Oil Falls ~1% as Markets Watch Ukraine Peace Talks and Upcoming Fed Rate Decision

Oil prices declined about 1%, with Brent settling at $61.94 and WTI at $58.25 per barrel, following a larger drop the previous day. The fall was driven by renewed Ukrainian peace discussions, Iraq’s restoration of output at Lukoil’s West Qurna 2 field, and rising global supply, including a 2.5 million barrels-per-day increase in oil cargoes at sea since mid-August. Analysts note that sanctions on Rosneft and Lukoil are one of the few factors preventing Brent crude from falling even further. Markets are awaiting the Dec. 11 IEA report, which could reinforce forecasts of a significant oil surplus by 2026, as well as U.S. inventory data showing a 4.78 million-barrel crude draw and sharp rises in gasoline and distillate stocks. Traders are also focused on the Federal Reserve’s upcoming decision, with an 87% probability priced in for a 0.25% rate cut, which could support oil demand but may have limited immediate impact on prices.

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Ukrainian Drone Strike Shuts Down Russia’s Syzran Refinery After Hitting Key Distillation Unit

Russia’s Syzran oil refinery halted operations on December 5 after a Ukrainian drone attack damaged its critical CDU-6 crude distillation unit, which had also been hit in August and required two weeks of repairs. One source said this latest repair effort may take about one month, further disrupting refinery output. The attack is part of ongoing strikes by both Ukraine and Russia on each other’s energy infrastructure amid stalled peace talks. The plant, owned by Rosneft, processed well below capacity last year at roughly 90,000 bpd (4.3 million tons). In 2023, Syzran produced 800,000 tons of gasoline, 1.5 million tons of diesel, and 700,000 tons of fuel oil.

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EIA Raises 2025 U.S. Oil Output Forecast to Record 13.61 Million bpd

The U.S. Energy Information Administration increased its 2025 oil production forecast by 20,000 bpd, projecting a record 13.61 million barrels per day, even as global oversupply concerns rise. The agency slightly lowered its 2026 output forecast to 13.53 million bpd, despite expectations of a large surplus. This follows last month’s IEA warning that the global oil market could face an excess of up to 4.09 million bpd next year. The EIA also raised its 2025 U.S. oil demand estimate to 20.6 million bpd, with 2026 demand expected to remain flat. WTI is now forecast to average $65.32 per barrel in 2025, while Brent is projected at $68.91, both slightly higher than previous estimates.

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Saudi Crude Exports to China Set to Hit 3-Month High in January After Sharp Price Cuts

Saudi Arabia’s crude exports to China are expected to rise to 49.5 million barrels in January—about 1.60 million bpd—the highest level in three months following Saudi Aramco’s price reductions for Asia. This marks a significant increase from the past two months, when allocations were below 40 million barrels, and is the strongest level since October. PetroChina, Rongsheng Petrochemical, and Shenghong Petrochemical are among those increasing liftings, while CNOOC and Hengli Petrochemical will take less. Aramco cut its January Arab Light OSP to Asia to 60 cents/barrel above Oman/Dubai, its lowest premium in five years, making term barrels more attractive than spot purchases. Additional demand also came from Chinese independent refiners, who recently received their first batch of 2026 import quotas.

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Saudi Aramco to Begin Jafurah Condensate Exports in February as $100B Gas Project Ramps Up

Saudi Aramco plans to begin exporting its first condensate from the $100 billion Jafurah gas project in February, following the start of initial production earlier this month. The Jafurah field holds an estimated 229 trillion cubic feet of raw gas and 75 billion barrels of condensate, making it central to Aramco’s strategy to expand its global gas presence. Aramco may export 4–6 cargoes per month, each around 500,000 barrels, with sales currently occurring through private negotiations. The condensate grade has an API gravity of 49.7, 0.17% sulphur, and yields about 40% naphtha, making it competitive with heavier condensates and ultra-light crude grades. Jafurah’s gas output will be used domestically to displace up to 500,000 bpd of oil used for power generation, while Saudi Khuff condensate exports have already risen to 49,000 bpd from 18,000 bpd last year.

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South Sudan Keeps Oil Flowing Despite Rebel Seizure of Key Heglig Facility in Sudan

South Sudan says its oil is still flowing through Sudanese facilities despite the Rapid Support Forces (RSF) capturing the critical Heglig production hub on Monday. Heglig—located on the border—plays a vital role in the pipeline transporting South Sudan’s crude to the Red Sea, raising fears of another export disruption after a stoppage in mid-November. Engineers, civilians, and Sudanese army members fled into South Sudan as the RSF advanced. The RSF, which has been fighting Sudan’s army since April 2023 in a war believed to have killed hundreds of thousands, claims it will secure the oil infrastructure. The takeover marks yet another major territorial gain for the militia, which already controls most of Darfur and has been accused by the U.S. of genocide.

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Trafigura Tanker Desk Sees One of Its Busiest Periods Ever as Company Warns of Oil ‘Super Glut’

Trafigura reported one of the busiest periods in its tanker desk’s history, advancing its new VLCC construction program and completing several secondhand ship purchases, bringing its VLCC orderbook to 10 vessels in China. Despite early-year pressure across tanker segments, stronger demand and shifting trade flows helped shipping operations finish with positive momentum, with the desk handling 5,256 voyages, only slightly down from last year. The company remains cautious on the oil market, warning—via chief economist Saad Rahim—of a potential “super glut” as new supply projects converge with slowing demand, potentially creating a record surplus of 4 million bpd in 2026.

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Shadow Fleet and Private Equity Fuel Surge in Tanker Sales as Greeks Lead Market Shake-Up

Shadow-fleet buyers, private equity groups and traders are driving an “exceptionally active” tanker sale-and-purchase market, with 152 of the year’s deals made by undisclosed buyers, according to Xclusiv Shipbrokers. Greece leads declared purchases with 64 tankers, followed closely by China’s 61, while global buyers acquired another 101 vessels, reflecting deep and diverse liquidity. On the selling side, Greece offloaded 74 ships, ahead of China (40) and Singapore (36), as owners take advantage of high values for older tonnage. Clarksons reports 408 tankers sold this year totaling 44.2m dwt — a 28% jump in volume — though prices rose only 4%, and modern units remain scarce and heavily sought after. Greeks concentrated their acquisitions in MR2s, aframax/LR2s and suezmaxes, supporting strong tonne-mile demand amid refinery shifts, long-haul trades and a historically low orderbook below 10%.