Oil Prices Drop 2% to 12-Week Low Amid OPEC+ Output Increase and US Tariff Worries

Oil prices fell by approximately 2% to their lowest levels in 12 weeks, driven by news that OPEC+ will proceed with a planned increase in oil output starting in April and concerns over U.S. tariffs potentially harming global economic growth and oil demand. Brent crude dropped $1.19 (1.6%) to $71.62 per barrel, while West Texas Intermediate (WTI) crude fell $1.39 (2.0%) to $68.37. This marks the lowest close for Brent since December 6 and for WTI since December 9. The decline comes amid multiple negative factors, including the OPEC+ decision to raise production, U.S. manufacturing data, peace talks in Ukraine, and tariff issues. OPEC+ has been reducing output by 5.85 million barrels per day to support prices, but the planned increase in April has led to market pressure. Additionally, U.S. President Donald Trump's tariff proposals on Canada and Mexico, along with potential sanctions relief for Russia, are contributing to broader economic uncertainty. As tariffs could potentially slow U.S. economic growth, analysts are concerned about the impact on energy demand, which has led to a 10% decline in WTI prices over the last six weeks. Speculators have reduced their positions in U.S. crude futures, further weighing on market sentiment.

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US Port Fees for Chinese-Linked Ships Could Surge to $3.5M, Impacting Global Trade

US port fees for Chinese-linked ships could rise significantly if the Trump administration proceeds with additional levies, with charges reaching up to $3.5 million per port call. Chinese-operated or ordered vessels may face up to $1 million per visit, while Chinese-built ships could be charged as much as $1.5 million. Currently, US port call costs are around $80,000, making the proposed fees a dramatic increase. Clarksons Research estimates that 36,595 port calls last year, or 43% of all US port calls by internationally trading ships, would have been affected by the new measures. Sector exposure varies, with 83% of container ship calls, 68% of car carrier calls, and 44% of bulk carrier calls falling within the maximum proposed scope. Additional costs would significantly impact shipping, with an MR tanker trading from the US Gulf to Northern Europe potentially seeing an extra $26–$39 per tonne in freight costs. The new fees could disrupt US import demand, export competitiveness, and global shipping patterns, potentially leading to vessel reorganization to minimize costs. The US accounts for 12% of global seaborne trade, with 47% of LPG trade and 8% of dry bulk trade at stake. Within the Chinese-built fleet, 11% of LNG carriers and 48% of bulk carriers would be affected, adding to potential disruptions. Final decisions on the levies will be made after a March 25 hearing, with further developments likely depending on US-China negotiations.

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VLCC Demand Poised to Rise as Trump Threatens Chevron’s Venezuela Oil Deal

VLCC demand could increase if former US President Donald Trump cancels Chevron’s license to export Venezuelan crude, disrupting crude flows and increasing long-haul shipments. Venezuela exported 234,000 barrels per day to the US in 2024, primarily to the Gulf Coast, accounting for a quarter of its production. Analysts predict these exports could drop to 700,000 bpd overall, while a shift to alternative suppliers like the Middle East could boost tonne-miles by 0.2% to 0.5%. The potential loss of Chevron’s involvement could severely impact Venezuela’s crude production due to its technical and logistical support. US Gulf refiners have already diversified their crude sources, turning to Canadian, Mexican, and Middle Eastern grades, but tariffs on Mexico and Canada set to take effect in March could further complicate supply chains. Currently, 209,000 bpd of Venezuelan crude is still being exported to the US, mostly on aframax tankers. If the Chevron deal is revoked, most of Venezuela’s crude could shift to Asia, with China and India as primary buyers, increasing tonne-miles and freight costs. The shift could also pressure Venezuela to lower crude prices and rely more on intermediaries, eroding its oil trade earnings. Analysts note that Chevron expects a six-month wind-down period if the license is revoked, though the impact on other companies remains uncertain.

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Frontline Profits Shrink as Shadow Fleet Disrupts Asian Trades, But Market Outlook Improves

John Fredriksen’s tanker company Frontline reported a weaker-than-expected fourth quarter, with profits falling to $66.7 million from $118.4 million the previous year due to the impact of shadow fleet tankers on Asian trades. While revenue increased slightly to $425.6 million from $415 million, rising vessel operating costs and depreciation offset the gains, leading to a reduced annual profit of $496 million compared to $656 million in 2023. CEO Lars Barstad cited soft global oil demand growth and slower seaborne exports as key factors, despite stricter enforcement of sanctions on Iran and Russia. He noted that these countries still supply a significant portion of Asia’s crude, reducing demand for Frontline’s fleet. However, market conditions have improved in the first quarter, with VLCCs fixing at $43,700 per day for 80% of available days, suezmaxes averaging $35,400 per day with 77% booked, and LR/aframaxes securing $29,700 per day for 64% of available days. Frontline highlighted that 11.3% of the global VLCC, suezmax, and aframax/LR2 fleets are now under US sanctions. Recent self-sanctioning measures by China’s Shandong Port Authority and India’s indications that it will not handle blacklisted vessels have begun shifting trade patterns toward compliant suppliers, increasing demand for non-sanctioned tonnage. More compliant tankers are now being pulled into Russian trades, tightening available capacity for mainstream shipping and potentially reversing the downward pressure on compliant tanker demand that has persisted since Russia’s invasion of Ukraine.

