2025.01.14

Oil Prices Soar to Four-Month High on Expectations of U.S. Sanctions on Russian Oil

Oil prices surged around 2% reaching a four-month high due to expectations of further U.S. sanctions on Russian oil leading Chinese and Indian refiners to seek alternative suppliers. Despite a stronger U.S. dollar and a potential Gaza truce, Brent and WTI crude prices increased, with Brent settling at $81.01 and WTI at $78.82 per barrel. The rise in prices also led to a surge in total futures volume and open interest in both Brent and WTI contracts. This increase in prices is attributed to concerns about supply disruption as 65 oil tankers have dropped anchor due to the new sanctions on Russian oil vessels. Additionally, a possible Gaza truce and a stronger U.S. dollar could reduce the demand for oil by increasing inflation and interest rates, respectively.

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China's Crude Oil Imports Decline in 2024, Natural Gas Imports Reach Record High

In 2024, China experienced a 1.9% decrease in crude oil imports, marking the first annual decline in two decades outside of pandemic-related drops. This decline was attributed to tepid economic growth and reduced fuel demand due to plant closures and increased electrification. Additionally, refined fuel product exports decreased by 7.2% in 2024, while natural gas imports reached a new high with a 9.9% increase from the previous year. Refiners in China had to scale back crude oil processing capacity due to depressed fuel demand and narrowing refining margins. State-run and independent refiners operated at lower capacities in 2024, contributing to a decline in crude oil imports. Sinopec reported a decrease in gross refining margins in 2024, and natural gas imports, including LNG and piped gas, rose by nearly 10% to a record high. Despite the decrease in crude oil imports and refined fuel exports, China's natural gas imports saw significant growth in 2024.

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Kyklades Sells Nissos Delos Tanker to MJL Bangladesh for $45.3m

Alafouzos firm Kyklades recently sold the aframax tanker Nissos Delos to MJL Bangladesh in a deal worth $45.3m. MJL, known for its lubricant and LPG business, has only made a few tanker acquisitions in the past, with the latest being the Omera Legacy from Chandris (Hellas). In addition to secondhand purchases, MJL has also ordered newbuildings in Japan and South Korea. Meanwhile, Kyklades has been focusing on fleet renewal, acquiring modern tonnage such as the aframax Amades and suezmax newbuildings from Japan. With recent transactions, Kyklades now operates a fleet of nine VLCCs, 12 suezmaxes, and four aframax/LR2s.

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US Sanctions Leave Russian Oil Tankers Stranded off China's Coast

Three tankers carrying Russian oil have been sanctioned by the US and are currently stuck off the coast of China. The Biden administration blacklisted 183 ships, leading to questions about the legality of receiving crude already in transit. Chinese oil buyers have reportedly held emergency meetings. The tankers, including the Huihai Pacific, Mermar, and Olia, were bound for Chinese ports but are now idle in the Yellow Sea due to the sanctions. The owning companies of these vessels, including Hong Kong Hanyuan Shipping Co. and Aristos Maritime, have been sanctioned for operating in Russia's energy sector. These sanctions have caused turmoil in the market and raised concerns about the impact on global oil trade.

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US Sanctions on Russian Oil Trade Disrupt Tanker Market: VLCCs Set for Rate Gains

The US sanctions on over 180 ships owned by companies involved in the trade of Russian oil exports have caused a major disruption to the tanker market. As a result, compliant vessels, including VLCCs, are expected to see significant rate gains as replacement barrels are redirected to India and China. The sanctioned vessels carried a significant portion of Russia's crude exports, and the impact of these sanctions is expected to be substantial. Refiners, tanker owners, and port executives in Asia are currently dealing with the fallout from the sanctions, with emergency meetings being held to address the situation. The key question now is whether Russia, Iran, and Venezuela can find replacement tankers to transport crude to India and China. The tanker market has already shown a bullish response to the sanctions, with spot VLCC rates increasing. Overall, the newly sanctioned fleet is expected to create a high demand for compliant vessels and could potentially lead to increased floating storage and scrapping of vessels in the future.