Oil Prices Drop 2% to Two-Month Low Amid Economic Uncertainty and Rising Supply

Oil prices fell about 2% to a two-month low as economic concerns in the U.S. and Germany raised fears of weaker energy demand. Brent crude dropped $1.76 (-2.4%) to $73.02, while WTI crude fell $1.77 (-2.5%) to $68.93 per barrel. U.S. consumer confidence saw its sharpest decline in 3.5 years, and inflation concerns may prompt the Federal Reserve to keep interest rates high, slowing growth. Trump's March 4 tariffs on Canadian and Mexican imports could restrict supply but are seen as a negative factor for global demand. A potential Russia-Ukraine peace deal may lift sanctions, increasing Russian oil supply, while Iraq and Nigeria are ramping up production. Trump’s support for the Keystone XL pipeline may further boost U.S. oil flows. Analysts expect a 2.6-million-barrel increase in U.S. crude inventories, marking the first five-week stock build since March 2024. With weakening demand signals and rising supply, oil prices face continued downward pressure.

___________________________________

Trump Pushes for Keystone XL Pipeline Revival Despite Company’s Exit

Donald Trump reaffirmed his support for the Keystone XL pipeline on Monday, pledging easy regulatory approvals and an immediate start if he returns to office. The $9 billion project, originally proposed in 2008 to transport 830,000 barrels per day of Canadian oil to U.S. refiners, was revoked by Biden in 2021, leading TC Energy to halt construction. In a social media post, Trump urged the company to "come back to America," but South Bow Energy, which took over TC Energy’s oil pipeline business, stated it had moved on from Keystone XL and was exploring other options for increasing Canadian oil exports. TC Energy is also seeking $15 billion in damages from the U.S. government over the cancellation. The project had faced years of opposition from environmentalists, landowners, and Native American tribes, citing climate concerns and legal challenges. Trump originally approved the pipeline in 2017, but it never fully overcame regulatory and legal hurdles. Despite his push for its revival, the likelihood of Keystone XL’s return remains uncertain as South Bow Energy shifts its focus elsewhere.

___________________________________

Iraq and BP Sign $25 Billion Deal to Boost Kirkuk Oil Production

Iraq and BP have signed an agreement to redevelop four Kirkuk oil and gas fields, aiming to increase production by 150,000 barrels per day (bpd) and stabilize output. The project, expected to cost up to $25 billion, will include drilling new wells, rehabilitating existing facilities, and expanding gas infrastructure to support Iraq’s domestic energy needs. BP’s remuneration will be tied to production volume, oil prices, and costs, allowing the company to book a share of the reserves. The agreement, subject to final government ratification, marks a significant step for Iraq, where oil production has been hindered by years of war, corruption, and sectarian tensions. The deal comes as BP plans to shift its focus back to oil and gas investments after reducing renewable energy commitments. BP, which first discovered oil in Kirkuk in the 1920s, estimates the field holds nine billion barrels of recoverable oil. The company also operates Iraq’s Rumaila oilfield, where it holds a 50 percent stake in a joint venture.

___________________________________

Nigeria Increases Oil Production to 1.8 Million Barrels per Day

Nigeria's oil production has risen to 1.8 million barrels per day, a significant increase from 1 million barrels a year ago, according to the country's minister of state for petroleum, Heineken Lokpobiri. At an oil conference in Abuja, Lokpobiri highlighted an 80% growth in production since he became minister. However, the current output still falls short of Nigeria's goal of 2 million barrels per day set for its 2025 national budget. The government has intensified efforts to combat oil theft in the delta region, which it believes will further boost production in the coming year.

___________________________________

Sanctions on Tankers Drive Demand, Pushing Rates Higher

New US and EU sanctions on tankers linked to Iran and Russia are expected to significantly increase demand for mainstream vessels, according to Fearnley Securities. The US blacklisted 13 vessels, including five VLCCs, while the EU added 65 more ships, with limited overlap between the two lists. Over 10% of the VLCC and suezmax fleet and nearly 20% of the aframax/LR2 fleet are now blacklisted, complicating crude and clean product exports from Iran and Russia. Fearnley analysts suggest stricter enforcement will force importers to seek alternatives, driving demand for non-sanctioned tankers. To replace 1 million bpd of Iranian crude exports to China, 25 VLCCs are needed, but only five VLCCs are scheduled for delivery this year. This creates a potential upward pressure on tanker rates, leading to a positive outlook for the sector.

___________________________________

Iran Faces Shipping Challenges as Tanker Shortage Intensifies Amid Competition with Russia and Venezuela

Iran's oil exports are facing significant challenges due to a growing shortage of available tankers, exacerbated by increased competition from Russia and Venezuela. As sanctions continue to target vessels involved in Iranian crude transport, the pool of unsanctioned tankers has dwindled, with only a small number remaining to carry high-risk cargoes. Russia's increased demand for tankers, driven by higher freight rates, is further limiting options for Iran. The country also struggles to move around 25 million barrels of crude stored in China from 2018-2019, with some tankers facing stricter US sanctions. Iranian crude exports have dropped from 1.76 million barrels per day in November to 1.5 million barrels per day, and analysts predict a further decline by mid-year. If US sanctions on Russian tankers were lifted, it could alleviate some of the pressure, making more shipping capacity available for Iran.

___________________________________

EU Seeks India's Support to Enforce Sanctions on Russia Amid Trade Talks

European Commission President Ursula von der Leyen will meet Indian Prime Minister Narendra Modi in New Delhi to discuss Russia sanctions enforcement, as part of broader EU-India talks. The EU aims to intensify sanction enforcement on Russia due to its war in Ukraine, which the EU sees as a global threat. While India has not condemned Russia, it advocates for dialogue and diplomacy and observes only UN sanctions. The leaders will also address market access issues, including high Indian tariffs on cars and wine, as part of free trade negotiations. Additionally, discussions will cover a trade corridor linking India to Europe through the Arabian Peninsula, with the EU offering to help develop infrastructure for better connectivity. Despite regional changes, particularly due to the Gaza conflict, there is growing urgency for closer cooperation between India and the EU due to global geopolitical shifts.

___________________________________

Shell Predicts 60% Growth in Global LNG Demand by 2040, Led by Asia

Shell forecasts a 60% rise in global LNG demand by 2040, driven by economic growth in Asia, AI-driven energy efficiency, and efforts to reduce emissions in heavy industries and transport. The latest outlook estimates demand to reach between 630 million and 718 million metric tons per year, exceeding last year’s forecast of 625 million to 685 million tons. China and India are expanding LNG import capacity, with China’s total gas imports reaching 131.69 million tons in 2023, of which 76.65 million tons was LNG. India’s natural gas consumption is expected to increase 60% by 2030, doubling its LNG import needs. Emerging markets like Algeria, Egypt, Malaysia, and Indonesia are seeing rising gas demand, but domestic production in these regions may decline by up to 50 million tons over the next 15 years. To meet demand, over 170 million tons of new LNG supply is expected by 2030, but delays due to geopolitical tensions, regulations, and supply chain issues have postponed 30 million tons of new supply until 2028. The U.S. and Qatar are expected to dominate the LNG market, providing around 60% of global supply by 2035, with U.S. LNG exports potentially reaching 180 million tons annually by 2030. Europe’s LNG demand will continue to grow beyond 2025, with existing gas infrastructure potentially repurposed for bio-LNG and hydrogen imports in the long term.