2024.11.25

Oil Prices Surge 1% to Two-Week High Amid Ukraine Conflict and Global Economic Shifts

Oil prices rose about 1% on Friday, reaching a two-week high, driven by heightened geopolitical risks from the escalating Ukraine-Russia conflict.

Brent crude settled at $75.17 per barrel, and U.S. WTI crude closed at $71.24, with both benchmarks gaining roughly 6% for the week.

Russia intensified its missile testing while facing new U.S. sanctions targeting Gazprombank.

Meanwhile, China's crude oil imports are expected to rebound in November, bolstered by government measures to support trade.

India, the third-largest oil importer, also saw increased demand. However, economic concerns in Europe, including a downturn in business activity and sluggish German economic growth, pressured prices.

In the U.S., strong economic indicators boosted the dollar to a two-year high, potentially curbing global oil demand due to increased costs for non-dollar buyers.

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China’s November Crude Oil Imports Surge Amid Price Cuts and Seasonal Demand

China's crude oil imports are set to rebound in November, reaching their highest levels since August 2023, driven by price cuts and seasonal demand ahead of the Lunar New Year.

Analysts estimate imports at 10.7–11.4 million barrels per day (bpd), with significant growth in Middle Eastern supplies from Saudi Arabia and Iraq, spurred by reduced official selling prices for October-loading cargoes.

The recovery follows six months of annual declines as refiners faced weak margins. Lower global oil prices in September encouraged stockpiling, particularly in Shandong Province, where strategic and commercial reserves were bolstered with Russian and Middle Eastern crude.

Although Iranian oil imports dipped due to geopolitical concerns, independent refiners accelerated purchases to utilize year-end quotas, and strategic stockpiling is expected to continue with Russian ESPO crude. This import surge positions China to meet increased fuel demand and enhance supply security.

[SLOW] Trade Flow _ From Kozmino To China Monthly Trade Flow (CRUDE)

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Europe's Path to Zero Dependence on Russian Gas Accelerates

The closure of a key Ukrainian pipeline by year-end signals the nearing end of Europe’s reliance on Russian gas, a dependency that accounted for 42% of EU gas imports in 2021 but has now dropped to 14%. Structural changes, including Europe’s pivot to renewable energy and increased LNG imports, have reshaped the gas market.

The EU's REPowerEU initiative, spurred by Russia's invasion of Ukraine, and sanctions on Russian LNG have diminished Moscow's competitive advantages. European gas storage is already 95% full, ensuring stability despite the pipeline shutdown's impact on Austria, Hungary, and Slovakia, which rely heavily on Ukrainian transit.

With new LNG supplies from the U.S., Asia, and North Africa, and reduced gas usage overall, Europe is on track to meet its goal of eliminating Russian gas dependency by 2027. Even steep discounts from Russia are unlikely to entice Europe back to its former energy partner due to trust and geopolitical concerns.

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U.S. Oil and Gas Rig Count Declines for Second Week

U.S. drillers reduced oil and gas rigs to 583, the lowest since September, marking a 6% year-over-year drop. Oil rigs rose by one, while gas rigs fell by two, with significant declines in Haynesville and Colorado. Rising costs, weaker prices, and a focus on shareholder returns drive the reduction, as firms plan flat spending in 2024 after years of growth.

 [SLOW] Oil Rig Count

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Indian Refiners Boost Crude Processing in October Amid Rising Domestic Demand

Indian refiners increased crude processing by over 3% year-on-year in October to 5.04 million barrels per day, driven by strong domestic demand fueled by robust economic growth. Crude imports also rose 3.9% month-on-month, while product exports fell over 22%, reflecting a focus on meeting local consumption needs.

Russian oil imports climbed to a three-month high of 1.95 million bpd, constituting around 40% of total imports. Looking ahead, Hindustan Petroleum plans to raise its crude import deal with Iraq by 43% to 100,000 bpd in 2025, signaling further diversification and expansion of India's energy supply.

 [SLOW] From World To India Monthly Trade Flow (CRUDE)

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Zodiac Maritime Expands Fleet with Dual-Fuelled Product Tankers

Zodiac Maritime, led by Eyal Ofer, has ordered two dual-fuel aframax product tankers from China’s New Times Shipbuilding. Each 115,000-dwt LR2 vessel is expected to cost around $75 million, with delivery slated for 2027. The LNG dual-fuel ships are designed to comply with upcoming EU environmental regulations, such as FuelEU, and will primarily operate in Europe.

This order increases Zodiac’s LR2 newbuilding count to four, complementing two scrubber-fitted tankers commissioned last year at Yangzijiang Shipbuilding. Over the past decade, Zodiac has significantly expanded its fleet, which now includes around 150 diverse vessels. It currently has 25 newbuilds under construction across China, Japan, and South Korea, highlighting its commitment to fleet renewal and environmental compliance.

 [SLOW] Shipyard Analytics

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Odfjell Expands Storage Capacity in South Korea to Support Chemical Exports

Odfjell Terminals Korea (OTK) will expand its Ulsan terminal with the E5 project, increasing storage capacity by 28% to over 400,000 cbm. The expansion includes 10 carbon steel tanks designed for chemicals like benzene, methanol, aromatics, and ethanol, in response to strong demand for storage in Northeast Asia. The project will also support the nearby $7bn S-Oil Shaheen crude-to-chemical facility, enhancing export capabilities.

OTK and S-Oil have signed a 10-year MoU for the storage of chemicals from the Shaheen project, which will be connected via pipeline for efficient export. Construction is set to begin in 2025, with new tanks operational by 2026. Odfjell’s stake in OTK is 50%, in partnership with Korea Petrochemical Industry Co.