2024.11.26

Oil Prices Plunge Over $2 Amid Potential Israel-Lebanon Ceasefire Deal

Oil prices fell sharply on Monday, with Brent crude dropping 2.87% to $73.01 per barrel and U.S. WTI crude sliding 3.23% to $68.94. The decline follows reports of a possible ceasefire agreement between Israel and Lebanon to end the Israel-Hezbollah conflict, according to unnamed U.S. officials. Despite no actual supply disruptions from the conflict, the ceasefire news has impacted market sentiment, with analysts noting fluctuating fears of supply interruptions.

This comes after last week's oil price surge fueled by geopolitical tensions, including Russia’s use of hypersonic missiles in Ukraine. Additionally, OPEC+ is set to meet on Dec. 1 to discuss maintaining current output cuts, with Azerbaijan signaling support for the existing policy.

[SLOW] Oil Market

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China Issues Extra Crude Oil Import Quotas for 2024-2025

China has granted an additional 5.84 million metric tons of crude oil import quotas to independent refineries for end 2024 and early 2025.

The move aims to boost imports after a November rebound driven by discounted shipments.

Beneficiaries include Shandong-based "teapot" refineries and Hengli Petrochemical.

Analysts expect increased interest in Iranian oil amid rising prices and Middle East supply concerns.

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

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Kazakhstan Plans Major Oil Export Shift to Bypass Russia

Kazakhstan aims to significantly increase oil exports via Turkey’s Ceyhan port, reducing reliance on Russia, which currently handles over 80% of its shipments. The country plans to expand exports through the Baku-Tbilisi-Ceyhan (BTC) pipeline from 1.5 million to 20 million metric tons annually, though no timeline has been set.

In 2024, Kazakhstan will export 68.8 million tons of oil, primarily through Russian routes. Production for the year is expected at 88.4 million tons, slightly below its original target due to maintenance and OPEC+ commitments. From 2026, Kazakhstan forecasts annual output exceeding 100 million tons, potentially reshaping global supply dynamics.

[SLOW] Flow - Oil PipeLine

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Flag-Hopping VLCC Sold Amid Declining Vintage Tanker Values

The 281,000-dwt Tricia II (built 2000) has been sold for $20.9M amid a downturn in vintage tanker values, significantly below its assessed value of $24.9M. The VLCC has a history of frequent flag and name changes, having cycled through ownerships since leaving NYK control in 2020. It was detained in China in September due to safety deficiencies.

Market trends show falling tanker asset values, with five-year-old MRs losing nearly 10% in two months. Analysts expect more aged vessels to be scrapped as shadow fleet saturation impacts prices. Recent sales include the Taiga (built 2007), sold for up to $45M to Chinese buyers, highlighting varied price pressures in the tanker market.

 [SLOW] Flow

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Persistent Tanker Weakness Causes Concern as Aframaxes Struggle, Says Sources

Tanker rates are under significant pressure in the traditionally stronger fourth quarter, with the biggest impact on Aframaxes, according to Sources. Despite global seaborne trade growing by over 6% in tonne-miles in 2024, Aframaxes have seen a 2.5% drop in tonne-miles, driven by reduced demand from Russia, attacks in the Red Sea, and maintenance issues in Libya and the North Sea.

Suezmax demand remains stable, but VLCCs have seen growth, especially from the US Gulf and Latin America. The clean tanker market presents a more complex picture, with LR2 demand rising early in the year but now facing downward pressure due to shifts from dirty to clean cargo. MRs and handysize tankers have been impacted by lower clean exports from Europe and a weakening Chinese economy. Sources concludes that while seasonal fluctuations may offer some relief, demand may not return to recent highs.

 [SLOW] Aframax Market Monitor

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Israel and Hezbollah Close to Ceasefire Deal Amid Ongoing Clashes

Israel and Hezbollah are nearing a ceasefire agreement, with Israel's security cabinet set to vote on the deal. The 60-day truce would require Hezbollah fighters to move away from the Israeli border, while the US and France monitor compliance. Despite ongoing rocket attacks, Israeli officials remain hopeful for a deal, though some issues remain unresolved. Hezbollah's military setbacks have led to a softer stance, but concerns over Israel's right to strike if violations occur persist.