Oil Prices Fall Over 1% Amid Tariff Worries and Supply-Demand Concerns

Oil prices fell over 1% on Thursday due to concerns about U.S. tariff threats and global trade tensions, which could hurt demand. Brent crude dropped 1.5% to $69.88 per barrel, and WTI fell 1.7% to $66.55. The IEA forecasted that global oil supply could exceed demand by 600,000 bpd this year, while U.S. tariffs and a potential Russia-Ukraine ceasefire added uncertainty. Despite tight inventories, the market remains cautious about demand growth, with concerns about the impact of tariffs on consumers.

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AI Revolutionizing Oil and Gas Production, Leading to Faster, Cheaper Drilling

Artificial intelligence (AI) is transforming the oil and gas industry, enabling faster and more cost-effective drilling processes, according to executives speaking at the CERAWeek conference in Houston. AI is allowing companies to drill in previously unfeasible areas, improving operational efficiency, and reducing costs. BP is utilizing AI to predict problems in wells and optimize drill bit performance, resulting in more wells drilled per year. Devon Energy has used machine learning to enhance the productive life of its oil and gas wells by 25%. Chevron has deployed AI-powered drones to monitor emissions and streamline maintenance in its shale operations. These technological advancements have significantly reduced downtime and increased productivity, especially in offshore drilling, where BP now analyzes seismic data in weeks instead of months. AI tools are also being employed for visualizing subsurface features, providing a competitive edge for companies that integrate this technology. As the industry embraces AI-driven solutions, companies that fail to adapt risk falling behind in a highly competitive market.

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IEA Foresees Global Oil Market Surplus in 2025 as Demand Falls Short

The International Energy Agency (IEA) predicts a global oil supply surplus of approximately 600,000 barrels per day (bpd) in 2025, driven by record-high production in the United States and weaker-than-expected global demand. Despite sanctions on major exporters Russia and Iran, the IEA highlighted the challenge for OPEC+ in balancing the market, with the U.S. expected to be the largest source of supply growth. World oil demand is expected to rise by 1.03 million bpd in 2025, primarily driven by Asia, particularly China, where petrochemical feedstocks are expected to account for most of the demand growth. The IEA also noted that rising global trade tensions may further dampen demand, and if OPEC+ continues to unwind production cuts, the surplus could increase by an additional 400,000 bpd. Despite these challenges, global oil supply is set to grow at double the pace of 2024, with non-OPEC countries, notably the U.S., Canada, Brazil, and Guyana, leading the charge.

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Trump Administration Expands Sanctions on Iran’s Shadow Fleet and Support Tugs

The Trump administration has intensified sanctions on Iran’s shadow fleet by targeting not only tankers but, for the first time, the tugs that support them. The US Treasury added 10 tankers and several associated companies to its blacklist, while also sanctioning Iranian petroleum minister Mohsen Paknejad. A key shift in strategy came from the State Department, which sanctioned three tugs—Malili (built 1997), Celebes (built 1978), and Marina Vision (built 1981)—and their operators in Singapore and Indonesia for facilitating ship-to-ship transfers of Iranian oil. Treasury’s latest sanctions focused on tankers involved in clandestine operations, including six VLCCs, two aframaxes, a panamax, and an MR chemical tanker, with some employing location data manipulation to evade detection. Notably, the 300,000-dwt Itaugua (built 1997) was identified conducting secret cargo transfers off Malaysia, and the Peace Hill (built 2005) was blacklisted for carrying Iranian oil from China. The Corona Fun (built 2004) and its Hong Kong-based owner Sun Science International were also sanctioned for similar violations. US officials continue to expand enforcement deeper into Iran’s oil supply chain, with Treasury Secretary Scott Bessent vowing to disrupt Tehran’s use of oil revenues for destabilizing activities.

