Oil Prices Fall to 8-Week Low Amid US-Russia Sanctions Uncertainty and OPEC+ Supply Increase

Oil prices dropped about 1% to their lowest levels in eight weeks, with Brent crude settling at $66.89 and WTI at $64.35 per barrel, marking five consecutive days of declines. The slide followed U.S. President Trump’s remarks on progress in talks with Russia, which raised uncertainty over potential new sanctions linked to the Ukraine war. This uncertainty, combined with a planned OPEC+ production increase and the recent U.S. tariff on Indian imports of Russian oil, pressured the market. Saudi Arabia also raised its crude prices to Asia for September amid tight supply and strong demand. Meanwhile, U.S. crude inventories unexpectedly fell by 3 million barrels last week, offering some support to oil prices despite the overall bearish factors.

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Trump Imposes Extra 25% Tariffs on Indian Goods Over Russian Oil Imports

U.S. President Donald Trump imposed an additional 25% tariff on Indian goods, effective 21 days after August 7, due to India’s ongoing imports of Russian oil, raising total duties on some products to as high as 50%. The tariffs threaten India’s access to the U.S. market, worth nearly $87 billion in 2024, impacting key sectors like textiles, footwear, and jewelry, and marking a sharp downturn in U.S.-India relations since Trump’s return to office. India’s government called the move “extremely unfortunate” and emphasized its energy needs and market factors behind Russian oil purchases. The tariffs come amid stalled trade talks and growing tensions, with Trump also hinting at similar tariffs on China, another major Russian oil buyer. Economists warn the move could reduce India’s GDP growth below 6% this year, while Indian exporters face a 30-35% competitive disadvantage compared to rivals like Vietnam and Bangladesh.

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Indian Refiners Await Government Signal Amid U.S. Tariffs Over Russian Oil Imports

Indian refiners are holding off on altering their Russian oil purchases as they await government instructions following the U.S. decision to impose an additional 25% tariff on Indian goods due to New Delhi’s continued energy ties with Moscow. While state-run refiners have paused Russian oil imports, private companies such as Reliance Industries, Nayara Energy, and HPCL Mittal Energy (HMEL) continue to import. India currently relies on Russian crude for over one-third of its oil needs, and any disruption could redirect demand toward suppliers in the Middle East, Africa, or the Americas. The new tariffs will go into effect 21 days after the August 7 announcement, though modifications may be considered if Russia or India shift alignment with U.S. policies.

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Russia to Boost Oil Exports After Drone Attacks Disrupt Refinery Operations

Russia is set to increase oil exports from its western ports to nearly 2 million bpd in August, up by 200,000 bpd from earlier estimates, following Ukrainian drone strikes that disrupted operations at the Ryazan (262,000 bpd) and Novokuibyshevsk (115,000 bpd) refineries. These facilities, both operated by Rosneft, have shut several crude distillation units and are expected to take about a month to complete repairs. The added supply could further pressure global oil prices, which are already affected by an OPEC+ production hike agreed upon earlier this month. To accommodate the increased exports, up to 10 Aframax tankers will be added to Russia’s loading schedule.

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Saudi Arabia Raises Asian Crude Prices Amid OPEC+ Output Boost

Saudi Aramco increased the price of Arab Light crude to Asia by $1 per barrel for September shipments, bringing the premium to $3.20 — the highest since April — amid growing demand and rising OPEC+ output. In contrast, prices to Europe were cut by $1.30, the steepest drop in a year, while U.S.-bound shipments saw a slight increase. Aramco CEO Amin Nasser expressed optimism about continued demand growth, projecting second-half oil demand to be over 2 million bpd higher than the first half. OPEC+ agreed to raise production by 547,000 barrels per day in September, following a similar increase in August. Despite this, firms like JPMorgan and Goldman Sachs anticipate oil prices may fall toward $60 per barrel later this year due to the added supply.

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HMM Abandons SK Shipping Acquisition Over $1.8B Pricing Gap

South Korea’s HMM has officially ended acquisition talks with Hahn & Co for SK Shipping due to a significant pricing disagreement. Hahn & Co was reportedly seeking KRW 4 trillion ($2.8 billion), while HMM was only willing to pay slightly over KRW 1 trillion for 37 vessels, excluding LNG assets restricted by a prior non-compete clause. HMM had planned the acquisition as part of its broader KRW 18.3 trillion investment strategy across container, dry bulk, tanker, gas, and car carrier sectors. Despite the collapse of the deal, HMM stated it remains committed to expanding its bulk business. SK Shipping, 78% owned by Hahn & Co since 2018, has significantly improved performance, with operating profit growing from KRW 73.3 billion to KRW 395.7 billion by 2024.

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Charterers Flock to Older VLCCs as Rates Surge Amid Market Optimism

Charterers are increasingly turning to older VLCCs as daily rates rise, with Clarksons reporting a 23% week-on-week increase to $35,700 per day. Half of the recent fixtures involve tankers 15 years or older, including Indian Oil’s charter of the New Andros (built 2005) at a notably low rate. Scrubber-fitted VLCCs such as Achilleas (built 2010) and Nave Galactic (built 2009) were fixed at higher rates around $29,000–$37,000 per day for voyages from the Middle East to Asia. Analyst Omar Nokta noted that rising OPEC+ output and looming U.S. sanctions on Russian oil buyers are supporting bullish sentiment in tanker equities. Suezmax rates also surged to $40,000 per day, while Aframax rates showed mixed movement depending on the data source.

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International Seaways Strategically Refreshes Fleet with New VLCC Acquisition

International Seaways is using $57 million from the sale of six older product tankers to help fund the $119 million purchase of a 2020-built scrubber-fitted VLCC from Hyundai Heavy Industries, to be delivered in Q4. This move is part of a broader strategy to modernize its fleet by replacing older vessels with newer, more efficient ones. CEO Lois Zabrocky and CFO Jeffrey Pribor emphasized the company’s commitment to the VLCC market, building on past moves like swapping older VLCCs for newer MRs. With the latest addition, Seaways will own 12 VLCCs and is continuing to explore further opportunities in crude tonnage. The company also recently acquired six MRs for $232 million and secured $240 million in financing for six dual-fuel LR1s under construction.

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Aframax Tanker Values Fall Over $10M from 2024 Peak Amid Market Correction

Recent sales of aframax tankers reveal a significant decline in secondhand values, with the 115,900-dwt Advantage Award (built 2011) reportedly selling for $36.5 million—down from $52 million a year ago. Another vessel, the 105,700-dwt Aqua Pearl (built 2005), was sold for approximately $24.8 million, reflecting a $10 million+ drop from its $34.8 million value last year. Despite these drops, current prices remain historically strong. VesselsValue and MSI Horizon estimated Aqua Pearl’s value at $24.9 million and $23.3 million, respectively, aligning with the sale price even though the ship was due for dry-docking. In contrast, an identical sister ship, Planet Pearl, was sold in August 2024 for $29 million to be converted into a floating storage vessel for Malaysia’s Petronas.