2025.02.05

China strikes back with additional tariffs on US Imports

China responded swiftly to new U.S. tariffs by imposing additional tariffs on American imports, including a 10% tariff on all Chinese imports into the U.S. China's Finance Ministry announced levies on U.S. coal, LNG, crude oil, farm equipment, and some vehicles. China also began an anti-monopoly investigation against Google and included PVH Corp and Illumina on a list for potential sanctions. Furthermore, China is imposing export controls on critical metals. The new tariffs will start on Feb. 10, giving time for negotiations between Washington and Beijing. Trump suspended tariffs on Mexico and Canada and plans to speak with Chinese President Xi Jinping. The trade tensions between the U.S. and China have escalated, with the possibility of further tariffs on the horizon. The market is concerned about a protracted global trade war, with uncertainties surrounding a quick resolution between the two countries.

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Tanker rates surge as trade tensions escalate: VLCC rates up nearly 10%

Tanker rates are on the rise due to recent tariff developments. VLCC rates surged nearly 10% in response to escalating trade tensions between the US, Canada, Mexico, and China. China's 10% retaliatory tariffs on US crude oil could potentially reduce VLCC spot rates. The US delayed tariffs on Mexican and Canadian goods, except for energy products. Despite a decrease in rates on some routes, overall tanker rates are up compared to last week. US charges on Canadian oil are seen as the most impactful, as the US imports 4m barrels of Canadian oil daily. Some speculate that Canadian producers may sell cargoes abroad or adjust prices to offset the tariffs.

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Oil prices volatile amid US-China tariff conflict and Trump's pressure on Iranian exports

Oil prices fluctuated on Tuesday due to ongoing tariff conflict between the U.S. and China, as well as U.S. President Trump's renewed efforts to drive Iranian oil exports down to zero. Trump signed a memorandum ordering maximum economic pressure on Iran, leading to a drop in U.S. crude prices but an increase in Brent crude futures. The tension between the U.S. and China over tariffs also impacted oil prices, with concerns about weakening demand. Trump's decision to suspend tariffs on Mexico and Canada temporarily added to the uncertainty in the market. The ongoing trade tensions are expected to affect oil prices, especially if the U.S. dollar strengthens and OPEC+ increases oil supply. China's targeted tariffs on U.S. crude oil imports are likely to impact the market, potentially leading to higher prices for consumers. Additionally, U.S. crude oil and gasoline stocks saw mixed results last week, with an increase in crude stocks and gasoline inventories but a decrease in distillate stocks. These factors are contributing to the volatility and uncertainty in the oil market.

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Fire at Iraq's largest oilfield leads to decrease in VLCC shipments

VLCC shipments from Iraq are expected to decrease due to a fire at the country's largest oilfield, which led to a production cut of 300,000 barrels per day. The fire at tank No 2 at the DS5 station in North Rumaila was quickly controlled, with no serious injuries reported. Recovery to previous output levels is uncertain, and the oil ministry is conducting safety checks before resuming operations. Rumaila holds 17 billion barrels of oil, with exports of 1.2 million barrels per day. Shipments on VLCCs accounted for 78% of exports in 2024, mainly to China and India. Any decrease in Iraqi output could impact the VLCC segment, and increased demand from Chinese and Indian refiners due to sanctions on Russia and the shadow fleet could further affect the market. Middle East Gulf to Asia VLCC spot rates have risen to $41,900 per day, up 49% in a week.

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European Union and US shipowners profited $6bn from selling tankers to Russian shadow fleet since 2022

European Union and US shipowners have profited $6bn from selling tankers to the Russian shadow fleet since 2022. Greek owners made $3.8bn from these sales, with non-specified nations making $1.3bn. Despite sanctions on Russian oil shipments, tankers continue to be sold to the shadow fleet. The EU introduced rules requiring notification of tanker sales to non-EU parties but lacks the power to block deals. The UK has threatened jail time and fines for sanctions-busting sales but has not followed through. Hellenic owners sold 261 tankers sold between 2022 and 2024. Tankers loading at the Russian port of Primorsk in 2024 changed hands for $1.5bn. Greek, Norwegian, and UK sellers were the top three, while buyers were from the UAE, Seychelles, and Turkey. The project involved 40 journalists from 12 newsrooms and based findings on data from the Kyiv School of Economics.

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Suez Canal traffic remains low despite Houthi ceasefire

Despite a Houthi ceasefire opening the Red Sea to maritime traffic excluding ships tied to Israel, ship traffic through the Suez Canal remains low, with minimal increase in daily transits. The slow return to normal levels is due to logistical challenges in changing schedules, fears of the ceasefire unraveling, and the profitability of reroutings around Africa. While product tankers have seen a slight increase in traffic, overall numbers remain below pre-crisis levels. Egypt's Suez Canal Authority is trying to attract companies back by assuring them of full capacity operation. However, a recent announcement about a tanker attacked by Houthis was likely a mistake, showing the challenges in restoring confidence in the canal's safety and reliability.

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