Oil Drops to Two-Month Low Amid Rising U.S. Fuel Stockpiles and Russia-Ukraine Peace Prospects

Oil prices fell to two-month lows on Wednesday as a surprise build in U.S. fuel stockpiles signaled demand weakness, while a potential Russia-Ukraine peace deal added further pressure. Brent crude settled down 49 cents (0.67%) at $72.53 per barrel, while WTI fell 31 cents (0.45%) to $68.62—both at their lowest since December 10. Despite an unexpected draw in crude oil inventories, rising gasoline and distillate stockpiles pointed to weaker consumption, according to the EIA. ING strategists noted improving prospects for a Russia-Ukraine peace deal, which could lead to lifted sanctions and ease supply concerns. Saxo Bank analyst Ole Hansen warned that U.S. President Donald Trump’s policies, including increased Iraqi exports and tariff strategies, could weigh on oil prices. Meanwhile, the U.S. and Ukraine reached terms on a draft minerals deal, aligning with Trump's push to end the war swiftly. ANZ analysts suggested that fears of a trade war are overshadowing supply concerns, even as new U.S. sanctions on Iran and a reversal of Biden-era concessions to Venezuela take effect.

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Crude Tanker Market Awaits OPEC+ Boost Amid Supply Uncertainty

Clarksons predicts a strong 2025 for crude tankers, expecting OPEC+ to begin unwinding production cuts in April, leading to a 2% rise in global oil production to 105 million barrels per day (bpd). The Middle East’s output is projected to increase by 1% (400,000 bpd) to 29.6 million bpd, which could support crude oil trade growth of 1.6% and crude tanker demand growth of 1.3%. However, analysts at Kpler remain doubtful, citing 650,000–700,000 bpd of non-OPEC supply growth, which could reduce OPEC’s incentive to increase production. Geopolitical factors, including US President Donald Trump’s renewed sanctions on Iran, have influenced the market. Iranian crude exports declined from 1.4 million bpd in January 2024 to 1.3 million bpd in January 2025, with nearly all shipments heading to China. Sanctions have driven Chinese buyers towards mainstream tankers, boosting VLCC demand. Freight rates have responded to market shifts, with VLCC time-charter equivalent (TCE) rates surging from $23,995/day in January to $39,223/day, while Suezmax rates jumped from $22,821/day to $40,362/day, peaking at $44,887/day on February 17. In contrast, Aframax rates have declined slightly from $29,272/day to $27,705/day. While the crude tanker market remains hopeful for an OPEC+ production boost, ongoing uncertainty over supply and geopolitical shifts will continue to shape tanker earnings.

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Ukraine Strikes Russian Tuapse Oil Refinery, Moscow Claims 83 Drones Downed in Southern Region

On Wednesday, Ukraine's military claimed it attacked Russia's Tuapse oil refinery on the Black Sea coast, recording at least 40 explosions at the site. Tuapse is home to one of Russia’s largest oil refineries, which had been previously targeted by Ukrainian drones. Ukraine also targeted two military airfields in Crimea, but did not provide further details. Meanwhile, Russia stated that it downed 83 Ukrainian drones overnight over its southern Krasnodar region, including the port of Tuapse, with some residential houses in the region damaged, though no injuries were reported. Russia's aviation watchdog briefly closed Sochi’s international airport, located 150 km from Tuapse, to ensure air safety.

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Trump Revokes Chevron’s Venezuela Oil License, Halting Key Crude Exports

Trump revoked Chevron’s license to operate in Venezuela, citing the Maduro government’s failure to meet electoral conditions and migrant return agreements. The decision ends Chevron’s ability to export 240,000 barrels per day (bpd) of Venezuelan crude, over 25% of the country’s total oil output. The U.S. government had previously estimated that oil activities covered by U.S. licenses, including Chevron and European firms, generated $2.1 billion to $3.2 billion annually in royalties and taxes for Venezuela. The move follows Biden’s reimposition of broad oil sanctions in April, although he had left Chevron’s license intact. The cancellation could impact crude shipments already en route to U.S. refineries.

