Oil Prices Rise 1% Amid U.S. Stock Draw and Venezuela Supply Concerns

Oil prices climbed on Wednesday as U.S. crude and fuel inventories fell and concerns grew over global supply disruptions due to potential U.S. tariffs on Venezuelan crude buyers. Brent crude settled at $73.79 per barrel (+1.05%), while WTI closed at $69.65 (+0.94%). Crude stocks dropped by 3.3 million barrels to 433.6 million barrels last week—significantly more than the expected 956,000-barrel decline—as refiners ramped up production. Venezuelan crude trade with China stalled after the U.S. threatened a 25% tariff on nations importing from Caracas. Analysts estimate Venezuela could lose up to 400,000 barrels per day in production and suffer a $4.9 billion revenue hit, over 10% of its GDP. Meanwhile, tightening physical markets are shifting global flows, with OPEC+ potentially increasing production to counterbalance lost Iranian exports. A U.S.-brokered agreement between Russia and Ukraine to pause attacks at sea and on energy infrastructure tempered price gains, as the market anticipates increased Russian crude supply.

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US Crude Stockpiles Drop as Refining Activity Rises, EIA Reports

U.S. crude oil inventories declined by 3.3 million barrels to 433.6 million barrels in the week ending March 21, surpassing analysts' expectations of a 956,000-barrel draw, according to the Energy Information Administration (EIA). Refinery crude runs increased by 87,000 barrels per day, while utilization rates edged up to 87%, marking a third consecutive week of growth as facilities resumed operations after seasonal maintenance. Gasoline stockpiles fell by 1.4 million barrels to 239.1 million barrels, short of the projected 1.8 million-barrel draw, while gasoline demand slipped to 8.6 million barrels per day (bpd) from 8.8 million bpd. Distillate inventories, including diesel and heating oil, dropped by 420,000 barrels to 114.4 million barrels, missing forecasts of a 1.6 million-barrel decline. Jet fuel demand fell to 1.4 million bpd, its lowest level since February 2024, while net U.S. crude imports rose by 845,000 bpd. Crude stocks at the Cushing, Oklahoma, delivery hub also declined by 755,000 barrels. Analysts noted the increase in refining activity but cautioned that weaker product demand could weigh on market sentiment as the summer driving season approaches.

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India’s Reliance to Cease Venezuelan Oil Imports Amid US Tariff Threat

India’s Reliance Industries, the operator of the world's largest refining complex, will stop purchasing Venezuelan crude following the United States' announcement of a 25% tariff on nations importing oil from Venezuela, according to industry sources. Reliance, which had previously obtained U.S. approval to buy Venezuelan oil, imports an average of 2 million barrels per month. According to Bloomberg, sources indicate that while a single shipment aboard the VLCC Helios (302,100-dwt) is still expected to arrive in mid-April, all future purchases are on hold. Reliance's two refineries in Gujarat, with a combined processing capacity of 1.4 million barrels per day, are designed to handle heavy crude like Venezuela’s Merey. However, the increased costs from U.S. tariffs could force the company to shift sourcing strategies.

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Russian Oil Freight Rates Drop as More Western Shipowners Return

Freight rates for Russian oil shipments from Baltic ports to India have declined from record highs as more Western shipowners re-enter the market following a drop in Urals crude prices below the $60-per-barrel price cap, according to traders. The Group of Seven and EU price cap, imposed in late 2022, restricted access to Western shipping services and insurance for Russian oil sold above $60 per barrel to limit Moscow’s war financing. The cost of shipping Urals oil from Baltic ports, including Primorsk and Ust-Luga, has fallen to an average of $7 million per one-way trip after hitting a 12-month high in early March. The decline follows a drop in global oil prices, which pushed Urals crude below $60, with shipments from Primorsk priced at approximately $57 per barrel as of Wednesday. Traders anticipate further reductions in freight rates if a maritime and energy truce between Russia and Ukraine takes effect. However, despite the recent drop, shipping costs remain significantly higher than in January when freight rates ranged between $4.7 million and $4.9 million per trip.

