Oil Rises as Venezuela Interception and Ukraine Attacks Lift Supply Risks

Oil prices settled higher after rising geopolitical risks threatened supplies from Venezuela and Russia. Brent crude gained $1.60 (2.7%) to settle at $62.07 a barrel, while WTI rose $1.49 (2.6%) to $58.01, following a U.S. Coast Guard attempt to intercept a tanker near Venezuela, the third such operation this month under President Donald Trump’s sanctions blockade. Analysts warned that enforcement actions could disrupt Venezuelan exports, which account for about 1% of global oil supply, most of it shipped to China, which criticized the U.S. actions as violations of international law. Prices were further supported after Ukrainian drone attacks damaged two vessels and two piers in Russia’s Black Sea region, a key route for Russian energy exports. Despite ongoing diplomatic talks, uncertainty around Ukraine, Russia, and Venezuela kept a geopolitical risk premium in oil markets.

___________________________________

VLCC Spot Rates Suffer Sharp One-Day Collapse, Though Tanker Market Stays Strong

VLCC spot rates saw their steepest one-day drop in more than five years on Monday, with the Baltic Exchange’s TD3C Middle East Gulf–China index plunging 20% from Friday to $87,711 per day, the lowest level since Oct. 27. The $22,357-per-day fall marked the largest single-day nominal decline since May 1, 2020, as quiet January cargo activity and growing prompt tonnage pressured the market. This dragged the Baltic’s global average VLCC index down to $83,882 per day, while West Africa–China and US Gulf–China VLCC routes fell 11% and 3% respectively. Despite the shock, owners note that VLCC earnings remain historically strong, having last traded at similar levels during the 2020 floating-storage boom, and volatility of $20,000–$30,000 per day swings is typical in strong markets. Moreover, the broader crude tanker sector remains firm, with suezmax rates at $91,465 per day — their highest since late November — and aframax rates near two-year highs at $61,978 per day.

___________________________________

Sanctioned Tankers Continue Venezuelan Oil Loadings Despite US Blockade

More than a dozen tankers have loaded Venezuelan oil since Dec. 11 despite intensified US pressure, with around 14 vessels loading crude and at least 6 of them already under sanctions. Loadings have continued at a near-normal pace of about 890,000 bpd, above the typical 800,000 bpd, even as the Trump administration deployed warships, imposed a naval blockade, and boarded the Centuries tanker, marking the first interception of a non-sanctioned vessel. Venezuela exports roughly 900,000 bpd of oil, about 30% via a shadow fleet, and proceeds remain a critical source of hard currency for the economy. At least four tankers, including Centuries, switched off their tracking signals after loading, while three recent cargoes were linked to Chevron, which operates under a US license and says it remains fully compliant with sanctions.

___________________________________

Russian Strikes Hit Odesa Ports, Disrupt Power to 120,000 as Black Sea Attacks Intensify

Russian forces struck Ukraine’s Black Sea port city of Odesa late Monday, damaging port facilities and a ship in the second attack on the region within 24 hours, according to regional governor Oleh Kiper. Earlier overnight strikes hit port and energy infrastructure, causing a major port fire and cutting electricity to more than 120,000 customers across the Odesa region. Deputy Prime Minister Oleksiy Kuleba said about 30 containers of flour and vegetable oil caught fire at the port of Pivdennyi, highlighting the impact on export logistics. No fatalities were reported, though one person was injured, and emergency crews were deployed to contain fires and restore services. 

___________________________________

US Sanctions Drive Russia’s Urals Crude to Near $34 a Barrel

Russia’s flagship Urals crude has plunged to around $34 a barrel, highlighting the impact of new US sanctions on Moscow’s oil sector. Prices fell to $34.82 in the Baltic Sea and $33.17 in the Black Sea, far below dated Brent at about $61, according to Argus Media. The Trump administration imposed sweeping sanctions on Russia’s two largest oil producers in October, complicating exports and likely reducing shipments to key buyer India in coming months. Discounts on Urals average roughly $27 a barrel at export, narrowing to about $7.50 by the time the oil reaches India. Since oil and gas generate around 25% of Russia’s federal budget, a prolonged price slump could significantly weaken the Kremlin’s ability to fund the war in Ukraine.

___________________________________

Russia Becomes China’s Top LNG Supplier as Discounted Volumes Hit Record

Russia’s liquefied natural gas exports to China jumped to a record 1.6 million metric tons in November, more than double year on year, allowing Moscow to overtake Australia and rank behind only Qatar as China’s largest LNG supplier. The surge reflects China’s willingness to buy discounted Russian gas despite Western sanctions, with Russian LNG priced about 10% below the average at $9.85 per million Btu, making it the cheapest among 12 suppliers. Russia has redirected LNG flows to Asia to offset lost European demand following its invasion of Ukraine. China’s total LNG imports also rose year on year for the first time in over 12 months, signaling a modest demand recovery. Meanwhile, China has not imported US LNG since February, and Russia’s sanctioned Arctic LNG 2 project has faced output cuts due to winter ice disrupting exports.

___________________________________

Japan Clears Restart of World’s Largest Nuclear Plant After Fukushima

Japan has approved the restart of the 8.2-gigawatt Kashiwazaki-Kariwa nuclear power plant after Niigata’s assembly backed Governor Hideyo Hanazumi, nearly 15 years after the 2011 Fukushima disaster. The TEPCO-operated plant could bring a 1.36-GW reactor online as early as January, lifting electricity supply to the Tokyo area by about 2% as Japan seeks to cut dependence on imported fossil fuels, which still provide 60%–70% of power. Japan plans to double nuclear energy’s share of electricity generation to 20% by 2040, partly to meet rising demand from AI data centres and decarbonisation goals. However, public resistance remains strong, with 60% of Niigata residents saying restart conditions have not been met and nearly 70% concerned about TEPCO’s ability to operate the plant safely. Protests following the vote highlighted enduring fears linked to Fukushima and the deep divide between energy security needs and safety concerns.

___________________________________

Avin International Places 35-Tanker Fleet into Ahti Pool for FuelEU Compliance

Greek owner Avin International, part of the Vardinoyannis group, has placed its 35-vessel tanker fleet totaling about 2.5 million dwt into the Ahti Pool, a Finnish FuelEU Maritime compliance platform. The fleet spans suezmaxes, aframaxes, MRs and handysizes, joining a pool that already manages hundreds of vessels and more than €100 million ($117 million) in emissions exposure. FuelEU Maritime rules, which came into force in January, require ships trading to EU waters to meet stricter well-to-wake carbon intensity limits, with penalties potentially running into millions of dollars. Ahti Pool uses artificial intelligence to optimize compliance, allowing owners of low-emission ships to monetize surplus allowances while higher-emission vessels avoid fines. Avin said the move strengthens its decarbonisation strategy by pairing internal initiatives with a structured, market-based compliance mechanism.