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Mexico’s Pemex Crude Exports Drop 44% to Historic Low Amid Quality Issues

Mexico’s state energy company Pemex saw crude oil exports plunge 44% year-on-year in January to 532,404 barrels per day (bpd), marking their lowest level since records began in 1990. Exports to the Americas, primarily the U.S., fell 36% to 320,944 bpd. Pemex’s total crude oil and condensate production dropped 12% year-on-year to 1.62 million bpd. Despite this, gasoline production rebounded while fuel imports declined 23% from January 2024. Refining output across Pemex’s seven refineries fell 7% to 886,787 bpd, with no production recorded at the new 340,000 bpd Olmeca refinery. The company attributed the export decline to temporary crude quality issues, including excessive salt and water content.

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US Policy on Iran Poses Major Risk to Oil Market, Says Trafigura

Trafigura’s head of oil trading, Ben Luckock, warns that US foreign policy toward Iran is the biggest upside risk to crude prices in an otherwise well-supplied market. Brent crude prices have dipped into the low $70-per-barrel range as risk premiums from conflicts in Ukraine and the Middle East ease. Trafigura, which moves an average of 6 million barrels of oil and products per day, equivalent to the demand of South Korea and Brazil combined, sees uncertainty over Iranian exports under Trump’s renewed “maximum pressure” strategy. Meanwhile, about 1,000 vessels in the shadow fleet continue to transport oil from Russia, Iran, and Venezuela. Luckock also suggests that shifting US and European policies could lead to renewed imports of Russian oil before Europe, should a Ukraine deal be reached.

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US and Russia Discuss Arctic Trade and Energy Cooperation

US and Russian officials are exploring Arctic cooperation on trade routes and energy, aligning with President Trump’s efforts to improve ties with Moscow. Talks coincide with Trump’s push to end the Ukraine war, unsettling NATO allies. Some US officials see Arctic collaboration as a way to weaken Russia-China ties, but their growing partnership makes this unlikely. The region’s strategic value is rising with melting ice opening new shipping lanes and resource opportunities. Russia’s Direct Investment Fund confirmed Arctic energy talks, while the US military remains wary of Russian-Chinese alignment in the area. China continues expanding its Arctic presence through its Polar Silk Road initiative.

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Cosco Defies US Tariff Threats with Massive Shipbuilding Expansion

Cosco Shipping is moving forward with a multibillion-dollar shipbuilding program, showing no signs of slowing down despite US proposals to impose tariffs on Chinese-built or operated vessels. The company is in talks with multiple domestic shipyards to order more than 70 new vessels, following its 2023 order of around 100 ships. The expansion includes a diverse range of ship types such as Panamax and Suezmax tankers, Kamsarmax and Newcastlemax bulk carriers, container ships, and stainless-steel chemical tankers. Key orders include up to 18 Panamax tankers at Dalian Cosco KHI Ship Engineering, 12 Kamsarmax bulk carriers at Mawei Shipbuilding, and a potential order of 30 Newcastlemax bulk carriers. Eco-friendly technologies play a role in the expansion, with new 210,000-DWT bulk carriers scheduled for delivery between 2027 and 2028 featuring methanol dual-fuel propulsion and ammonia-ready capabilities, while Cosco Lines is backing 11,000-TEU methanol dual-fuel boxships. Financially, Chinese leasing firms such as Everbright Financial Leasing and Citic Financial Leasing are expected to support the expansion, with subsidiaries like Cosco Shipping Bulk and Cosco Shipping Energy Transportation set to charter vessels under long-term contracts. Cosco has already begun its ordering spree, having recently invested $479 million in six new tankers, including Aframax crude carriers, LR2 tankers, and Panamax tankers, following a 2023 spree that included six VLCCs, over 50 midsize bulkers, LNG carriers, and container ships. By continuing to invest heavily in fleet renewal and expansion, Cosco is reinforcing its position as a global shipping leader despite geopolitical challenges.