Oil prices rise 2% despite trade war uncertainty and supply risks

Oil prices gained nearly 2% on Monday despite ongoing concerns about a potential U.S.-China trade war and recent losses. Brent crude settled at $75.87 per barrel (+1.6%), while WTI crude rose to $72.32 per barrel (+1.9%). Investors remain cautious as Trump prepares to impose 25% tariffs on steel and aluminum, which could impact global economic growth and energy demand. Meanwhile, Russia may impose a one-month gasoline export ban to stabilize domestic prices, further tightening global supply. China’s retaliatory tariffs on U.S. exports are set to take effect, adding uncertainty to trade talks. Sanctions on Russia and Iran continue to disrupt supply, particularly to China and India, while rising natural gas prices are boosting oil demand. Despite these factors, Wall Street closed higher, suggesting investors are adjusting to ongoing tariff volatility.

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OPEC price hikes as sanctions disrupt Russian oil flow

Tough U.S. sanctions on Russian oil are allowing major Middle Eastern producers, such as Saudi Arabia, Iraq, and the United Arab Emirates, to raise prices significantly for their key markets, bringing much-needed revenue amid regional economic pressures. Iraq increased the price of its Basrah Medium crude to its highest level since September 2022, while Saudi Arabia and UAE also raised prices last week. The sanctions on Russia and Iran, combined with supply disruptions, have pushed buyers to seek replacement supplies of comparable Middle Eastern crude, boosting regional prices. Dubai swaps, the benchmark for Gulf oil, surged, reflecting increased demand. This price hike helps Iraq and Saudi Arabia, the latter of which faces challenges in balancing its spending plans. Refining margins in Asia have also improved, aiding the price increases. For March, Iraq raised its Basrah Medium crude by $2.60 per barrel, and Abu Dhabi's Murban crude rose to $80.22 per barrel, reflecting a $7 jump from February.

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Trafigura and Sinokor strengthen VLCC ties amid market speculation

Trafigura and Sinokor Maritime Co have been linked to a potential collaboration in the VLCC market, with recent charter deals reinforcing speculation. The two companies appear to be increasingly interdependent, with new period fixtures suggesting coordination. Brokers reported that either Trafigura or Sinokor booked the 319,500-dwt VL Prime (built 2015) for either 11 months at $51,600 per day or 12 months at $52,500 per day, while Trafigura was also linked to a one-year charter for DHT Holdings’ 317,800-dwt DHT China (built 2007) at $40,000 per day. Meanwhile, BP has reportedly secured Singapore owner Higo Marine Services’ 311,100-dwt Union Peace (built 2007) for 12 months at $38,000 per day, straight out of dry-dock. Market observers noted that Trafigura is now listing Sinokor’s VLCCs under its control, suggesting short-term time charters at floating, index-linked rates. At the end of January, reports indicated that Trafigura and Sinokor were considering merging their VLCC commercial operations, potentially giving them shared access to more than 100 vessels and a combined 12% market share. However, neither company has officially confirmed the partnership, with Trafigura dismissing the claims as speculation while Sinokor has yet to make a public statement.

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Gulf refiners reject Mexican oil due to excessive water content

US refiners are turning away Mexican crude, notably Pemex's flagship Maya crude, due to excessive water content, six times higher than the industry standard. This has led to complaints and demands for discounts from refiners in Texas and Louisiana, who have sought alternative supplies from Canada and Colombia. The crude's water content—up to 6%—is significantly hindering the refining process, forcing refiners to invest extra time and resources to remove the water, raising operational costs. This issue compounds Pemex's financial struggles, which include $20 billion in outstanding payments for chemicals and equipment needed to make its oil suitable for refining. The situation has further worsened with Mexico's crude exports falling to a 35-year low in January. Pemex's Dos Bocas refinery also faces shutdowns, as salty, poor-quality crude is unfit for processing, impacting the country’s refining capacity.

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Nigeria's Dangote Refinery set to reach full capacity in 30 days, executive announces

Dangote Oil Refinery, Africa's largest, could start operating at full capacity in the next 30 days, according to Edwin Devakumar, the refinery’s head. Currently running at 85% capacity, the refinery, located in Lagos, processes crude into various products, including diesel, naphtha, jet fuel, and petrol. Although the refinery began operations in January last year, it faced challenges securing enough local crude. In response, it began importing crude and secured a deal to import 550,000 barrels per day for the first half of this year. Despite these struggles, the refinery is expanding its markets, including sending jet fuel cargoes to Saudi Aramco. The Dangote refinery aims to rival European refiners and plans to explore additional global markets for its products. 

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Explosion hits aging tanker in Russian port amid Baltic tensions

The 164,500-dwt Koala (built 2003) suffered an engine room explosion on February 9 in Ust-Luga, forcing the crew to evacuate. No injuries or cargo spills were reported, and the vessel remains stable. Managed by Lagosmarine Ltd, the tanker has frequently changed names and flags, most recently to Antigua & Barbuda. Ambrey Analytics reported three blasts, raising concerns about war risk premiums for Russian Baltic trade. The incident adds to recent maritime risks, including the Starlit-Calida collision on New Year's Eve and NATO’s increased Baltic patrols amid growing scrutiny of aging Russian-trading vessels.

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Trump’s Gaza takeover remarks threaten Red Sea shipping recovery

Shipowners fear that Trump’s suggestion of a Gaza takeover could provoke Yemen’s Houthis to resume attacks, delaying the return of vessels to the Red Sea. While shipping activity had cautiously resumed following a Gaza ceasefire, Trump’s comments have raised concerns about prolonged instability. Omani LNG carrier Salalah LNG and Champion Tankers’ Champion Star recently transited the region, but experts now warn that risk levels remain high. Norden CEO Jan Rindbo and Vespucci Maritime CEO Lars Jensen note that earlier optimism has faded. Maersk CEO Vincent Clerc stressed that shipping companies need long-term stability before committing to Red Sea routes, as uncertainty makes Suez Canal transits unreliable.

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VLSFO weakens while HSFO holds gains amid tight crude market

Asia’s fuel oil market showed mixed trends, with very low sulphur fuel oil (VLSFO) under pressure while high sulphur fuel oil (HSFO) maintained its strength. VLSFO cash premiums softened to $5 per metric ton due to ample blendstock supply, though cracks remained above $11 per barrel. Meanwhile, HSFO continued its rally, supported by tight heavy crude supply, with March 380-cst HSFO cracks extending gains to an 84-cent premium per barrel. Trading remained thin, but spot premiums increased due to market backwardation. Indonesia’s Pertamina issued tenders for March marine fuel oil and low-sulphur waxy residue, though export uncertainties persist. In refinery updates, Nigeria’s Dangote refinery is expected to reach full capacity in 30 days, while Lyondell Basell has fully shut down its Houston refinery. Oil prices rebounded despite concerns over Trump’s latest trade threats, while BP’s stock surged 7% following reports of Elliott Management’s stake acquisition.