Oil Prices Rise but Retreat as Trump Warns of Possible Russia Sanctions

Oil prices climbed on Friday but pulled back from session highs after U.S. President Donald Trump warned of potential sanctions on Russia if it does not agree to a cease-fire with Ukraine. Brent crude settled at $70.36 per barrel, up 1.3%, while WTI closed at $67.04, up 1.02%. Earlier in the session, Brent hit $71.40 and WTI peaked at $68.22 after Russian Deputy Prime Minister Alexander Novak confirmed OPEC+ would proceed with its planned April output increase but could later consider production cuts. Brent ended the week down 3.8%, its biggest weekly drop since November, while WTI declined 3.9%, the largest drop since January. Market volatility intensified as traders reacted to shifting U.S. trade policies and geopolitical risks, including Trump's threats of new sanctions on Russian banks and products. The Federal Reserve, led by Chairman Jerome Powell, noted concerns over how Trump's policies could impact the economy. Meanwhile, U.S. Treasury Secretary Scott Bessent suggested plans to curb Iranian crude exports, including potential inspections of Iranian oil tankers at sea. OPEC+ confirmed an April production increase of 138,000 barrels per day, while U.S. crude inventories continued to rise. Trump also temporarily suspended 25% tariffs on Canadian and Mexican goods until April 2, though steel and aluminum tariffs remain set for March 12. U.S. job growth picked up in February, but uncertainty over trade policy and federal spending cuts may challenge the labor market's resilience in the coming months.

___________________________________

Trump’s Trade Policies Weigh on VLCC Rates While Suezmaxes Surge 11%

Geopolitical uncertainty and shifting US trade policies under President Donald Trump have kept VLCC rates largely flat, while suezmaxes saw an 11% weekly gain driven by increased activity in Europe and West Africa. Clarksons’ fleet-weighted VLCC average dipped slightly to $42,500 per day, a 2.1% weekly decline, as declining tonne-days pressured the market. However, the Middle East Gulf to China corridor showed signs of recovery, growing 1.4% to $42,400 per day, likely due to China’s efforts to rebalance crude imports amid Russian restrictions. Suezmaxes surged to $38,900 per day, with their biggest single-day gain of 5.7% occurring on Wednesday, as a rush of cargoes in Europe and West Africa supported demand. Fearnleys noted that up to five cargoes were still available, indicating further rate increases in these regions. Meanwhile, the US Gulf market remained strong but faced competition from the more cost-effective aframaxes, which also rose 2.4% to $27,200 per day by week’s end.

___________________________________

Trump’s Proposed China Port Fees Threaten John Fredriksen’s $2.7B Shipping Empire

John Fredriksen’s private shipping empire, heavily reliant on Chinese shipyards, faces potential disruption as the US considers imposing port fees of up to $1.5 million per terminal visit on Chinese-built vessels, a sharp increase from the current $80,000 maximum fee. While Fredriksen’s publicly traded tanker company, Frontline, has no new orders in China, his private Seatankers Management has 32 vessels on order at Chinese yards, including eight VLCCs, six suezmaxes, and two aframaxes. The Seatankers fleet is valued at $2.7 billion, while the operational fleet of Golden Ocean Group, another Fredriksen company, is valued at $2.8 billion and is also largely Chinese-built. CEO Lars Barstad acknowledged that Frontline is exposed to these new tariffs through its suezmax and LR2/aframax fleets but emphasized that no immediate actions are planned, opting instead for a “sit-and-watch” approach. He warned that the likely outcome of these measures would be disrupted trade routes and increased inefficiencies in global shipping.

___________________________________

Sovcomflot’s Profits Plunge 55% Amid Three Years of Sanctions Pressure

Russia’s state-controlled tanker company, Sovcomflot, reported a 55% drop in profits, falling to $424 million in 2024, while revenue declined 19% to $1.87 billion. The company cited geopolitical tensions and sanctions from the US, EU, and UK as primary reasons for the downturn. The latest US sanctions, imposed on January 10, 2025, came after the reporting period but added further operational restrictions. Sovcomflot has been under increasing sanctions pressure since the February 2022 invasion of Ukraine, leading to some vessels ceasing operations and contributing to the rise of a shadow fleet replacing its tankers. The International Energy Agency reported that US-designated tankers saw a 90% reduction in activity, severely impacting Sovcomflot’s operations. The company argues that these sanctions are destroying the global commercial shipping system, jeopardizing both safe navigation and the environment.

___________________________________

U.S. Faces $20 Billion, Multi-Year Effort to Refill Oil Reserve

The U.S. Energy Department estimates that refilling the Strategic Petroleum Reserve (SPR) to its maximum capacity will cost $20 billion and take several years. Energy Secretary Chris Wright stated that while President Donald Trump aims to restore the SPR as part of his pro-oil and gas policy, no immediate budget request has been made to Congress. The SPR, which has a capacity of 727 million barrels, currently holds about 395 million barrels after significant drawdowns during former President Joe Biden’s administration, including a 180-million-barrel release in 2022 to curb rising fuel prices after Russia's invasion of Ukraine. At current prices, $20 billion would allow the purchase of about 301 million barrels, bringing total reserves to just under 700 million barrels. The SPR, created in 1975 to mitigate supply shocks, is stored in underground salt caverns along the Texas and Louisiana coasts. Trump has criticized Biden’s use of the reserve and may cancel remaining mandated sales to prevent further depletion and reduce wear on storage facilities. Analysts suggest that to minimize structural strain, the Department of Energy may need to modify future sales and purchases.

