Oil Prices Surge Over 2% as U.S. Revokes Chevron’s Venezuela Licence

Oil prices rose more than 2% as Brent crude settled at $74.04 per barrel (+2.1%) and WTI crude reached $70.35 (+2.5%) following the U.S. decision to revoke Chevron’s licence to operate in Venezuela. This move prevents Chevron from exporting 240,000 barrels per day—over 25% of Venezuela’s total output—and could lead to alternative export agreements for Venezuelan crude. Analysts warn that this could reduce Venezuela’s production, allowing OPEC+ to increase output, potentially raising costs for U.S. refiners. Meanwhile, OPEC+ is debating whether to raise or freeze production in response to new U.S. sanctions on Venezuela, Iran, and Russia. Trump’s involvement in a Russia-Ukraine peace deal remains a key factor in market stability, as uncertainty continues to influence oil prices. Additionally, U.S. economic growth slowed in Q4, and jobless claims rose more than expected, fueling concerns about economic momentum.

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Trump Confirms Tariffs on Canada, Mexico, and China Set to Take Effect March 4

President Donald Trump has confirmed that 25% tariffs on Canada and Mexico will go into effect on March 4, along with an additional 10% tax on Chinese imports. These tariffs, initially delayed in February, are being reinstated due to continued drug trafficking from these countries. The tariffs will apply to nearly all imports from Canada and Mexico, with the exception of Canadian energy products, which will be taxed at a lower rate of 10%. Trump has been dissatisfied with the border security measures taken by both countries and is using tariffs as a tool to force action. In response to this, Canada and Mexico are lobbying to secure an additional reprieve, with Canadian and Mexican officials having traveled to Washington to present their case. Both countries have already taken steps to address the U.S. concerns, such as increasing border patrols and deploying troops to combat drug trafficking. However, Trump has been resolute in his stance, and if the tariffs are imposed, retaliatory measures from Canada and Mexico are likely. The new tariffs on China come on top of an earlier 10% duty imposed in February. This move is part of Trump's broader effort to target China over its role in the fentanyl trade, as much of the illegal drug comes from China and is trafficked into the U.S. through Mexico. China has objected to these tariffs, calling them a pretext. The threat of these tariffs is expected to have significant economic repercussions, with the potential for a trade war between the U.S. and its major trading partners, which could destabilize integrated supply chains and drive up prices for U.S. consumers.

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OPEC+ Weighs April Output Increase Amid Sanctions and Tariff Uncertainty

OPEC+ is debating whether to proceed with its planned oil output increase in April or freeze it due to uncertainty caused by new U.S. sanctions on Venezuela, Iran, and Russia, according to eight sources. The group, which typically finalizes its supply policy a month in advance, has until March 5-7 to decide, but no consensus has emerged. The UAE and Russia support the increase, while Saudi Arabia favors a delay. Oil prices, which surged above $82 per barrel in January, have since dropped to $73, partly due to optimism over a potential Russia-Ukraine peace deal. However, U.S. plans to cut Iran’s oil exports to zero and cancel Chevron’s Venezuelan license have kept prices from falling further. OPEC+ has been cutting output by 5.85 million barrels per day (about 5.7% of global supply) since 2022. The latest round of cuts, originally set to begin unwinding in April, may be postponed again, with some analysts predicting a delay until the second half of 2025.

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Russia to Resume Oil Projects in Iraqi Kurdistan After Resolving Disputes

Iraqi Kurdistan and the federal government have settled their oil disputes, allowing Russian companies to restart their projects in the region, according to Russia’s Energy Minister Sergei Tsivilev. One of the companies affected was Rosneft, Russia’s largest oil producer, which had halted operations near the Syrian border due to security concerns. The resumption of Kurdish oil exports has been a major point of contention between the region and Iraq’s federal authorities. Iraq’s oil minister, Hayan Abdel-Ghani, stated that Iraq is now waiting for Turkey’s approval to restart oil flows from Iraqi Kurdistan, hoping for resumption within days. Tsivilev emphasized the significance of this development for Russia, as its companies have invested heavily in the region but had to suspend projects due to previous disputes. Additionally, Russia’s state-owned Zarubezhneft is seeking to return to Iraq, having left in the early 1990s following Saddam Hussein’s invasion of Kuwait.

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Warming US Relations with Moscow Could Impact Russian Crude Flows to India

The potential softening of U.S. sanctions on Russia could significantly affect Russia’s crude oil exports to India. BRS Shipbrokers pointed out that the behavior of a suezmax tanker, the Cordelia Moon, anchored off India’s Vadinar, carrying Urals crude, might signal how India will manage sanctions on Moscow and its growing agreement to buy more U.S. oil. The tanker, which discharged its 1 million barrels of oil, reflects India’s balancing act between purchasing Russian crude at competitive prices and adhering to U.S. sanctions. Despite this, India’s focus remains on price, with the U.S. once being its largest crude oil provider, but Russian imports surged after the Ukraine invasion in 2022, peaking in March 2022 with over 460,000 bpd. However, by May 2023, Russian oil accounted for nearly half of India’s 5 million bpd imports. The U.S. was reintroduced as a key supplier after President Trump’s meeting with Prime Minister Modi, and India agreed to buy more U.S. crude. Following the U.S. sanctions on Russian oil, imports of Russian crude to India slowed, with the spread between West Texas Intermediate and Urals crude at a narrow $2.65 per barrel, pushing India to favor U.S. oil. While Russian oil shipments to India have dipped, U.S. imports surged, and Russian oil shipments are still en route to India, with tankers like the Kira K and Konya arriving in India. However, the situation remains fluid, and changes in U.S. policy could shape future flows.

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Equinor Plans $300M Investment in New Shuttle Tankers

Norwegian oil giant Equinor is looking to build up to two ice-class dynamic positioning two (DP2) shuttle tankers, with an estimated total cost of over $300 million. The newbuilds will include one firm 156,000-dwt vessel and an option for a second. These shuttle tankers will be chartered for at least 15 years, but Equinor is expected to reserve the building slots and appoint a shipping company to own them. It is unclear what fuel type will be chosen for the ships, but LNG-powered, ice-class vessels are expected to cost an additional $15-20 million. Equinor aims to take delivery of the vessels between 2027 and 2028, and has sought offers from South Korean and Chinese shipyards, with South Korean shipbuilders showing the most interest. The new shuttle tankers are likely to replace those currently operated under long-term contracts with Teekay Tankers and are intended for use in the North Sea.

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Frontline Sells Oldest Suezmax Tanker as Part of Fleet Overhaul

John Fredriksen-backed Frontline has sold its oldest tanker, the 157,000-dwt Front Brage (built 2011), as part of a fleet renewal strategy. The sale price is reported to be between $41 million and $42 million. Front Brage is the oldest vessel in the fleet, with the next closest being the 157,000-dwt Front Ull (built 2014). The sale follows Frontline's previous sale of three 2010-built suezmaxes in 2023, including the Front Odin, Front Loki, and Front Thor, for prices ranging from $45 million to $48 million. The sale price of the Front Brage aligns with current market valuations, with VesselsValue estimating it at $40 million. Asset values for suezmax tankers have fallen in recent months, with Clarksons and VesselsValue indicating a significant drop in valuations. Following the sale, Frontline retains 21 suezmax tankers in its fleet.