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Record OPEC+ Fuel Exports Offset Impact of Crude Supply Cuts

OPEC+ countries, including Saudi Arabia, Iraq, Kuwait, Oman, and the UAE, have significantly increased their refined product exports, mitigating the effect of their crude output cuts. In 2024, seaborne fuel exports from these Gulf OPEC+ members reached a record high of 5.51 million barrels per day (bpd), over 7% higher than the previous year. The rise in refined product exports has reduced the overall impact of crude supply cuts, with more oil reaching the market than the crude supply cuts alone would indicate. Despite reducing crude exports by 713,000 bpd in 2024, OPEC+ countries were able to maintain or expand their market share by selling refined products, including diesel and gasoline, particularly in Europe and other regions affected by sanctions on Russia. This shift in focus to refined products is part of a broader strategy to boost revenues and market share, leveraging significant investments in refining capacity. OPEC+ has been able to refine more oil, thanks to billions of dollars invested in the region's downstream industries. While the overall impact of the crude supply cuts was mitigated, the continued growth in refined product exports has played a crucial role in offsetting weak global demand growth, especially from China, and contributed to weaker oil prices.

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Saudi Arabia’s Crude Oil Shipments to China Drop in April Due to Refinery Maintenance

Saudi Arabia is set to reduce its crude oil supply to China in April, with shipments expected to fall to the lowest level in over a year. Trade sources indicated that Saudi Arabia has allocated 34 million barrels of crude oil to Chinese customers in April, down from 41 million barrels in March. This decrease is partly due to refinery maintenance by Sinopec, China's largest oil refiner, which plans to shut down over 700,000 barrels per day (bpd) of refining capacity from mid-March through May. Despite OPEC+’s decision to raise production in April, this reduction in supply is a result of weakened demand from China, as Sinopec's refineries, including the Yangzi, Jiujiang, and Gaoqiao plants, undergo maintenance. Meanwhile, crude oil markets in Asia are stabilizing, with a rebound in imports of Russian and Iranian oil to China following disruptions caused by U.S. sanctions in late 2024 and early 2025.

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US VLCC Spot Market Slows as Chinese Buyers Shun Trade Uncertainty

The US VLCC spot market has become unusually quiet as uncertainty surrounding President Donald Trump’s trade policies keeps Chinese buyers at bay. This has led to a 13.1% drop in time-charter equivalent rates on the US-to-China route in just one week and a 35.8% decline from the January peak of $55,500 per day to $35,700 per day. The Baltic Exchange reported the lowest rates since 13 January. Norwegian shipbroker Fearnleys noted that VLCCs are increasingly loading cargo from Brazil and West Africa instead of the US. The Trump administration’s decision to impose a 20% tariff on Chinese goods, along with threats of levies on Chinese-built ships and those flying the Chinese or Hong Kong flag, has contributed to the slowdown. China has retaliated by placing tariffs on US crude, but some brokers argue that Chinese buyers had already been diversifying away from US Gulf crude prior to the tariffs, sourcing more from Panama’s west coast and Canada. The last recorded fixture for a US Gulf-to-China cargo was on 21 February. Despite the decline in US-to-China rates, the broader VLCC market is showing signs of stability, with the Baltic Exchange’s average VLCC rate rising to $38,400 per day. Recent activity in Middle Eastern cargoes for late March and early April loadings has helped stabilize rates, and analysts suggest that while rates have yet to rebound significantly, further declines appear limited.

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Russian Oil Exports Remain Resilient Despite Strongest Sanctions Yet

Despite the latest US, EU, and UK sanctions, Russia's oil exports have remained largely stable, according to the International Energy Agency (IEA). The Biden administration sanctioned 183 tankers on 10 January, forcing Russia to rely more on non-sanctioned shipping and maritime insurers as crude prices dropped below the $60 per barrel price cap. This shift allowed G7-linked operators to legally transport Russian oil, with crude prices falling to around $55 per barrel. Russia’s crude production declined from 9.2 million barrels per day (bpd) to 9.12 million bpd, while crude exports increased and refined product exports fell due to Ukrainian drone strikes on refineries. Revenue from Russian oil exports fell 16% year-on-year to $13.28 billion in February. The oil price cap and sanctions have only partially achieved their goal of restricting Russian revenue, as enforcement remains inconsistent. The UK and EU imposed new sanctions on Russian-linked shipping in February, marking the third anniversary of the Ukraine invasion, but Washington instead shifted focus to Iran, sanctioning 13 more tankers. China and India briefly slowed Russian crude imports in January to assess risks, but Indian imports, which accounted for over 70% of Russia’s crude exports in 2024, quickly rebounded. Ship-tracking data suggests US-sanctioned tankers have largely avoided Indian ports, but exceptions exist, such as the 115,600-dwt Kiwala (built 2007), which discharged Urals crude at Jamnagar despite being sanctioned by the UK and EU.

