Oil Prices Slide Further as U.S.-China Trade War Clouds Global Demand Outlook

Oil prices continued to decline on Monday, with Brent crude at $64.47 and U.S. WTI at $61.23 per barrel, down around 0.45% each, as escalating U.S.-China trade tensions dim global economic prospects. Since the start of the month, both benchmarks have dropped by about $10 per barrel. Goldman Sachs forecasts Brent to average $63 and WTI $59 for the rest of 2025, with a further decline in 2026 to $58 and $55 respectively. It also predicts global oil demand will rise by only 300,000 barrels per day in Q4 2025, with petrochemical feedstocks hit hardest. The trade war intensified after Beijing raised tariffs on U.S. goods to 125%, retaliating against Trump’s previous increases. While some tech imports were temporarily spared, new U.S. duties targeting semiconductors and critical technology are expected within two months. China’s weakening economy, reflected in falling consumer and producer prices, raises concerns about domestic oversupply and reduced demand. Meanwhile, U.S. oil firms cut the most rigs in a single week since June 2023, though geopolitical tensions, particularly potential U.S. action to block Iranian oil exports, may offer limited price support.

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U.S. Tariffs Stall Chevron’s Venezuela Crude Shipments Amid Growing Trade Tensions

Chevron’s crude oil exports from Venezuela have been disrupted as two tankers—Carina Voyager and Dubai Attraction—halted shipments to the U.S. in response to continued 25% tariffs imposed by the Trump administration. Four additional tankers—Pegasus Star (116,000 dwt), Ionic Anax (115,000 dwt), Calypso (112,000 dwt), and Sea Jaguar (114,000 dwt)—are also anchored off Venezuela, unable to load due to suspended PDVSA operations. The Carina Voyager was headed for Chevron’s Pascagoula refinery, while Dubai Attraction was scheduled to offload near Aruba. These tankers are owned and operated by companies from Greece, Dubai, and other international shipping firms. The Trump administration also revoked Chevron’s license to transport Venezuelan crude, though the company has until May 27 to comply. Venezuelan crude exports had already been declining since the tariffs took effect last month. In response, President Nicolás Maduro declared an economic emergency, citing a U.S.-led global trade war. Vice President Delcy Rodriguez emphasized Venezuela's efforts to sustain and recover its oil and gas production while encouraging “non-traditional exports” to stabilize the economy.

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Chinese Teapot Refiners Boost Iranian Oil Stockpiles Amid Rising U.S. Sanctions Pressure

China’s smaller “teapot” refiners have rapidly increased their imports of Iranian crude oil as U.S. sanctions intensify against Tehran. Chinese crude imports reached 10.6 million barrels per day in March, the highest since October 2023, with 1.5 million bpd destined for Shandong province. Onshore inventories in Shandong rose by more than 20 million barrels last month, marking the fastest monthly stock build on record and closely tied to the influx of Iranian oil. OFAC’s latest sanctions blacklisted 28 Iran-linked tankers and an individual, Jugwinder Singh Brar, escalating fears of disrupted supply. This led refiners to fast-track stockpiling of Iranian crude, considered essential feedstock. Although Shandong Ports Group declared it would reject U.S.-sanctioned ships in January, refiners continued importing Iranian oil despite the risks. Initial optimism that China might shift toward other Middle Eastern suppliers boosted mainstream tanker rates temporarily. However, VLCC rates have since declined, with the fleet average falling 2.2% to $41,900 per day, down 8% from last week and below the quarterly and yearly averages of $46,900 and $44,100 respectively.

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U.S. Energy Chief Asserts Capability to Halt Iran’s Oil Exports Amid Rising Tensions

U.S. Energy Secretary Chris Wright asserted that the U.S. can halt Iran's oil exports as part of President Trump’s renewed maximum pressure strategy against Tehran’s nuclear program. Wright emphasized that oil export control is “very doable,” citing Trump’s success in reducing Iranian shipments during his previous term. Although Iranian oil exports rebounded under President Biden and remain steady in 2025, China continues to be Iran’s main buyer despite opposing unilateral sanctions. Wright declined to specify methods but said "everything is on the table," including military options, if diplomacy fails. Iran, meanwhile, expressed cautious optimism ahead of high-level nuclear talks with the U.S., though tensions remain elevated after Trump’s warning of potential military action. Wright also projected a positive outlook for global oil supply and demand under Trump’s policies, predicting stable prices and improved profitability through deregulation and innovation. He denied direct coordination with OPEC+ but confirmed strong ties with Gulf allies, who share U.S. concerns about a nuclear-armed Iran. Wright's comments come amid a broader Middle East tour, including upcoming visits to Saudi Arabia and Qatar.

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Russia’s Oil Export Profits Plunge to Lowest Level Since 2023 Amid Market Weakness

Russia’s oil export profitability, measured by the netback for deliveries from Western Siberia to the Baltic port of Primorsk, dropped to a two-year low this week. The netback fell to 32,759 roubles ($392) per metric ton on April 8, the lowest since June 2023, due to declines in global oil prices. This metric is crucial for domestic oil pricing and reflects traders' profitability after excluding transportation and associated costs. The fall poses a challenge for the Russian government, already grappling with high inflation and slowing economic growth. Reuters estimates the discount on Russia's Urals crude compared to Brent at $11.88 per barrel. Recently, Urals crude prices for shipments from Primorsk, Ust-Luga, and Novorossiisk dropped to about $53 per barrel. This is significantly below the $69.70 per barrel average used in Russia’s 2025 state budget projections. As oil remains a key revenue stream, continued price weakness could put further pressure on Russia’s fiscal planning.