Oil Prices Rise Amid Drone Strikes on Caspian Pump Station and Russia-Ukraine Peace Talks

Oil prices rose on Monday following a drone strike on the Kropotkinskaya pipeline pumping station in Russia's Krasnodar region, which reduced oil flows from Kazakhstan. The attack, which the Caspian Pipeline Consortium labeled as an act of terrorism, disrupted Western producers like Chevron and Exxon Mobil. The rising frequency of such attacks is causing concerns over potential supply risks, according to UBS analyst Giovanni Staunovo. Additionally, oil prices were supported by a weaker U.S. dollar, making crude cheaper for non-U.S. buyers. Brent crude rose 48 cents to $75.22 a barrel, while U.S. WTI increased 65 cents to $71.39. The price hike also comes as U.S. and Russia prepare for peace talks, which could lead to sanctions relief and increased global oil supplies. However, concerns over a potential global trade war, spurred by Trump’s tariff proposals, tempered further price increases. OPEC+ also confirmed it would proceed with scheduled monthly oil supply increases starting in April.

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OPEC+ Confirms No Delay to April Oil Supply Increase, Novak Says

OPEC+ producers, including Russia, are not considering postponing the planned series of monthly oil supply increases starting in April, according to Russian Deputy Prime Minister Alexander Novak. Despite reports that OPEC+ was examining a delay following pressure from U.S. President Donald Trump to lower oil prices, sources within the group have confirmed there have been no discussions on delaying the increase. Analysts have speculated that the market could absorb the extra supply, particularly with tougher sanctions and rising Chinese demand. OPEC+ is currently reducing output by 5.85 million barrels per day and plans to unwind 2.2 million barrels per day of cuts starting in April, with a monthly rise of 138,000 barrels per day. The increase is set to continue until September 2026, with a final decision expected in early March.

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Kurdistan's Oil Exports to Resume Next Week, Iraqi Minister Confirms

Oil exports from Iraq's semi-autonomous Kurdistan region are set to resume next week, ending a nearly two-year halt. The flow was suspended in March 2023 after Turkey was ordered by the International Chamber of Commerce to pay $1.5 billion in damages for unauthorized pipeline exports. Iraq's Oil Minister, Hayan Abdel-Ghani, confirmed that a delegation would negotiate the export mechanism, with Baghdad set to receive 300,000 barrels per day. This resumption, along with potential Russia-Ukraine peace talks and OPEC+ easing production cuts in April, could increase global oil supply and impact prices. Meanwhile, Iraq continues to pump around 4 million barrels per day in line with OPEC+ targets. The resumption is expected to alleviate economic pressure in Kurdistan, where the export halt caused delays in public sector salaries and service cuts.

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Sinokor Expands VLCC Portfolio Amid Geopolitical Uncertainty

South Korea’s Sinokor Maritime has expanded its presence in the VLCC market by securing a long-term charter deal with AET Tankers, a subsidiary of MISC of Malaysia. The 299,000-dwt Eagle Victoria (built 2016) has reportedly been leased for 27 to 29 months at a rate of $51,000 per day, amounting to an estimated $46 million deal. VLCC charter rates have shown mixed trends, with one-year term rates at $48,000 per day (down by $1,000), two-year term rates for eco ships at $46,500 per day (up by $1,500), and the current spot VLCC rate at $45,000 per day, according to Clarksons Securities. Other recent VLCC deals include the 319,500-dwt VL Prime (built 2015), which was chartered by either Trafigura or Sinokor for 11 months at $51,600 per day or 12 months at $52,500 per day, and the 317,800-dwt DHT China (built 2007), which Trafigura secured for one year at $40,000 per day. The Aframax and dirty-trading LR2 markets have also seen activity, with one-year Aframax rates at $30,000 per day (down by $1,000), though sentiment remains mixed as owners hold out for higher offers. The VLCC sector is currently influenced by geopolitical tensions, particularly concerning Iran sanctions and trade tariffs. Analysts at Braemar believe the market is awaiting clarity on whether the U.S. will enforce "maximum pressure" on Iran or if a new agreement will emerge. Despite short-term uncertainty, there is sustained interest in long-term VLCC charters, suggesting optimism for market stability in the future.

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Can VLCC Rates Soar to $80,000 Amid US Sanctions on Iran

Shipbrokers and analysts anticipate a surge in VLCC rates as the US threatens stricter sanctions on Iranian oil exports. The US aims to slash Iran’s shipments by up to 1.5 million barrels per day (bpd), potentially requiring 38 to 51 additional VLCCs to fill the gap, pushing rates from $45,000 to nearly $80,000 per day. Oslo-listed Hunter Group and UK broker Braemar expect increased demand for compliant VLCCs, especially as tankers shift to moving Atlantic crude to India. While newbuildings are rising, investors fear tanker values have peaked. However, if sanctions permanently displace shadow vessels, the upcycle could extend until 2027.

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US Blacklist Leaves Majority of Sanctioned Tankers Inactive

Nearly two-thirds of tankers blacklisted by the US in January have ceased operations, according to Bloomberg’s analysis of ship tracking data. The Biden administration sanctioned 183 vessels for transporting Russian oil, with 94 of the 154 previously active ships now idle. Seven others are still under construction or in sea trials. While Russia’s oil production remains unaffected, deliveries have been disrupted, with about half of the idled tankers halting operations immediately after the 10 January sanctions. Of the 44 vessels that have lifted cargo since, 20 remain restricted to Russian waters. Major buyers like China’s Shandong Port Group and India have set restrictions on handling these tankers, leading to vessel clusters near Russian ports, China’s Zhoushan, and east of Singapore. Bloomberg reports export delays from Russia’s Sakhalin project, with its shuttle tankers also idled.

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NYK and Eneos Ocean Launch NEO After 41-Ship Fleet Deal

Japanese shipping giant NYK and Eneos Ocean Corp have formed NYK Energy Ocean Corp (NEO) as part of NYK’s acquisition of an 80% stake in Eneos Ocean’s non-crude oil shipping business. The deal, finalized in July 2024, involves at least 41 ships, including 11 bulk carriers, 15 chemical and product tankers, and 15 VLGCs. While the financial terms remain undisclosed, the transaction received approval from the Japan Fair Trade Commission and other global regulators, with operations set to commence on April 1. NEO, headquartered in Yokohama, will integrate NYK’s scale advantages in quality control and cost efficiency while leveraging experienced personnel from Eneos Ocean. The company has introduced a new logo inspired by NYK’s twin red-striped “nibiki” flag, symbolizing reliability in marine transport.