Oil Prices Steady but Post Steepest Weekly Drop Since June Amid US-Russia Deal Speculation and Tariff Concerns

Oil prices steadied on Friday with Brent crude settling at $66.59 per barrel (+$0.16, +0.2%) and WTI unchanged at $63.88, but both posted their sharpest weekly declines since late June—Brent down 4.4% and WTI down 5.1%—amid tariff-driven economic concerns and speculation over a potential US-Russia deal on Ukraine. Bloomberg reported that Washington and Moscow are working toward a summit between Donald Trump and Vladimir Putin that could formalize Russia’s territorial gains, potentially easing sanctions. Tariff tensions escalated this week as Trump threatened higher duties on Indian and possibly Chinese imports of Russian oil, while sweeping new US tariffs on multiple countries took effect Thursday. OPEC+ agreed to raise September output by 547,000 bpd, fully reversing prior voluntary cuts, while the US oil rig count rose by 1 to 411, adding to supply-side pressure. Money managers also reduced net long positions in US crude futures and options in the week to August 5, reflecting growing bearish sentiment.

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Ukraine Strikes Russia’s Saratov Refinery as Energy Infrastructure Attacks Intensify

Ukraine’s military claimed a successful drone strike on Russia’s Rosneft-operated Saratov refinery, which has a capacity of 140,000 bpd, amid a surge in attacks on Russian energy facilities. Local officials reported one death from falling debris, flight delays, and industrial disruption, while Ukrainian intelligence said another drone hit Lukoil’s Komi refinery (80,000 bpd capacity). The strikes follow recent hits on Russia’s Ryazan refinery (340,000 bpd) and Novokuibyshevsk plant (177,000 bpd), part of Kyiv’s effort to cut Moscow’s fuel supply and revenue. Russia’s defense ministry said it intercepted 121 Ukrainian drones overnight, bringing the 24-hour total to about 372, while Ukraine claimed to have downed 70 of 100 Russian drones launched in the same period. Civilian casualties occurred in Zaporizhzhia and Kherson from Russian attacks, as diplomatic preparations continue ahead of a planned Alaska meeting between US President Donald Trump and Russian President Vladimir Putin, with Ukraine insisting it will not cede territory.

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OPEC Oil Output Rises in July by 270,000 bpd, Led by UAE and Saudi Arabia

OPEC’s oil production rose to 27.38 million bpd in July, up 270,000 bpd from June, according to a Reuters survey, driven mainly by increases from the UAE (+100,000 bpd) and Saudi Arabia, though gains were limited by Iraq’s extra cuts and Kurdish oilfield drone attacks. The rise follows an OPEC+ plan to unwind recent output cuts, with five OPEC members—Algeria, Iraq, Kuwait, Saudi Arabia, and the UAE—scheduled to raise output by 310,000 bpd, offset by 175,000 bpd in compensation cuts from Iraq, Kuwait, and the UAE. In practice, these five countries added 150,000 bpd, as Iraq reduced supply due to quota compliance pressure and disruptions in its Kurdish region. Saudi Arabia’s June supply was revised upward by 50,000 bpd to 9.36 million bpd, while the UAE’s July production remained under its OPEC+ quota. Estimates of Iraq and UAE output vary widely between OPEC, secondary sources, and outside agencies like the IEA, reflecting discrepancies in reporting.

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Norway Plans First Major Oil and Gas Licensing Round Since 2021 to Boost Future Output

Norway’s Energy Minister Terje Aasland announced plans for the first major oil and gas licensing round in unexplored frontier areas of the Norwegian continental shelf since 2021, aiming to secure long-term supply to Europe and sustain domestic jobs. The move comes after a four-year moratorium on frontier exploration was agreed in 2021, limiting new acreage to areas near existing fields. Norway currently produces about 4 million barrels of oil equivalent per day—half as natural gas and half as crude and liquids—with 60% of export revenue last year coming from petroleum. Many of Norway’s oil and gas fields are aging, with production projected to decline in the 2030s unless new reserves are found. The petroleum sector accounts for roughly 10% of private-sector employment, making exploration vital to the country’s economy.

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Norway Joins Europe in Insurance Checks to Curb Shadow Fleet Tankers Carrying Russian Oil

Starting August 11, Norway will conduct insurance checks on foreign-registered tankers carrying Russian oil within its exclusive economic zone to reduce environmental risks and combat shadow fleet traffic. The measure, initially lasting six months, involves voluntary information requests managed by the coastal administration and verified by the Norwegian Maritime Directorate, with industry consultations planned for August 28. Norway joins Denmark, Finland, Sweden, Germany, and the UK, where authorities have already challenged hundreds of suspected shadow fleet vessels, including around 40 per month in the English Channel. The EU found that 20% of 154 ships failed to provide insurance details in a recent three-month period, prompting increased monitoring powers since May. Such efforts have pressured tankers like the sanctioned 105,000-dwt aframax Marathon to take longer routes around the UK to avoid scrutiny.

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Indian State Refiners Accelerate Non-Russian Oil Purchases Under Trump Pressure

India’s largest state refiners, Indian Oil Corp (IOC) and Bharat Petroleum Corp (BPCL), bought at least 22 million barrels of non-Russian crude for September–October delivery after U.S. President Donald Trump urged India to halt Russian oil imports. IOC purchased 2 million barrels of U.S. Mars crude from BP at $1.5–$2/bbl above September Dubai quotes, 2 million barrels of Brazilian Sepia and Sururu from Totsa, and 1 million barrels of Libyan Sarir and Mesla from Petraco, in addition to 8 million barrels from the Middle East, U.S., Canada, and Nigeria for September arrival. BPCL secured 9 million barrels, including 1 million barrels each of Angola’s Girassol and U.S. Mars, 3 million barrels of Abu Dhabi Murban, and 2 million barrels of Nigerian oil. Together, the refiners’ spot purchases account for about 6% of India’s May crude processing capacity, and trade sources said improved arbitrage economics for Atlantic Basin grades to Asia also encouraged these deals.

