Oil prices rise, make weekly gains as Ukraine peace process stalls

Oil prices stabilized on Friday as concerns over a potential peace deal between Russia and Ukraine persisted. Prices rose for the first time in three weeks, with Brent crude settling at $67.73 and WTI at $63.66. President Trump's next steps are eagerly awaited, as he considers working with Putin and Zelenskiy to end the conflict. However, negotiations are progressing slowly, leading to uncertainty over a ceasefire. The ongoing war saw Russia launching attacks near Ukraine and retaliation on critical Russian oil infrastructure. The possibility of a summit between Putin and Zelenskiy remains uncertain, with the risk of increased U.S. sanctions on Russia looming. Additionally, a larger-than-expected decline in U.S. oil stockpiles and a reduction in oil and gas rigs operating indicate strong demand. Weak economic data from Germany raised concerns over oil demand, while investors awaited signals of a potential Federal Reserve interest rate cut next month at the Jackson Hole economic conference. Lower interest rates could stimulate economic growth and increase oil demand, potentially boosting prices.

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Private Chinese firm producing oil in Venezuela under rare 20-year pact

China Concord Resources Corp, a private Chinese firm, is investing over $1 billion to develop two oilfields in Venezuela, aiming to produce 60,000 barrels per day by 2026. This rare investment in Venezuela, plagued by international sanctions, was facilitated by a 20-year production sharing contract signed with the Venezuelan government in May 2024. With the help of 60 Chinese staff and a drill rig, CCRC plans to revive around 100 wells at the fields in Lake Maracaibo, currently producing 12,000 bpd. By targeting a total of 500 wells, CCRC intends to increase production to 60,000 bpd by 2026, delivering light crude to PDVSA and heavy crude to China. The lack of major companies in Venezuela's oil sector due to U.S. sanctions has created an opportunity for smaller players like Concord. Despite challenges, including limited foreign partnerships, Chinese firms continue to support Venezuela's oil industry through alternative channels.

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US issues sanctions on networks, vessels for dealing in Iran oil

The Trump administration issued new Iran sanctions targeting entities and vessels in several countries. Greek national found transporting Iranian oil in violation of sanctions. State Department sanctioned Chinese operators of oil-related terminals for handling Iranian oil imports. Talks between Iran and US paused after US and Israel attacked Iran's nuclear sites. Iran denies developing atomic bombs and is open to nuclear talks with US.

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VLCCs’ futures curve rises amid stronger-than-usual summer

The VLCC spot market in August is experiencing the highest rates in years, with futures for the largest tanker class rising to a Worldscale rate of WS 66.6 for September contracts. This surge is driven by increased demand due to Opec+ adding 2.5m barrels per day into the market, with China also contributing to storage demand. August has seen the highest average spot earnings since 2008, with TCE rates jumping to $47,300 per day. 

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Turkey ‘bans’ ships with Israeli links from its ports

According to sources, the Erdogan government in Turkey has recently implemented “informal” measures to restrict Israeli shipping, following increased pressure over the Gaza war. Port authorities are now asking for documentation from shipping agents to prove that vessels are not connected to Israel and are not carrying military or hazardous cargo destined for the country. Turkish-flagged ships are also banned from calling at Israeli ports. These new restrictions come after Turkey cut trade links with Israel last year, worth $7bn annually. The transport ministry of Turkey has not commented on the matter. The country has been a vocal critic of Israel’s actions in Gaza, with incidents like pro-Palestinian protesters boarding a German-owned vessel believed to be carrying explosives for Israel. Despite Egypt denying the claims, the ship continued to Turkey where protesters boarded it, waving Palestinian flags and accusing it of supporting Israel.