2025.01.03

Oil Prices Rise Amid China Growth Optimism and U.S. Inventory Data

Oil prices rose over $1 per barrel on the first trading day of 2025, driven by optimism about China's economy following President Xi Jinping's pledge to implement growth-promoting policies. Brent crude closed at $75.93 per barrel, up 1.7%, while U.S. West Texas Intermediate (WTI) settled at $73.13, up 2%.

Although China's factory activity slowed in December, analysts suggest this may prompt further economic stimulus. Meanwhile, U.S. gasoline and distillate inventories surged last week, reflecting lower-than-expected demand, which capped price gains. Crude stockpiles decreased by 1.2 million barrels, less than the anticipated 2.8 million.

Traders are also considering geopolitical risks, U.S. economic policies, and the upcoming ISM manufacturing data, which could influence oil's next moves. Analysts predict oil prices will remain constrained around $70 per barrel in 2025 due to weak Chinese demand and rising global supplies, despite OPEC+ efforts to stabilize the market.

In Europe, Russia halted gas exports through Ukraine after a transit agreement expired, though alternative arrangements have been made, and Hungary continues to receive Russian gas via the TurkStream pipeline.

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VLCCs Poised for Gains Amid Geopolitical Uncertainty in 2025

The largest crude carriers (VLCCs) are set to benefit in 2025 from potential reductions in Iranian oil exports and a low orderbook, according to Sources. Expanded U.S. sanctions under President-elect Donald Trump could shift demand to Middle Eastern and Atlantic suppliers, creating a need for nearly 30 VLCCs to replace lost Iranian exports.

Geopolitical conflicts, including disruptions in Russia and the Red Sea, are expected to persist and shape shipping markets. A resolution to these crises could sharply reduce tonne-miles, impacting car carriers, product tankers, and container ships. However, analysts predict continued instability in these regions throughout 2025.

The VLCC sector’s orderbook-to-fleet ratio is just 9%, with only six deliveries expected in 2025, bolstering prospects for companies like DHT Holdings, Frontline, and Okeanis Eco Tankers, which received “buy” recommendations.

Other shipping sectors face challenges: container freight rates are expected to decline, car carriers are nearing their peak, and the dry bulk sector may remain stagnant until 2026. Meanwhile, escalating Houthi attacks in the Red Sea could further disrupt shipping routes, keeping geopolitical tensions a dominant factor in freight markets.

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Vietnam’s Phuong Dong Petrol Expands Fleet with $80M Tanker Acquisition

Vietnamese shipping company Phuong Dong Petrol Transport has acquired two LR2 tankers, Fos Picasso and Fos Da Vinci (now renamed Fossil and Sand), for over $80 million from Greek-owned Marla Tankers. The deal marks a significant profit for Marla, which purchased the vessels in 2018 for $47.4 million combined.

Phuong Dong Petrol is emerging as a key player in Vietnam's growing maritime sector, managing a fleet that includes LR2 tankers, a VLCC, a bulker, and a gas carrier. This acquisition is part of a broader trend, with Vietnamese companies, including Asia Pacific Shipping and Hoanh Son Group, increasingly active in purchasing secondhand vessels, particularly from Greek sellers.

The company remains low-profile, with limited public information, and is not affiliated with state-owned PVT Logistics. Its fleet expansion reflects the rising prominence of Vietnamese shipping firms in global maritime markets

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Finland Inspects Detained Tanker Eagle S Following Undersea Cable Damage

Finland has initiated a port state control inspection of the Eagle S, a Cook Islands-flagged tanker detained after causing significant undersea cable damage in the Gulf of Finland on December 25. Finnish authorities aim to verify the vessel's compliance with international maritime safety standards, a process that could take several days.

The tanker, part of the "shadow fleet" transporting Russian oil products, allegedly dragged its anchor over subsea infrastructure, damaging a power link and four data cables. Finnish investigators have identified the ship as responsible and are pursuing charges of aggravated criminal mischief and interference with communications. Seven crew members face travel bans amid the ongoing probe.

This incident is the third such event in the Baltic Sea within a year, raising concerns about potential intentional acts. Finnish President Alexander Stubb has called for greater scrutiny, citing the improbability of repeated accidents.

The damage to the EstLink 2 power cable may take up to seven months to repair, with operator Fingrid Oyj seeking court approval to seize the vessel to cover repair costs. Similar incidents in recent years have prompted NATO to enhance patrols in the region.

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Russia Claims Strikes on Ukrainian Energy Facilities and Military Targets

Russia announced it had struck Ukrainian energy facilities supporting Kyiv's military-industrial complex using air force, drones, missiles, and artillery over the past 24 hours. The attacks reportedly targeted energy sites, military airfields, and personnel.

The Russian Defense Ministry stated the strikes were in retaliation for Ukraine's use of Western-supplied missiles against Russian territory. Additionally, Russia claimed to have downed a Ukrainian Su-27 fighter jet, 97 drones, and six U.S.-supplied HIMARS missiles overnight.

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Singapore Fuel Oil Stockpiles Dip but Stay Above 20 Million Barrels

Singapore's onshore fuel oil inventories fell 4% to 20.96 million barrels in the week ending January 1, 2025, but remained above the 2024 weekly average of 19.7 million barrels, according to Enterprise Singapore. The decline follows a multi-year high recorded two weeks ago.

Strong inflows from Russia and the UAE contributed to the elevated stock levels, while exports were primarily directed to China. High inventories have limited price recovery in Asia's fuel oil market, with very low sulfur fuel oil (VLSFO) premiums staying below $2 per metric ton.

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