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Russia’s LPG Exports Surge to Afghanistan as Europe Cuts Imports

Russia's liquefied petroleum gas (LPG) exports to Afghanistan and Central Asia have soared following the European Union’s ban on Russian LPG, which took effect on December 20, 2024, as part of sanctions over the Ukraine war. The sanctions, pushed by Poland, forced Moscow to redirect its supplies to alternative markets. Railway shipments from Russian plants, including the Kazrosgas joint venture with Kazakhstan, increased by 80% year-on-year in January and February, reaching 140,000 metric tons. Exports to Afghanistan, Russia’s largest LPG buyer in the region, rose by 52% to 71,000 tons during the same period. Traders anticipate further growth, as Afghanistan’s annual LPG demand is estimated at 700,000 tons.

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Non-Chinese-Built Tankers See Price Premium Amid U.S. Port Fee Threat

In the wake of potential U.S. port fees on Chinese-built vessels, brokers report a growing premium for non-Chinese-built tankers in the secondhand market. A notable example is the sale of the Japanese-built P Yanbu by Greece's Performance Shipping for $39 million, nearly $5 million above its valuation. Brokers suggest that this price reflects the increasing demand for non-Chinese-built tonnage as buyers anticipate future regulatory developments. The vessel’s quick, debt-free transaction and strategic premium for non-Chinese vessels were key factors. Other recent sales, such as those of Japanese-built ships like the Capricorn Sun and Nemo, further support this trend. As geopolitical tensions rise, the market sentiment appears to favor vessels of non-Chinese origin, with a significant portion of sales now involving Japanese and South Korean-built tonnage. Performance's sale of P Yanbu is part of its broader fleet renewal strategy, underscoring the changing dynamics in the shipping market.

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Greek Shipping Faces Turbulent Times Amid Political Shifts

Greek shipowners, generally conservative, initially supported Trump’s policies, which balanced environmental goals and fleet stability. However, recent U.S. proposals to impose tariffs on Chinese-built vessels have created uncertainty, as Greek owners depend heavily on Chinese shipyards. Since early 2023, Chinese shipyards have built two-thirds of the new vessels ordered by Greeks, raising concerns over potential port fees. Additionally, the war in Ukraine has placed Greek owners in a challenging position, navigating both support for Ukraine’s grain trade and maintaining ties with Russia’s energy sector. Despite these challenges, Greeks have been successful in offloading older tankers for profit, raising nearly $10 billion. They face potential damage to vessels linked to Russia due to geopolitical tensions. As political risks rise, Greek owners remain invested in conventional fuel ships, signaling their belief in the sector's future. However, political developments will likely continue to shape the shipping industry.

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Aframax Tanker Rates Soar Amid Mediterranean Fixing Surge

Aframax tanker rates saw a significant spike, driven by a surge in activity in the Mediterranean. Clarksons reported a nearly 17% day-on-day increase in the fleet’s weighted average, reaching $37,600 per day. Rates for eco-designed aframaxes on cross-Mediterranean routes jumped more than 27%, hitting $51,200 per day. The Mediterranean route experienced a 57% growth week-on-week, making it the most lucrative of all aframax routes. Similarly, the US Gulf to Europe route saw a 10.5% rise, reaching $36,000 per day. However, rates for VLCCs and suezmaxes slowed, with declines of 4% and 1.4%, respectively. Despite the Russia-Ukraine agreement to pause sea attacks, analysts noted it wouldn’t significantly impact tanker volumes. The uptick in aframax rates is largely attributed to high activity in the Mediterranean market.

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Record 2024 Renewable Growth Falls Short of 2030 Climate Targets, Says IRENA

Global renewable energy capacity surged by a record 585 GW (15.1%) in 2024, bringing total capacity to 4,448 GW, according to IRENA. Renewables accounted for 92.5% of new energy additions, but growth still lags behind the 11.2 terawatts needed by 2030 to meet climate targets, requiring a 16.6% annual increase. China led the expansion, contributing 64% of new capacity, including 278 GW of solar power. The G7 nations followed with 14.3%, while Central America and the Caribbean added only 3.2%. Solar and wind remained dominant, making up 96.6% of all new renewable additions. IRENA’s Director General, Francesco La Camera, warned of regional disparities and the urgency of accelerating deployment before the 2030 deadline.