Oil Prices Jump 3% Amid US-China Trade Optimism and Global Market Uncertainty

Oil prices surged nearly 3% on Thursday due to growing optimism over upcoming trade talks between the U.S. and China, the world’s top two oil consumers. Brent crude settled at $62.84 a barrel, while U.S. WTI rose to $59.91. Anticipation of progress in trade negotiations, scheduled for May 10 in Switzerland, lifted market sentiment. However, analysts warned that tariff-related volatility remains a major driver of oil price fluctuations. Meanwhile, a new U.S.-UK trade deal maintained some tariffs but improved access for American goods. On the supply side, OPEC+ is set to increase production, although actual April output fell slightly, primarily due to declines in Venezuela, Iraq, and Libya. Citi Research cut its short-term Brent forecast to $55, though it kept its year-end target at $60. Potential outcomes of U.S.-Iran nuclear talks could shift prices significantly, while U.S. sanctions on Chinese refiners importing Iranian oil have disrupted crude flows and intensified pressure on Tehran.

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UK to Sanction Up to 100 Tankers in Effort to Disrupt Russia’s Shadow Fleet

The UK is set to impose sanctions on up to 100 oil tankers involved in Russia's shadow fleet, an effort to counter the country’s continued oil trade despite ongoing sanctions related to the invasion of Ukraine. The new sanctions, targeting vessels responsible for transporting over $24 billion worth of cargo since 2024, will increase the UK’s designations by up to 75%. These measures are part of the UK’s broader strategy to hold Russia accountable for its actions in Ukraine, as the shadow fleet allows Russia to circumvent restrictions on its oil exports. There are concerns that these ships pose safety risks, including potential damage to critical infrastructure such as underwater cables. The new sanctions will make the UK the leading country in targeting ships linked to Russia’s oil trade, surpassing other nations in the scope of its actions. Before this announcement, the UK had already sanctioned 133 tankers, with 41 of them solely targeted by the UK. Despite these sanctions, 39 of those 41 vessels have continued transporting Russian oil, according to vessel-tracking data. The persistence of these tankers in moving Russian crude highlights the challenges of fully enforcing sanctions in the global shipping industry.

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US Sanctions on Chinese Teapots Disrupt Iranian Oil Trade and Operations

Recent U.S. sanctions on two small Chinese independent refiners—Shandong Shouguang Luqing Petrochemical and Shandong Shengxing Chemical—for importing Iranian oil have disrupted their crude supplies and operations, sources say. These actions are part of Washington’s increased pressure on Iran's oil revenues as part of broader geopolitical tensions. The sanctions have had a chilling effect on other independent refiners in Shandong province, prompting several to halt Iranian oil purchases. Port restrictions have worsened the issue, with Shandong Port Group denying entry to tankers linked to sanctioned firms, forcing rerouting to alternative terminals. Large state banks have also cut financial support to Luqing, pushing it to rely on smaller institutions. Meanwhile, export activity has slowed, with no gasoline blendstock shipments recorded since March from key ports used by Luqing. In response, the sanctioned refiners are attempting to bypass restrictions by selling through new entities. China's government opposes unilateral U.S. sanctions and continues to import Iranian oil disguised as coming from other countries, though official customs data reports none since July 2022.

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OPEC Output Falls in April Despite Scheduled Hike as U.S. Pressure Hits Venezuela

OPEC's oil production slightly declined in April, falling by 30,000 barrels per day to 26.60 million bpd, according to a Reuters survey. This drop came despite an official plan by OPEC+ to begin raising output starting in April, with more hikes planned for May and June. Venezuela saw the largest decline as U.S. sanctions targeting oil flows—especially those involving Chevron—led to canceled shipments. Iraq and Libya also saw modest output reductions, with Iraq acting under pressure to better comply with OPEC+ quotas. Top producers like Saudi Arabia, UAE, and Kuwait largely maintained steady production despite quota increases. Iran was the only member to post a meaningful increase, showing resilience to recent U.S. enforcement efforts. These dynamics raise questions about how much of the planned OPEC+ production hike will materialize amid geopolitical constraints. The survey draws on data from LSEG, Kpler, and sources within OPEC and oil firms.

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Indonesia’s Karimun Terminal Emerges as Key Russian Oil Re-Export Hub

Indonesia’s Karimun terminal has become a central hub for transshipping Russian oil products, with cargo origins often rebranded before being re-exported, according to eight industry sources. Following Western sanctions after Russia’s 2022 invasion of Ukraine, Russian oil exports have largely shifted from Europe to Asia. Karimun, located in a free trade zone near Singapore, has received regular Russian shipments since October, exporting to Malaysia, Singapore, and China. Over 500,000 metric tons of Russian fuel oil and 217,000 tons of diesel have arrived at Karimun this year, a sharp increase compared to 2024 levels. March saw a record 590,000 tons of oil products exported from the terminal, helping maintain Asia’s supply of refined fuels, especially high-sulphur fuel oil. Sources say this has led to a discount in pricing relative to Singapore benchmarks. Indonesia’s energy ministry claims no jurisdiction over the zone, while other government bodies and involved companies have declined to comment. The terminal was acquired last year by Dubai-based Novus Middle East DMCC from Germany’s Oiltanking.

