2024.11.27

Oil Prices Dip Amid Israel-Hezbollah Ceasefire and Market Shifts

Oil prices dropped as Israel's ceasefire agreement with Hezbollah reduced geopolitical risk premiums. Brent crude closed at $72.81 per barrel, and U.S. WTI settled at $68.77 per barrel. Analysts predict further price pressure if U.S. sanctions on Iranian oil are relaxed due to the ceasefire.

Meanwhile, OPEC+ is deliberating delaying a planned production increase, citing weak demand and rising global supply, ahead of a key policy meeting. Despite brief spikes, oil prices remained subdued due to uncertain demand recovery and policy outlooks.

Additionally, U.S. President-elect Donald Trump announced a 25% tariff on Mexican and Canadian imports, including crude oil. This could disrupt North American energy trade, despite Canada's oil being a critical U.S. import. The American Petroleum Institute warned against such tariffs, highlighting the importance of maintaining energy flows.

[SLOW] Oil Market

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Pemex Reports Decline in October Crude Oil Production

Pemex's crude oil and condensate production fell to 1.72 million barrels per day (bpd) in October, marking a 7.8% year-on-year drop and the lowest level in 2024.

Crude oil output alone declined 8% to 1.45 million bpd. Despite the dip, refinery processing rose 20% year-on-year to 730,000 bpd. The new Olmeca refinery in Dos Bocas processed no crude in October, following sporadic output in previous months.

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Gazprom’s 2025 Plans Assume End of Ukraine Gas Transit

Gazprom’s internal 2025 plans anticipate a complete halt of Russian gas transit to Europe via Ukraine after the current deal expires on December 31. While Moscow has expressed openness to continuing transit, Kyiv opposes an extension, ending a decades-long energy link and cutting Ukraine's $1 billion annual transit revenue.

Russian gas exports to Europe and Turkey are expected to fall 20% in 2025, to under 39 billion cubic meters, as Europe shifts away from Russian energy. Supplies to Turkey via the TurkStream and Blue Stream pipelines remain steady, while exports to China via Power of Siberia are set to grow. The war and damaged infrastructure have significantly reduced Russia's role as a European gas supplier.

[SLOW] Flow - Gas PipeLine

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UK to Ramp Up Fines for Russian Sanctions Breaches, Says Enforcement Chief

Giles Thomson, head of the UK's Office of Financial Sanctions Implementation (Ofsi), has promised more and larger penalties for breaches of Russian sanctions, addressing criticism over limited enforcement. Ofsi has issued just one fine since Russia's invasion of Ukraine but currently investigates 400 cases, with only a small fraction expected to result in penalties or public naming.

Thomson highlighted the growing sophistication of sanctions enforcement, targeting insurers and financiers, and blacklisting vessels linked to violations. Despite some viewing the oil price cap as ineffective, he argued it had strained Russia's finances, forcing a $10 billion investment in its fleet. The agency aims to accelerate its 27-month investigation timeline and bolster compliance amid global shifts in financial systems.

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Secondhand Tanker Market Gains Momentum Amid Falling Prices

The secondhand tanker market saw increased activity this week, with the sale of two veteran VLCCs, including the 306,400-dwt Xidi (built 2004), reportedly purchased by Asian buyers for over $30 million. Despite the uptick in transactions, asset values for older vessels continue to decline, with Xidi valued at $35 million, down from $41 million a year ago.

Another sale involved the 281,000-dwt Tricia II (built 2000) for $20.9 million, lower than its $24.9 million valuation. Industry experts note that sellers dominate the market for aging tankers, though there are "soft" signs of stabilizing prices.

 [SLOW] Flow

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Israel and Hezbollah Agree to 60-Day Cease-Fire Amid Conflict

Israel and Hezbollah have agreed to a 60-day ceasefire following U.S.-mediated talks. The deal aims to halt violence along the Lebanon-Israel border, though both sides continued attacks shortly after the announcement. The truce is seen as a step toward broader peace efforts, including ending the Gaza conflict. Israel insists on Hezbollah's disarmament in southern Lebanon, and the right to strike if the ceasefire is violated. The agreement has received mixed reactions in Israel, with some officials opposing it, while markets responded positively.