Oil Prices Rise Slightly as Weak Dollar Offsets Economic Concerns

Oil prices edged up on Tuesday, with Brent crude rising 0.4% to $69.56 per barrel and WTI gaining 0.3% to $66.25, supported by a weaker U.S. dollar. However, concerns over a potential U.S. economic slowdown and tariff-related trade tensions limited further gains, as President Donald Trump announced a 25% tariff hike on Canadian steel and aluminum imports. Both crude benchmarks had fallen 1.5% on Monday, mirroring declines in U.S. stock markets, with the Nasdaq suffering its worst drop since September 2022. The U.S. Energy Information Administration projected record crude production of 13.61 million bpd in 2025, while OPEC+ plans to increase output in April but may adjust based on price trends. Analysts suggest that if oil prices remain below $70 per barrel for an extended period, OPEC+ may pause production hikes. U.S. crude stockpiles rose by 4.2 million barrels, ahead of official inventory data expected on Wednesday.

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Tanker Market Faces Uncertainty Amid Chinese Demand and Geopolitical Concerns

Tanker rates remain stagnant as concerns over Chinese crude demand and geopolitical tensions weigh on market sentiment. Breakwave Advisors, in its latest report, highlighted a lack of momentum for VLCCs despite rising activity last week, attributing this to uncertainties around future crude demand growth. Chinese oil imports fell by 5% in January and February, dampening confidence in sustained rate gains. While short-term market tightness and clearing early-positioned tonnage may offer some support for VLCC rates, broader macroeconomic challenges and geopolitical uncertainties, including US threats on Chinese shipping and potential changes in Russian sanctions, remain key obstacles to a full recovery in tanker rates.

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2025 CERAWEEK HOUSTON

- Canada could potentially limit its oil exports to the US amid trade tensions

- Occidental Petroleum forecasts that US oil output will peak within the next five years, signaling a shift in production trends.

- Mexico’s Pemex is focusing on refining, shifting its heavy oil away from the Gulf.

- Petrobras is exploring opportunities in Argentina, particularly due to the potential of Vaca Muerta gas reserves.

- Argentina is planning 11 major energy and mining projects, signaling growth in the sector.

- India’s ONGC is prioritizing investments in the Middle East, Africa, and Latin America.

- The UAE’s ADNOC CEO has expressed support for US gas investments, under the banner "Make energy great again."

- Nigeria is confident in its ability to meet its OPEC oil output target, according to a state oil executive.

- European leaders are looking to avoid reliance on Russian energy, even if sanctions are lifted, according to statements from ministers and executives.

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UK Lifts Sanctions on Turkish Ship Manager Active Shipping & Management

The UK government has removed Turkey's Active Shipping & Management from its Russian sanctions list after over a year. The company was originally sanctioned in February 2024 for allegedly supporting Russia during the Ukraine conflict, managing 17 vessels, including tankers calling at Russian ports. The UK Treasury did not provide reasons for the removal, and it appears the company no longer manages any vessels. Following the sanctions, Active’s assets were sold, with many of its ships now under the control of Onn Shipping. This move aligns with the UK government's shift towards targeting specific vessels rather than ship managers, with 133 tankers currently blacklisted.

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Houthis Resume Attacks on Israeli Ships Over Gaza Aid Blockage

The Houthi militant group in Yemen has vowed to resume attacks on Israeli ships for the first time in two months, following Israel's decision to block aid from entering Gaza. Houthi spokesman Yahya Saree declared that any Israeli ship violating the ban in the Red Sea, Gulf of Aden, and other key maritime routes would be targeted. The Houthis had previously launched missile and drone attacks on vessels in these areas, disrupting global shipping after the Hamas assault on Israel in October 2023. Despite a brief ceasefire, Western shipping companies remain hesitant to return to the region, fearing further assaults. The renewed threats could also hinder the recovery of the Suez Canal, which has already seen significant financial losses due to the Houthi attacks.

