 400,000 bpd in the first quarter of 2025. Nigerian National Petroleum Corp has been sending more crude to Dangote, reducing longer-haul exports and affecting Atlantic aframax demand. Dangote has shifted focus from importing US barrels to using VLCCs. On the export side, an aframax tanker loaded a cargo of petrol from Dangote's fuel unit in October.

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Russia Sending Sanctioned Tankers to India in Effort to Maintain Oil Exports

Following the US blacklisting of tankers, Russia is testing its ability to maintain oil exports by sending sanctioned tankers to India with cargoes lifted after the latest sanctions. The Biden administration sanctioned 183 more ships on 10 January, with India indicating that it will accept tankers loaded before the sanctions if they arrive by 27 February. Data shows that blacklisted tankers have taken on Russian crude destined for Indian refineries. Tankers have left the Arctic port of Murmansk, while vessels from Sakhalin Island are also en route to India. Indian refiners are hopeful that the new administration will soften these sanctions, as questions remain about the transfer of oil from sanctioned to unsanctioned vessels. The expanded sanctions have impacted the Russian trade, with only one out of 19 tankers loading Espo crude at Russian Pacific ports being sanctioned by the US.

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Possible Tie-up Between Trafigura and Sinokor Maritime Co Surfaces: Collaboration on VLCCs?

Indications of a possible tie-up between Trafigura and Sinokor Maritime Co are starting to surface, as Trafigura lists Sinokor VLCCs in its position list. The listed vessels include Coshonour Lake, Gem No.2, South Loyalty, Esteem Explorer, and Habrut. These VLCCs are believed to be chartered by Trafigura on short-term time charters at floating, index-linked rates. Rumors suggest the companies may merge their commercial operations on VLCCs, giving them shared access to over 100 vessels. However, neither company has confirmed this speculation. Some speculate that the two companies may have formed a joint venture, staffed by employees from both sides. Despite the lack of clarity, market players believe Trafigura and Sinokor have been doing business together for some time. Sinokor, led by GH Chung, has been expanding its fleet of chartered VLCCs, while Trafigura has shown confidence in the large tanker sector with new orders in China. The relationship between the two companies remains blurry, with some suggesting they prefer to keep their actions undisclosed to keep competitors guessing.

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Tanker Loadings Slashed at Russian Port of Ust-Luga Due to Technical Problems and US Sanctions

Tanker loadings at the key Russian oil port of Ust-Luga have been cut in half in January due to technical problems, with volumes reduced to 350,000 barrels per day. This drop in exports adds to Russia's export issues following new US sanctions on the shadow fleet. The January schedule included oil carried over from December, when the port loaded 565,000 bpd. The full capacity of Ust-Luga is 700,000 bpd. The drop-off in exports began in mid-December, shortly after supplies were halted through the Druzhba pipeline. Meanwhile, trading in March-loading Russian oil in Asia has slowed down as tanker rates and oil prices rise. ESPO crude exported from the Russian Pacific port of Kozmino has seen premiums spike to between $3 and $5 per barrel over the ICE Brent benchmark. This increase in prices comes after the US sanctioned 183 ships on January 10, causing freight costs to soar and stalling the market.

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President Trump Announces Tariffs on Imports from Canada, Mexico, and China

President Trump has announced that he will impose a 25% tariff on imports from Canada and Mexico beginning on February 1st, citing reasons such as drug trafficking and trade deficits. He also mentioned that China could face a 10% tariff due to issues with fentanyl. The move has caused market fluctuations and concerns about potential trade wars. Canada and Mexico have vowed to respond with their own tariffs if necessary. Trump believes that tariffs will benefit domestic manufacturing, despite warnings from industry groups about negative economic consequences. The US president is also considering tariffs on other sectors and countries, as he aims to fulfill his campaign promises and generate revenue through these measures.

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