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Mediterranean Emissions Rule Spurs Surge in Europe’s Imports of Chad’s Doba Crude

Dutch and German refineries imported all four cargoes of Chad’s Doba crude in April due to rising demand for cleaner marine fuel under new Mediterranean shipping rules. The shift follows the International Maritime Organization’s designation of the Mediterranean as an Emission Control Area, requiring ships to use ultra-low sulphur fuel oil (ULSFO) capped at 0.1% sulphur. Doba crude, a heavy and sweet grade ideal for ULSFO blending, has seen redirected shipments from its usual Asian destinations to Europe. In April alone, four Suezmax shipments—equating to about 127,000 barrels per day—were sent to Europe, the highest in a year. Chad typically exports around 130,000 bpd of Doba crude globally. Dutch firm Chane’s Rotterdam plant and Germany’s HES International refinery have been the only European importers of Doba this year. Maersk, which operates a large shipping fleet, is sourcing ULSFO from Chane to meet the new Mediterranean fuel standards. Analysts say Doba’s unique properties and limited global alternatives make it a prime choice for blending ultra-low sulphur marine fuel.

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Vietnam’s Binh Son Signs Long-Term Crude Oil Deal with Azerbaijan’s SOCAR

Vietnam’s Binh Son Refining and Petrochemical has signed a long-term crude oil supply agreement with Azerbaijan’s SOCAR Trading. The deal will continue to support operations at Binh Son’s 130,000 barrel-per-day Dung Quat refinery in central Vietnam. The refinery has already been using Azeri crude oil for several years. Since 2010, Binh Son has imported a total of 31.7 million barrels of Azeri crude, valued at approximately $2.55 billion. The new agreement reinforces the longstanding energy relationship between Vietnam and Azerbaijan. Binh Son did not disclose the volume or duration of the new supply deal. The refinery is a key asset in Vietnam’s energy infrastructure and contributes significantly to the country’s fuel supply. The partnership ensures continued access to stable and suitable feedstock for the Dung Quat facility.

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Seaways to Buy Back Six VLCCs from OceanYield, Targeting Cost Savings

International Seaways has announced plans to buy back six VLCCs it sold to OceanYield in 2021 for $375 million, exercising purchase options when the first opportunity arises in November. These tankers were initially sold during a weak market and leased back on 10-year bareboat charters, but Seaways now aims to benefit from lower financing costs. By purchasing the vessels, Seaways could reduce its daily operating breakeven costs by $300 to $400 per day, mainly due to lower interest rates and a more flexible amortization schedule. The decision to sell the ships to OceanYield was made in 2021 after the COVID-19 outbreak, but the company sees a more favorable refinancing environment now. Seaways plans to refinance the vessels with a new mortgage-backed loan, reducing financing costs from SOFR plus 405 basis points to SOFR plus 185 basis points. The six VLCCs, built between 2015 and 2016, include the Seaways Hendricks, Liberty, Diamond Head, Triton, Cape Henry, and Tybee. This move follows Seaways' 2018 acquisition of these vessels from Euronav, marking a significant step in fleet renewal. Seaways also received a crucial $30 million cash infusion from BlackRock to complete the original acquisition, overcoming financial challenges.

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BP-Shell Megadeal Could Form European Rival to Exxon Mobil

A potential acquisition of BP Plc by Shell Plc could become one of the largest deals in European history, forming a new oil giant capable of rivaling industry leaders like Exxon Mobil and Chevron. While BP's shares have declined nearly a third in the past year and its investors are doubtful about its turnaround strategy, the deal would significantly enhance Shell's market position. Combining the two London-based firms would increase Shell’s oil and gas production by 85%, making the new entity the largest investor-owned energy producer, surpassing both Exxon and Chevron. The acquisition would also help Shell recover from its 2021 decision to divest its Permian basin operations by adding BP’s Denver-based shale unit. Shell, already the world’s largest LNG seller, would see its LNG sales soar, representing more than 20% of the global market. The merger would create synergies in shipping, particularly for LNG tankers, offering substantial cost savings. Additionally, Shell and BP’s combined trading operations could boost returns, though it's uncertain if the acquisition would justify the premium Shell might need to pay. Analysts are weighing the potential benefits and drawbacks of such a transformative move, with questions about the value of BP’s trading operations in comparison to Shell's own capabilities.