Oil Prices Hold Near One-Week High Amid Supply and Sanctions Uncertainty

Oil prices remained near a one-week high due to concerns over supply disruptions in Russia and the U.S., while markets awaited clarity on potential sanctions as Washington seeks to mediate an end to the Ukraine war. Brent crude rose 0.3% to $76.04 per barrel, and WTI crude increased 0.6% to $72.25, marking their highest close since February 11. Drone attacks on Russian oil infrastructure have disrupted supply, with the Caspian Pipeline Consortium (CPC) reducing flows by 30-40%, equivalent to a loss of up to 380,000 barrels per day. Cold weather in the U.S. has also threatened supply, with North Dakota's production potentially dropping by 150,000 bpd. Speculation continues that OPEC and its allies may delay an April supply increase. While a U.S.-brokered peace deal could ease sanctions on Russia, Goldman Sachs analysts suggest this would have minimal impact on oil supply, as Russia's production is already constrained by OPEC+ quotas rather than sanctions. Middle East developments, including Israel-Hamas ceasefire negotiations, could reduce geopolitical risks and weigh on oil prices. Meanwhile, concerns over tariffs, inflation, and economic growth could limit oil demand, with the Federal Reserve’s focus on controlling inflation through high interest rates further dampening economic expansion. Market participants are also awaiting U.S. crude inventory reports, which are expected to show a stockpile increase of 2.2 million barrels, marking the fourth consecutive weekly rise.

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EU Expands Sanctions on Russian Shipping Amid Ukraine War Talks

The European Union is set to announce a new round of sanctions on Monday, marking the third anniversary of Russia's invasion of Ukraine. This 16th package of measures will target 73 additional ships, bringing the total number of blacklisted vessels to over 150. European Commission President Ursula von der Leyen emphasized that the EU is intensifying efforts to curb sanctions evasion by cracking down on Putin’s shadow fleet and imposing new trade restrictions. The package includes a ban on selling video game consoles, which can be repurposed to control drones in Ukraine. The EU, along with the US and UK, has collectively sanctioned over 270 tankers transporting Russian oil. 

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China Increases Brazilian and West African Crude Imports Amid Sanctions and Tariff Disruptions

China’s refiners are increasing purchases of Brazilian and West African crude as they adjust sourcing due to sanctions and tariff disruptions, while also responding to the rising prices of Middle Eastern oil. Stricter U.S. sanctions on Russia and Iran, along with China’s new 10% tariff on U.S. crude imports, have altered trade flows and raised costs for the world’s largest crude importer. February imports of Brazilian crude could reach 3 million metric tons (800,000 bpd), showing a 49% month-on-month rise in Brazilian crude and a 36% increase in Angolan crude. More shipments from these regions are expected in March and April due to risks associated with sanctioned oil. Shandong Yulong Petrochemical, set to begin operations in March or April, has purchased multiple shipments from Angola and Nigeria for March delivery. Additionally, state trader Unipec has secured over 20 million barrels of Brazilian crude for April delivery. Increased demand for these alternatives has raised premiums by 50% since U.S. sanctions took effect on January 10. Meanwhile, Saudi Arabia’s crude prices for March have reached their highest level in more than a year, leading Chinese refiners to reduce purchases from the Gulf. The new tariffs on U.S. crude are making Brazilian Tupi and West African grades more attractive, particularly as Chinese refiners seek non-sanctioned Brent-related crude to capitalize on narrow Brent-Dubai spreads and maintain strong refining margins.

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India Explores Overseas Oil Storage, in Talks with Oman for 5 Million-Barrel Reserve

India is exploring overseas oil storage options and is in early discussions with Oman to lease a facility capable of holding 5 million barrels of crude oil, according to L.R. Jain, chief executive of Indian Strategic Petroleum Reserves Ltd (ISPRL). As the world's third-largest oil importer, India relies on imports for over 80% of its oil needs and is expanding its strategic petroleum reserve (SPR) capacity to safeguard against global supply disruptions. If the deal with Oman materializes, it will mark India's first offshore oil storage facility, with additional Middle Eastern locations also under consideration. Domestically, ISPRL manages three SPRs in southern India with a total capacity of 5.33 million tons. To meet the International Energy Agency (IEA) membership requirement of holding 90 days' worth of oil consumption, India is working to increase its storage beyond the current 74-day capacity. ISPRL's reserves cover 9.5 days of demand, while Indian companies maintain crude and refined fuel stocks for 64.5 days. Plans include the construction of a 4-million-ton SPR at Chandikhol in Odisha and a 2.5-million-ton expansion at Padur in Karnataka, both in partnership with private firms, with the government retaining priority access to the stored oil during shortages. Additionally, ISPRL is evaluating a 5-million-ton underground crude storage and gas reserve project in Bikaner, Rajasthan.

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Shadow Fleet Operations Surge as Sanctioned Tankers Transfer Russian Crude

Shadow fleet activity intensifies as sanctioned tankers transfer Russian crude. More cargo transfers from newly sanctioned tankers can be expected as Russia seeks to keep oil exports flowing, experts say. Several dark ship-to-ship (STS) transfer operations involving Pacific Russian crude have been uncovered. The 311,100-dwt Panama-flagged Daban (built 2005) has loaded 2m barrels of Sokol crude from Sakhalin Island in Nakhodka Bay in the Far East through three separate cargo transfer operations. Satellite tracking from Tuesday showed the VLCC left the Nakhodka anchorage on 12 February and arrived off Yantai in China on Monday. Kpler named the three aframax tankers offloading cargoes as controlled by sanctioned Russian state shipowner Sovcomflot. They are the 104,600-dwt Vladimir Arsenyev (built 2022), 101,000-dwt Captain Kostichev and Victor Konetsky (both built 2005), which were blacklisted by the US in January. All the ships were observed with their location transponders switched off during the transfers, according to Kpler. “We anticipate more dark STS operations in the coming weeks, as recent US sanctions on Russian vessels have reduced the fleet available for delivering Russian crude,” the company said. Bloomberg data showed at least five tankers new to the Russian trade lifted cargoes from the Pacific port of Kozmino last week. Six more were anchored near the terminal.

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Cargill and Hafnia Launch Seascale Energy to Lead Bunker Fuel Market

Cargill and tanker operator Hafnia have merged their bunker fuel businesses—Pure Marine Fuels and Bunker Alliance—to form Seascale Energy, creating one of the world’s top bunker providers with nearly 8 million tonnes in annual fuel volumes. The company will be led by co-CEOs Olivier Josse from Cargill and Peter Grunwaldt from Hafnia, with offices in Singapore, Geneva, Copenhagen, and Houston. By leveraging Cargill’s fleet of 700 vessels and Hafnia’s 204 tankers, Seascale aims to enhance purchasing power, secure competitive fuel pricing, and drive transparency in the bunker market. With a strong focus on decarbonization, the company is investing in biofuels, LNG, and methanol-fueled ships to support the energy transition. Seascale Energy is positioned to improve bunker quality, reduce risks for buyers, and influence suppliers to prioritize the needs of fuel users while simplifying the increasingly complex marine fuel market.