___________________________________

Saudi Arabia Cuts Oil Prices to Asia Amid OPEC+ Supply Increase

Saudi Arabia, the world’s largest oil exporter, has reduced crude oil prices for Asian customers in April for the first time in three months. The price cut follows a decision by OPEC+ to gradually increase oil supply in the same month. Saudi Aramco lowered the official selling price (OSP) for Arab Light crude by 40 cents, setting it at $3.50 a barrel above the average Oman and Dubai prices. This marks a decrease from the previous month when Arab Light's OSP reached its highest in over a year, at $3.90 above the Oman and Dubai average, due to the impact of U.S. sanctions on Russian oil and disruptions in global trade. The company also reduced prices for other grades of crude oil sold to Asia. The price cut aligns with market expectations, as a Reuters poll had forecasted a reduction of 20 to 65 cents. OPEC+, responsible for producing about half of the world’s oil, confirmed its decision to proceed with an increase in oil output by 138,000 barrels per day in April, marking the first such increase since 2022. Additionally, Russian and Iranian oil exports to China are rebounding in March, as non-sanctioned tankers are drawn by lucrative incentives, easing supply concerns.

___________________________________

China's Crude Oil Imports Drop 5% in Early 2025 Amid Sanctions and Port Ban

China's crude oil imports fell by 5% in the first two months of 2025, totaling 83.85 million metric tons (about 10.38 million barrels per day), compared to 10.74 million bpd during the same period last year. The decline was driven by tougher U.S. sanctions targeting ships carrying Russian and Iranian oil and a port ban imposed by Shandong Port Group in January. The port ban, which affected independent refiners in Shandong—who are major buyers of Russian and Iranian crude—slowed deliveries, especially as U.S. sanctions removed significant shipping capacity. This, coupled with soaring freight rates, pushed up crude prices and further strained the finances of smaller Chinese refiners already dealing with thin margins. Some newer terminals outside Shandong took on the task of discharging sanctioned tankers, but the volumes were marginal. Despite this, China's crude oil imports are expected to recover in March and April as higher freight charges attract more non-sanctioned tankers, and refiners purchase alternative grades. Additionally, exports of refined oil products, including diesel and gasoline, were down 18% from the previous year, while natural gas imports also saw a decline of 7.7%.

___________________________________

BPCL to Tender for US Crude in 4-Month Deal, Seeks Alternative Supply Amid Sanctions

Bharat Petroleum Corp (BPCL), India's state refiner, plans to issue a 4-month tender next week to buy U.S. WTI crude. The tender seeks one million barrels of WTI each month for delivery starting in May or June. BPCL’s refineries, with a combined capacity of 706,000 barrels per day, frequently purchase U.S. oil, especially in light of sanctions targeting Russian producers and shippers. BPCL awarded a similar tender to BP last year. In February, India’s imports of U.S. oil reached their highest in over two years, with shipments totaling around 357,000 barrels per day (bpd), a significant increase from 221,000 bpd the previous year. India plans to boost its energy imports from the U.S. to $25 billion in the near future, up from $15 billion last year.

___________________________________

Cosmo Energy to Launch Japan's First Sustainable Aviation Fuel Production in April

Cosmo Energy Holdings is set to begin Japan’s first domestic production of sustainable aviation fuel (SAF) in April at its Sakai refinery. The SAF will be produced from used cooking oil as part of Japan's broader strategy to replace 10% of its jet fuel with cleaner alternatives by 2030. Cosmo plans to produce 30,000 kiloliters of SAF annually at Sakai, supplementing this with additional SAF from its Sakaide site and imports from Thailand. The company aims to supply 300,000 kiloliters of SAF by 2030, meeting 10% of Cosmo's jet sales. While higher production could reduce costs, challenges like raw material constraints and the higher price of SAF compared to conventional jet fuel remain. Cosmo’s Sakai project has already secured key customers such as Japan Airlines and ANA. Government subsidies have helped fund the project, covering about half of capital expenditures.

___________________________________

Singapore Increases Biofuel Blend Limit for Bunker Tankers to B30

Starting Friday, all licensed bunker tankers in Singapore will be allowed to transport and deliver up to 30% blended marine biofuel (B30), an increase from the previous limit of 24%. This change aligns with updates to the International Convention for the Prevention of Pollution from Ships (MARPOL). However, bunker suppliers and operators must still seek approval from the Maritime and Port Authority of Singapore’s Standards and Investigation Marine Fuels (SIMF) department for blends exceeding 30%. The move comes as bunker fuel deliveries, including biofuels, have risen at major hubs like Singapore and Rotterdam, as shipowners aim to reduce emissions by using cleaner fuel alternatives.