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Enesel’s Suezmax Tanker Delivers First Algerian Crude to Nigeria’s Dangote Refinery

Greek shipping company Enesel is transporting the first-ever Algerian crude oil shipment to Nigeria’s Dangote refinery. Oil analytics firm Kpler reported that the 158,000-dwt Sypros (built 2020) is carrying 1 million barrels of Saharan Blend crude, having loaded on 9 March and scheduled to arrive at Lekki port on 22 March. This marks a strategic move to diversify the refinery’s crude supply as it aims to reach full capacity. The Nigerian National Petroleum Company (NNPC) has supplied 48 million barrels under a six-month swap deal with Dangote, which expires at the end of March, with renewal discussions ongoing. Initially planned for multiple refineries, only Dangote benefited from the agreement. Meanwhile, UK shipbroker Gibson predicts a demand shift in the tanker market as Nigeria’s 650,000-barrel-per-day refinery reached 85% operational capacity last month and is expected to hit 100% within 30 days. This will likely reduce Nigeria’s dependence on clean product imports, which have already fallen by 155,000 barrels per day from Europe compared to 2023, impacting MR tanker demand.

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Indian Refiners Seek Alternatives to Russian Oil, Turning to Latin America and Africa in February

India's crude oil imports from Latin America and Africa saw a slight increase in February as refiners sought alternatives to Russian oil amidst tighter U.S. sanctions. Following Western sanctions on Russia after its 2022 invasion of Ukraine, India became the largest buyer of discounted Russian oil. However, in February, Russian oil imports decreased by 3% from January, dropping to about 1.54 million barrels per day (bpd), and Russia's share in India's overall crude imports reached its lowest since January 2024. Oil imports from African countries rose to about 330,000 bpd from 143,000 bpd in January, and imports from South America surged by 60% to 453,600 bpd. Following U.S. sanctions imposed in January targeting Russian producers and tankers, India turned to suppliers in Latin America and Africa, with Latin America's share rising to 9%, the highest since December 2021. February also saw India import a rare cargo of Gabon's Etame grade and its first-ever shipment of Argentina's Medanito oil. Additionally, several vessels carrying Russian oil arrived in India late in February and were discharged in March, as refiners aimed to maximize their purchases ahead of the February 27 deadline set by U.S. sanctions.

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Vitol Receives Additional Upper Zakum Cargoes as Middle East Crude Markets Show Activity

Middle East crude benchmarks Oman and Dubai saw an uptick on Thursday after Vitol received two more Upper Zakum cargoes, bringing its total for the month to 10 cargoes. PetroChina has delivered nine cargoes to Vitol, with the remaining one supplied by Hengli Petrochemical. Traders are also awaiting the results of QatarEnergy’s tenders, which are offering five al-Shaheen crude cargoes for loading in May. Additionally, PV Oil awarded two Rang Dong cargoes for May loading to the Binh Son refinery, and a tender for one Chim Sao crude cargo is currently underway.

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BP Plans New Oil Exploration in Azeri Caspian Sea as Part of Upstream Strategy

BP plans to explore new oil fields in the Azeri Caspian Sea, according to BP’s upstream chief, Gordon Birrell. While the company has been focused on stemming declining output from the Azeri–Chirag–Gunashli (ACG) complex and the Shah Deniz gas field, BP has now revealed its intent to pursue new exploration opportunities in the region. Birrell emphasized BP’s continued investment in Azerbaijan, including further development of ACG and Shah Deniz fields, as well as accessing discovered but undeveloped resources. This shift in strategy comes as BP increases spending on its oil and gas operations while cutting back on low-carbon investments. Azerbaijan’s oil output has been declining since the ACG complex peaked in 2010, and the country is also aiming to boost its gas exports.