Oil Dips as Ukraine Signals Potential Progress on Russia Peace Deal

Oil prices fell over 1%, with Brent at $62.48 per barrel and WTI at $57.95 per barrel, after Ukraine hinted at possible progress in diplomatic talks with the U.S. to end the war with Russia. A peace deal could lead to easing of Western sanctions on Russian energy, potentially adding more crude supply to already pressured markets facing expectations of a 2026 supply glut. Analysts noted that uncertainty remains high, with Russia’s missile strikes on Kyiv underscoring ongoing risks. Market expectations include a potential 2 million bpd surplus in 2026, with Russian oil stored in tankers and curtailed exports possibly returning to the market if sanctions are lifted. Meanwhile, U.S. crude inventories fell last week, even as fuel stocks rose, keeping markets cautious.

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OPEC+ Expected to Maintain Oil Output, Focus Shifts to Capacity Assessment

OPEC+ is likely to keep oil production unchanged at its upcoming meeting, while discussions will center on assessing members’ maximum production capacity to guide 2027 output baselines. Some countries, like Nigeria, seek higher quotas despite limited spare capacity, whereas the UAE retains ample room to boost production. Angola left the group in 2024 over quota disagreements. Since April, eight OPEC+ members increased output by roughly 2.9 million bpd after years of cuts, but paused further hikes for Q1 amid expectations of a potential oversupply. No immediate changes to 2026 output levels or first-quarter policies are expected.

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Iraq Covers Lukoil Staff Salaries to Safeguard West Qurna-2 Oil Output

The Iraqi government has stepped in to pay delayed salaries to local staff at Lukoil’s West Qurna-2 oilfield to ensure production continues despite U.S. sanctions on the Russian operator. Qurna-2 produces about 460,000–480,000 barrels per day, accounting for roughly 0.5% of global supply and 9% of Iraq’s total output. Delays in payments had risked operational disruption, as Iraqi staff manage day-to-day production. Authorities have also advanced December salaries to prevent further issues, ensuring that Iraq’s critical export volumes remain steady amid ongoing sanctions-related financial constraints.

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Ukraine Hits Russia’s Black Sea Oil Infrastructure for Third Time

Ukraine launched its third drone strike this month on Russia’s Black Sea energy infrastructure, targeting the Sheskharis oil terminal in Novorossiysk and the Tuapse refinery. Russia claimed to have intercepted 192 Ukrainian drones — 116 over the Black Sea and 76 over the Krasnodar region — though local officials said Novorossiysk faced “the most complicated” situation. The attacks temporarily disrupted operations, including loadings by the Caspian Pipeline Consortium, which handles Kazakhstan’s key oil exports. Ukraine has increasingly focused on Russian oil facilities to cut Kremlin revenue and hinder its war financing. The strikes come as U.S. and Russian officials meet in Abu Dhabi, with President Trump suggesting “big progress” in peace discussions.

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Indian Banks Open Door to Financing Non-Sanctioned Russian Oil as Compliance Tightens

Indian banks are now willing to finance Russian oil trade only when the sellers are not sanctioned and transactions fully comply with US restrictions — a notable shift from earlier caution. This comes after new US sanctions on Rosneft, Lukoil, Gazprom Neft, and Surgutneftegas made Indian refiners skip most Russian crude purchases for December. Banks have created stricter compliance systems, including enhanced checks on cargo origin, vessel histories, and ship-to-ship transfers, while enabling payments in UAE dirhams and Chinese yuan. The widened $7/bbl discount on Urals crude is encouraging refiners to cautiously explore new purchases, though they remain wary of payment freezes or secondary sanctions. Stricter vetting may slow transactions but is expected to keep some Russian crude flowing into India.

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Russia Eyes Higher Oil Exports to China, Pushes LNG Cooperation

Russia sees potential to increase oil exports to China and expand cooperation on LNG, Deputy Prime Minister Alexander Novak said during a forum in Beijing. China imports roughly 1.4 million bpd by sea and 900,000 bpd by pipeline from Russia, while India is also a key buyer. Novak highlighted possibilities for pipeline and sea-borne supply expansion, including agreements via Kazakhstan through 2033. He emphasized Russia as a reliable supplier and called for deepening energy partnerships. Chinese Vice Premier Ding Xuexiang urged cooperation across industrial chains, energy transition, and renewables. Russia and China are also collaborating on LNG projects, including Yamal LNG and Novatek-led Arctic LNG 2, despite U.S. sanctions restricting tanker operations. Since August, about 14 LNG cargoes have reached China at 30–40% discounted prices, underscoring ongoing bilateral energy collaboration amid external challenges.

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Iran’s Offshore Oil Stockpiles Climb to 52 Million Barrels as China Slows Buying

Iran’s floating crude storage has surged to 52 million barrels, nearly doubling in a month and reaching its highest level since mid-2023, as weakening demand from China causes barrels to accumulate at sea. Discounts on key grades such as Iran Light have widened to $8 per barrel below Brent, compared with about $4 in August, reflecting the oversupply and slower Chinese intake. China’s private refiners have reduced purchases due to exhausted import quotas, while new US sanctions on Chinese ports, including the major hub Rizhao, have disrupted offloading and forced tankers to divert. Despite sanctions, Iran’s oil exports remain near seven-year highs, but the rising offshore stockpiles add pressure to an already oversupplied global crude market.

