2025.01.06

Oil Prices Rise Amid Colder Weather and Chinese Economic Stimulus

Oil prices surged this week, driven by colder weather in Europe and the U.S., along with optimism surrounding China's economic stimulus measures. Brent crude futures rose 0.8% to $76.51 per barrel, while U.S. West Texas Intermediate (WTI) climbed 1.13% to $73.96 per barrel. Brent marked a 2.4% weekly gain, and WTI jumped nearly 5%.China's recent policies, including wage hikes for government workers and increased funding through ultra-long treasury bonds, aim to boost business investment and consumer spending, lifting oil demand expectations. Meanwhile, U.S. crude stockpiles fell by 1.2 million barrels, and oil demand benefited from the cold weather's impact on heating oil usage.However, gains were tempered by a strong U.S. dollar, which raised concerns about higher borrowing costs potentially slowing economic growth and oil demand.

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Singapore’s December Jet Fuel Imports Reach Multi-Year High Amid Ample Supply

Singapore's jet fuel imports surged to a nearly five-year high of 2.55 million barrels in December, primarily driven by increased inflows from India and South Korea, according to shiptracking data. The rise was fueled by a closed arbitrage to northwest Europe, redirecting supplies to Asia. India, in particular, shifted exports from Europe to Asia, contributing to the higher volumes.

Abundant supply from India, South Korea, and expectations of increased Chinese exports are exerting downward pressure on Asia's spot jet fuel prices. The regrade—a spread between jet fuel and 10-ppm sulfur gasoil—has flipped to negative territory, averaging an 80-cent discount per barrel in December, compared to a premium of 80 cents in November.

Looking ahead, Indian and Middle Eastern barrels may head west to northwest Europe as inventories in the Amsterdam-Rotterdam-Antwerp (ARA) hub approach eight-month lows. However, Asia remains well-supplied, with China-origin jet fuel continuing to saturate markets in early 2025.

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Finnish Court Upholds Seizure of Tanker in Baltic Undersea Cable Damage Case

A Finnish court has upheld the seizure of the oil tanker Eagle S, suspected of damaging undersea power and telecommunications cables between Finland and Estonia by dragging its anchor across the seabed. The incident, which occurred on December 25, has heightened concerns among Baltic Sea nations already on alert for sabotage following a series of infrastructure disruptions since Russia's 2022 invasion of Ukraine.

The tanker, carrying 35,000 tonnes of unleaded petrol, is believed to be part of a Russian oil "shadow fleet" evading sanctions. Finnish authorities are investigating potential sanctions violations, and eight crew members, of Georgian and Indian nationalities, are under suspicion.

The vessel, owned by UAE-based Caravella LLC and registered in the Cook Islands, remains impounded near Finland’s Porvoo port. The court rejected the owner's request for its release, prompting plans for a new legal motion. Meanwhile, NATO has pledged increased security measures in the Baltic region.

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Asia Pacific Shipping Expands Fleet with $880 Million Tanker Newbuildings

Vietnam's Asia Pacific Shipping (ASP) is solidifying its position as a key player in the tanker market, investing close to $880 million in 12 newbuildings. The privately-owned company has commissioned six LR2 tankers, four Aframax crude carriers, and two stainless steel chemical tankers from three major Chinese shipyards: Wuhu Shipyard, Dalian Shipbuilding Industry Co (DSIC), and Shanghai Waigaoqiao Shipbuilding (SWS).

Key details include:

• DSIC: Nine LR2 tankers and two Aframax crude carriers scheduled for delivery in 2027, with estimated prices ranging between $70-72 million per ship.

• SWS: Two Aframax crude carriers, also set for delivery in 2027, at approximately $72 million each.

• Wuhu Shipyard: Six stainless steel chemical tankers meeting Tier III NOx and EEDI Phase 3 standards, with deliveries extending into 2028.

ASP's recent expansion includes the purchase of three secondhand Aframax tankers in 2023 and a diversified fleet comprising bulkers, LPG carriers, and tankers, with further orders for methanol dual-fueled and MR tankers in progress. Founded in 2021, ASP now manages a fleet of 27 vessels and is rapidly emerging as a dominant tanker operator in Vietnam.

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Venezuela’s 2024 Oil Exports Rise 10.5% Amid Political Uncertainty

Venezuela's oil exports grew by 10.5% in 2024, averaging 772,000 barrels per day (bpd), the highest since U.S. sanctions began in 2019. The increase was driven by U.S.-granted licenses that allowed state oil company PDVSA and its partners to boost shipments, with Chevron leading U.S. imports, which rose 64% to 222,000 bpd. China remained the largest importer at 351,000 bpd, though its share declined by 18%, while exports to India surged sixfold to 63,115 bpd.

Despite gains, exports to Cuba dropped by 43% due to Venezuela’s refinery issues, and monthly exports dipped in December after operational problems at one of PDVSA's crude upgraders. Venezuela’s crude production climbed 17% to 914,000 bpd in the first 11 months of 2024. However, political turmoil and the end of broad U.S. licenses under President Joe Biden's administration cast uncertainty over future growth, especially as President-elect Donald Trump’s policies could reimpose stricter sanctions.

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Tanker Market Outlook 2025: Navigating Geopolitical and Market Shifts

The tanker market faced a challenging year in 2024, with weak crude and product tanker rates, muted Chinese oil demand, and multi-year lows in key indices like the Baltic Dirty Tanker Index and Baltic Clean Tanker Index. As 2025 begins, several dynamics could shape the market:

1. VLCC Dominance: Very Large Crude Carriers (VLCCs) are regaining influence, although their current weak rates have led to market encroachment on smaller vessels.

2. Geopolitical Factors: US president-elect Donald Trump's anticipated tough stance on Iran might disrupt Iran-China oil trade, potentially boosting mainstream tanker demand if Chinese buyers shift to other suppliers.

3. Cannibalization of Cargoes: The trend of larger tankers carrying product cargoes has re-emerged, tying the fortunes of crude and product tanker markets closely together.

As tanker owners prepare for 2025, the interplay of supply dynamics, geopolitical pressures, and fleet updates will be critical to navigating the market.