Update28 Jan 2025 14:39
- The ramifications of the Biden administration’s sanctions on Russia’s shadow fleet continue to roil oil markets, with the Brent-Dubai spread traded on ICE Futures expanding to its widest since at least 2015.
- The Middle East’s Dubai medium sour benchmark traditionally trades at a discount to Brent, but panic buying from Indian and Chinese refiners sent it to a $2.1 per barrel premium over the global benchmark.
- Asian refiners prefer prompt cargoes that are set to load over the upcoming weeks to avoid any shortfalls in crude deliveries, with frantic purchases putting Dubai’s average daily traded volume this month to 56,000 contracts, the highest on record.
- As Dubai-pegged grades become too expensive, Chinese refiners have almost doubled their purchases of Brazilian crude, buying almost 800,000 b/d for April, whilst India’s spot tenders have seen state-owned refiners like IOC doubling down on West African sweet barrels from Nigeria and Angola.
Market Movers
- US oil major ExxonMobil (NYSE:XOM) started exploratory drilling its Electra prospect in offshore Cyprus, previously describing the area west of the island as ‘highly promising’ despite it being the first ever wildcat in Block 5.
- US oil and gas firm ConocoPhillips (NYSE:COP) has taken over the Kebabangan cluster of fields in offshore Malaysia with an export capacity of 750 MMCf/day, following Petronas’ transfer of operator right.
- Appalachia-focused US oil producer Diversified Energy (NYSE:DEC) agreed to buy private equity-owned Maverick Natural Resources for $1.28 billion, boosting its Permian exposure with some 77,000 boe/d of production.
Tuesday, January 28, 2025
The media frenzy of Donald Trump’s first week in office has not been reflected in oil price movement as ICE Brent continues to trade in a relatively thin bandwidth of $77-79 per barrel. However, risks are tilted to the downside with ballooning Dubai backwardation, continuously weak Chinese manufacturing numbers, and Trump’s messaging vis-à-vis OPEC. It would take a major disruption – such as a potential shutdown in Libya – to send Brent futures back above $80 per barrel.
Deportation Rows Adds to Trump Risk Premium. Donald Trump’s threats to slap a 25% tariff on Colombia’s imports to the United States have roiled commodity markets, with 41% of Colombian oil exports sold in the US, a move averted by Bogota’s agreeing to take in deported migrants.
Trump Halts All Environmental Litigation. US President Donald Trump has reportedly halted all pending environmental litigation and reassigned four Justice Department attorneys, despite not being political appointees, focused on the issue to the newly created Sanctuary City Working Group.
Protesters Seek to Block Libyan Exports Again. Oil loadings from two key Libyan ports, Es Sider and Ras Lanuf with a combined capacity of some 450,000 b/d, have been brought to a standstill after protesters blocked the sites, dema
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