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India Receives First-Ever Medanito Crude Cargo as Refiners Seek Alternatives to Russian Oil

India has imported its first cargo of Argentinian Medanito crude as it looks for alternatives to sanctioned Russian oil. The 105,000-dwt aframax Sigma Triumph (built 2009), controlled by the Offen Group, delivered about 700,000 barrels from Puerto Rosales to Bharat Petroleum’s Mumbai refinery, marking the first time an Asian buyer has received Argentina’s predominant crude export. It was also India’s first Argentinian crude import since June 2018, when the Mangalore Refinery imported Escalante crude. Medanito crude is primarily consumed in the Americas, with the US being the largest importer, accounting for 60% of the 82,000 barrels per day exported in 2024. India's crude imports are expected to exceed 5 million barrels per day (bpd) in February, setting another record after January’s peak, with Middle East Gulf arrivals at 2.4 million bpd and Latin American crude imports nearly doubling from 251,000 bpd in January. Meanwhile, Indian crude oil inventories have dropped to an all-time low of 80.33 million barrels, a 54% utilisation rate, the lowest since Kpler began monitoring in 2017. Despite strong demand indicators, Kpler forecasts lower refinery runs in the second quarter due to increased maintenance, which may curb oil product demand growth. In 2023, trader Trafigura launched a new export point for Medanito crude via Puerto Galvan in Bahia Blanca, supported by infrastructure investments at its refinery. The facility, set for completion this year, will handle 4.8 million barrels per month, with a 130,000 cbm storage capacity. Once draught restrictions are lifted, suezmax vessels will also be able to load at Puerto Galvan, enhancing export flexibility to global markets.

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Greek Shipping Ramps Up Russian Crude Transport Amid Discounted Oil Flow to India and Turkey

Greek-operated aframax tankers have significantly increased their involvement in carrying Russian crude, taking advantage of discounted prices for deliveries to India and Turkey, according to Vortexa data. This marks a 12-month high in the volume of Russian oil transported on Greek vessels, with operators from diverse backgrounds entering the trade. Many of these vessels, some of which hadn't carried Russian crude for months or even years, are now participating in these shipments, a sign of Russia's need to offer discounts to maintain exports. Since US sanctions on Russian shipping in January, India and Turkey have become key buyers of Russian oil, with both countries adhering to the $65 per barrel price cap imposed by G7 nations. If the price exceeds this threshold, buyers must resort to shadow fleet vessels, risking sanctions. Meanwhile, the price of Russian Urals crude has recently dropped below the $65 mark, making it more attractive. Greek-operated aframax vessels, many of which previously operated in the Mediterranean and Atlantic basin, are benefiting from fewer ships in the region, leading to higher freight rates. However, rates for some European routes have seen a decline.

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Libya Announces First Oil Exploration Bidding Round in 17 Years

Libya is set to launch its first oil exploration bidding round in over 17 years, as announced by Masoud Suleman, the acting Chairman of the National Oil Corporation (NOC). Despite political instability and disruptions, including a significant drop in oil production in August due to rival factions, Libya remains Africa's second-largest oil producer and an OPEC member. Major companies such as Eni, OMV, BP, and Repsol resumed exploration activities in 2023 after a decade-long hiatus. Libya's current crude output is over 1.4 million bpd, slightly below pre-civil war levels, and it seeks up to $4 billion in investment to reach 1.6 million bpd. The country is exempt from OPEC+ output agreements.

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Kazakhstan Hits Record Oil Production of 2.12 Million Bpd in February, Exceeding OPEC+ Quota

Kazakhstan increased its crude oil and gas condensate production in February to a record high of 2.12 million barrels per day (bpd), marking a 13% rise from January, according to a source familiar with the official data. This output exceeded Kazakhstan's OPEC+ quota of 1.468 million bpd for the second consecutive month. Crude oil production alone surged by 15.5% to 1.83 million bpd, while the Chevron-led Tengiz oilfield saw production jump to 904,000 bpd from 640,000 bpd, following maintenance completion and an expansion program. Despite challenges, including a recent drone attack on the Caspian Pipeline Consortium (CPC), Kazakhstan's oil exports remain on track, with 80% of its oil transported via CPC. The energy ministry has yet to comment on the data.