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Reliance May Return to Middle East Oil Amid U.S. Pressure to Cut Russian Imports

Reliance Industries, India’s largest refiner and operator of the 1.4 million bpd Jamnagar complex, may shift back to Middle Eastern oil if U.S. President Donald Trump’s pressure leads India to reduce Russian crude purchases. Reliance has been the country’s top buyer of seaborne Russian oil since the 2022 Ukraine war, securing a 500,000 bpd deal with Rosneft, but the U.S. recently imposed an additional 25% tariff on Indian goods—potentially raising duties to 50%—over continued Russian imports. Analysts said Reliance could revert to pre-war suppliers, primarily Saudi Arabia and the UAE, with possible imports from Brazil and North Sea producers. In July, Indian state refiners halted Russian purchases under tariff threats, though Reliance’s port at Sikka is still set to receive 22 Russian cargoes this month.

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Canada Cuts Russian Oil Price Cap to $47.60 to Align with Allies

Canada will lower its price cap on seaborne Russian-origin crude oil from $60 to $47.60 per barrel, aligning with recent moves by the European Union and the United Kingdom aimed at reducing Russia’s oil revenues over its war in Ukraine. Finance Minister Francois-Philippe Champagne said the measure is intended to “ratchet up the economic pressure” and limit a critical funding source for Moscow. The coordinated cap reduction follows July announcements from the EU and UK to tighten sanctions on Russian energy exports.

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Canada Eyes Year-Round Arctic VLCC Oil Exports with Churchill Port Expansion

Canada’s Arctic Gateway Group (AGG) aims to enable year-round crude exports by VLCCs from the port of Churchill in Hudson Bay, contingent on government investment in icebreakers. Churchill is North America’s only deepwater Arctic port with rail connections via an 800-mile Hudson Bay railway to the Canadian National Railway, facilitating broad access across North America. Currently, shipping is limited to July-October, but studies are underway to extend navigability to six months annually without icebreakers, and AGG is pushing for full-year VLCC loading capability. The port shipped 10,000 tonnes of zinc concentrate last year, with plans to double exports in 2025, while infrastructure investments aim to boost exports of critical minerals, LNG, hydrogen, potash, and uranium. A new pipeline from Alberta to Churchill would be necessary to support increased oil exports, potentially saving up to three days of sailing time compared to eastern Canadian routes.

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Vitol Facilitates Pakistan’s First US and Nigerian Crude Oil Imports

Vitol is assisting Pakistan in diversifying its crude oil sources with landmark shipments of US WTI and Nigerian Bonny Light crude. Cnergyico, Pakistan’s largest refiner with a processing capacity of 156,000 bpd, will import 1 million barrels of WTI in October via a suezmax tanker from Houston, marking the first such US cargo for the country. This shipment is part of a test spot cargo agreement, with potential for at least one cargo per month if commercially viable. Separately, Pakistan Refinery Ltd plans to import its first Nigerian Bonny Light cargo, a 500,000-barrel aframax shipment expected to load in September. These moves follow months of negotiation amid rising Gulf crude prices and US tariff threats, aiming to reduce Pakistan’s reliance on Middle East suppliers and its $11.3 billion annual oil import bill.

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Iraq Seizes Liberian-Flagged Tanker Carrying 93,000 Tons of Suspected Smuggled Fuel

Iraq’s navy detained the Liberian-flagged tanker Liliana in its territorial waters near Basra, carrying 93,000 metric tons of suspected Iraqi-origin fuel oil as part of a crackdown on maritime smuggling. The vessel was intercepted 26 nautical miles from the coast, and an armed Iraqi military team boarded it to inspect documents, question the crew, and check passports. Authorities suspect the fuel was being smuggled out of Iraq, with the ship’s papers now referred to the judiciary for a court ruling. The operation followed intelligence on illegal oil activities, with officials warning that any vessel engaged in suspicious activity in Iraqi waters will be detained. This is the latest in Iraq’s maritime anti-smuggling efforts, following a similar fuel smuggling seizure in March.

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Sanctions on Russian Oil Tankers Spur Surge in Sale and Purchase Activity

Increasing sanctions on tankers trading Russian oil are driving owners back to the sale-and-purchase market, with solid rate gains supporting profitability through 2026, according to Eva Tzima of Seaborne Shipbrokers. The need to replace sanctioned tonnage is expected to revive demand, particularly for 15-year-old suezmax, aframax, and LR2 vessels, while interest in older VLCCs remains strong. Despite a subdued market, recent notable sales include the 50,000-dwt Lakshmi (built 2009) sold to Indian buyers for $17.5 million, above its assessed value of $15 million, and the 50,000-dwt Nord Olympia (built 2018) sold for around $37-38 million to Marwave Shipmanagement. Marwave also sold the 37,300-dwt MR1 Favola (built 2022) to a Nigerian buyer for over $7 million. Brokers highlight that stable buyers in India and Europe are targeting well-maintained, epoxy-coated tonnage amid ongoing market shifts.