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CNOOC Sends First Golden Arrowhead Crude from Guyana to China

China is set to receive its first cargo of Golden Arrowhead (GAH) crude from Guyana in December, loaded by CNOOC onto the VLCC Sophia. The 1-million-barrel cargo will arrive at Huizhou in Guangdong province on December 15, alongside 800,000 barrels of Liza crude. Sinopec purchased the shipment for its Guangzhou refinery. GAH is a light sweet crude (36.5° API, 0.25% sulfur) produced at Exxon Mobil-led facilities, including Guyana’s fourth floating production unit. Guyana’s oil exports have surged to about 700,000 bpd this year, with India also scheduled to receive its first GAH shipment in December.

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Unipec Secures Three VLCCs as Spot Rates Surge to Five-Year Highs

China’s Unipec has chartered three VLCCs—the 300,000-dwt Eagle Vallery (2022), 313,500-dwt Nave Tempo (2021), and 300,000-dwt Cape Aspro (2010)—as spot rates from the Middle East Gulf to Asia climb to $145,200 per day for modern scrubber-fitted units, marking a five-year peak. The deals highlight the growing trend among Chinese importers to secure compliant barrels amid expanding Western sanctions, with freight rates driven higher by tight tonnage and sudden cargo inflows. Shipbroker BRS noted that despite attempts by charterers to curb rates, strong demand and limited vessel availability reignited the rally, with owners actively fixing long-haul voyages at historically high levels.

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Tight European Diesel Supply Set to Boost Product Tanker Earnings, Says BRS

Product tankers in the Atlantic basin may see a freight earnings boost due to tight diesel supply in Europe, driven by the EU ban on refined products from Russian crude starting 21 January. Strong European demand for US diesel is expected to support rates on the US Gulf–northern Europe route, with the Baltic Exchange TC14 index reflecting volatile tanker costs influenced by seasonality, cargo demand, and vessel availability. Diesel prices remain elevated amid falling Russian exports caused by sanctions on Lukoil and Rosneft, unplanned refinery outages, and reports of Latin American buyers cutting purchases. Ultra-low-sulphur diesel cracks surged near $40 per barrel, while global crude prices fell around 3%, highlighting a tight diesel market likely to persist through the northern hemisphere winter.

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Vietnam’s Binh Son Refinery Increases U.S. Oil Imports

Vietnam’s Binh Son Refinery (BSR) will receive 1 million barrels of WTI crude in January, marking its second U.S. purchase in three months. The cargo, sold by Mercuria, is scheduled for delivery January 7–11. BSR previously imported 700,000 barrels of WTI on November 14, its first U.S. shipment since December 2024. The refinery, operating at 120% of designed capacity in 2025, aims to increase output to 123–125% in 2026, producing 7.24 million tons of refined products in the first 11 months, exceeding targets. The imports align with Vietnam’s push to increase U.S. goods purchases amid trade tensions.

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Canada and Alberta Near Deal to Greenlight New Oil Pipeline to West Coast

Canada’s federal and Alberta provincial governments are set to announce a deal supporting a new oil pipeline to the west coast, aimed at transporting Alberta crude to Asian markets. The memorandum of understanding, expected in Calgary, would grant regulatory exemptions currently blocking pipelines in northern British Columbia, contingent on stricter carbon pricing and multibillion-dollar investments in carbon capture by the Pathways Alliance oil sands companies. The move seeks to ease Alberta’s limited export access—currently reliant on the Trans Mountain pipeline to Vancouver—and reduce dependence on the US market, while balancing federal climate commitments. Opposition from BC Premier David Eby and Indigenous leaders remains, though the province lacks a legal veto, reflecting ongoing tensions between economic development, environmental policy, and regional politics.

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Equinor Plans 26 Offshore Exploration Wells in Norway for 2026

Equinor will drill 26 wildcat and appraisal wells off Norway in 2026, with 20 wells in the North Sea and 3 each in the Barents and Norwegian Seas. The company plans to invest $6 billion per year over the next decade to sustain oil and gas supplies to Europe. Over the next ten years, Equinor aims to drill 250 exploration wells and develop 75 subsea fields, keeping the Norwegian continental shelf as its core asset. Only two wells planned for 2026 will target entirely new prospects due to the maturity of the region. While Norway remains Europe’s largest natural gas supplier, its energy directorate forecasts a decline in hydrocarbon output after 2025.

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Ray Car Carriers Expands into VLCC Market with Four New HD Hyundai Orders

Ray Car Carriers is doubling its VLCC orders with four 300,000-dwt tankers contracted from HD Hyundai Samho, worth $520.6m in total, bringing its fleet on order to eight vessels. Known primarily as a car carrier provider, the company has gradually diversified into the VLCC segment, having acquired two secondhand 300,000-dwt ships in 2022 and chartered them to Trafigura. The newbuildings, powered by conventional marine fuel and scheduled for delivery by August 2029, reflect a broader surge in VLCC investment driven by record-high charter rates, bullish tanker markets, and shifting oil trade patterns from Middle East exporters. Analysts note that shipowners are reinvesting profits from other segments into VLCCs as rising Middle Eastern supply and rerouted cargoes create favorable structural conditions for the market.

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Cido Shipping Poised to Sell Two VLCCs Amid Strong Tanker Market Activity

Cido Shipping is reportedly set to sell its two oldest VLCCs, Mermaid Hope and Mercury Hope (both 2011-built, 297,300-dwt) for $60m each as VLCC sales surge past 2024 totals. The Hong Kong-based owner still has two 307,000-dwt VLCCs under construction at Dalian Shipbuilding, slated for delivery mid-2026 and early 2027. With 57 VLCCs sold so far this year, market values for older tankers have risen, even as newbuilding prices have declined. Fourteen-year-old vessels, like Cido’s, have appreciated over 6% year-to-date to around $60.3m, while 20-year-old VLCCs can fetch $40.3m. The deals reflect heightened deal-making in the tanker sector, buoyed by skyrocketing freight rates in recent weeks.