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Dangote Refinery Increases Foreign Oil Purchases as Ramp-Up Continues

Nigeria’s Dangote refinery is expanding its feedstock sources, drawing more foreign crude to supplement local deliveries as the mega-refinery gradually increases processing rates. Since the start of the month, the refinery has imported over three million barrels of American crude, alongside shipments from Angola and Algeria. While the facility has yet to reach full capacity, recent data shows a rise in run rates, averaging 450,000 barrels per day in the past two weeks. Once fully operational, Dangote could process up to 650,000 barrels per day, making it the largest refinery in Africa. The refinery continues to process mostly Nigerian crude, with the Nigerian government in talks to extend a contract to sell it crude in the local currency. Price competitiveness will be a key factor in deciding future crude imports, with several Atlantic basin grades under consideration.

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MR Tanker Demand Faces Decline Due to Nigeria’s Refining Expansion

UK shipbroker Gibson predicts a potential demand shock for MR tankers as Nigeria’s refining capacity increases. The new Dangote refinery, which reached 85% of its operational capacity last month and could reach 100% within 30 days, will reduce the need for imported clean products. Additionally, the revival of the Port Harcourt and Warri refineries later in 2024 could further impact tanker demand. Although reductions in clean product imports, particularly from Europe, have already been noted, MR tanker rates could face further declines. Nigeria’s reduced imports of petrol and diesel, alongside the increasing production from Dangote’s refinery, signal a structural shift in the country’s refining and import needs.

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Kazakhstan Yet to Implement Oil Output and CPC Export Cuts in March

Kazakhstan has not yet enforced its planned oil production and CPC Blend export cuts through the Caspian Pipeline Consortium (CPC), despite commitments to meet its OPEC+ quota, industry sources report. The country is negotiating with oil majors to align supply with its 1.5 million bpd target, which requires reducing output by 400,000 bpd. As of March 10, Kazakhstan’s oil and gas condensate production reached 2.18 million bpd, up from February’s average of 2.12 million bpd. Oil exports via CPC remain on schedule, with no reported shipment cancellations or reductions in the March loading plan of 6.7 million metric tons. While CPC shipments are proceeding smoothly, sources suggest that Kazakhstan may implement the expected cuts in the latter half of the month.

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Indonesia Expands Oil Refinery Plans to 1 Million BPD for Energy Security

Indonesia will construct multiple oil refineries across various islands, including Kalimantan and Sulawesi, expanding its initial plan of a single 500,000 barrels per day (bpd) refinery to a total capacity of 1 million bpd. This expansion is part of a broader effort to fast-track 21 natural resource processing projects worth $40 billion, which include coal gasification, oil storage construction, and refinery expansion. The country imports around 1 million bpd of crude oil and fuel to meet domestic demand. To enhance energy resilience, an additional 1 million-barrel oil storage facility will also be built. Indonesia is increasingly focusing on domestic processing of its natural resources to reduce reliance on imports. These measures align with President Prabowo Subianto's vision of strengthening Indonesia’s energy infrastructure.

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Panama Canal Considers LPG Pipeline to Serve Growing Asian Demand

The Panama Canal is exploring the construction of a pipeline to transport liquefied petroleum gas (LPG), with Japan identified as a key potential client for U.S. gas exports. This initiative follows a court ruling allowing the canal to diversify operations, especially after drought-related disruptions limited vessel crossings. Canal administrator Ricaurte Vasquez stated that the proposed pipeline could handle up to 1 million barrels per day (bpd), with studies indicating that total LPG traffic could reach 2 million bpd within a decade. The project emerges amid rising U.S.-Panama tensions, with President Donald Trump asserting U.S. interests in the canal and a recent U.S.-led deal involving port assets near the trade route. A final decision on the pipeline is expected within 12 months, with $8 billion already allocated for infrastructure and sustainability projects over the next ten years.