Oil Prices Edge Higher as Robust US Growth Offsets Venezuela and Russia Supply Risks

Oil prices settled modestly higher on Tuesday as markets balanced stronger-than-expected US economic growth against rising supply risks from Venezuela and Russia, after gains of more than 2% the previous session. Brent crude rose 0.5% to $62.38 a barrel, while WTI climbed 0.64% to $58.38, following data showing faster US third-quarter GDP growth driven by solid consumer spending. Sentiment was tempered by mixed economic indicators, including weaker consumer confidence and flat factory output, alongside concerns that stronger growth could prompt tighter US monetary policy. Supply risks supported prices as tanker loading in Venezuela slowed under President Donald Trump’s sanctions-linked tanker blockade, raising fears of production shut-ins amid limited storage capacity. Further upside came from escalating attacks on Black Sea energy infrastructure linked to Russia and Ukraine, even as Barclays warned that although markets remain well supplied, the projected surplus could narrow to just 700,000 bpd by late 2026.

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Venezuela Expands Floating Storage as US Seizures Disrupt Exports

Venezuela’s state oil company PDVSA has begun using tankers as floating storage after U.S. interceptions of Venezuelan-linked ships left more than a dozen crude cargoes unable to depart. With production at about 1.1 million bpd, onshore storage—especially at the Jose terminal handling Orinoco Belt crude—is rapidly filling. PDVSA’s stocks at Jose have risen to 12.6 million barrels in December from 9–11 million barrels since September, pushing total national inventories to about 22 million barrels, the highest level since August. The company is transferring oil to ships to avoid output cuts while negotiating deeper discounts and contract changes, as roughly 80% of exports normally go to China. Chevron, which produces about 130,000 bpd under a U.S. license, continues exports, while Venezuela approved a law imposing prison terms of up to 20 years for promoting or financing oil blockades.

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Asia Floating Oil Storage Nears Peak as Sanctioned Exports Ease and China Steps Up Buying

Oil stored on ships in Asian waters, which has tripled since September to a three-year high, is expected to decline as exports from sanctioned producers slow and Chinese refiners increase purchases. Floating storage hit 70.9 million barrels on December 18, up from 21 million barrels in early September, with Iranian crude accounting for more than half at 38.9 million barrels. Iran’s exports fell from over 1.9 million bpd in September–October to 1.8 million bpd in November and 1.1 million bpd so far in December, while Russian exports slid to 4.71 million bpd in November from 5.16 million bpd in September. Chinese independent “teapot” refiners boosted intake after receiving 8 million barrels of new import quotas, lifting Shandong imports to 3.8 million bpd this month and helping draw down floating storage.

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China’s Independent Refiners Snap Up Russian ESPO as Discounts Hit Record Lows

Discounts for Russia’s ESPO Blend crude loading in January have widened to a record $7–$8 per barrel versus ICE Brent at Chinese ports, up from $5–$6 earlier in December, as Western sanctions pressure weighs heavily on the grade. The deeper discounts have revived demand from China’s private “teapot” refiners, supported by newly issued and upcoming import quotas, while state-owned refiners remain largely absent from the spot market. Competition from abundant Iranian crude, often sold at even steeper discounts, has added further downward pressure on ESPO prices despite its attractiveness as a light sweet crude with short shipping distances. Sanctions are also impacting Russia’s Urals crude, with some cargoes diverted to China due to weaker Indian demand and discounts exceeding $10 per barrel versus Brent for December loadings. China, Russia’s largest oil buyer, is likely to continue absorbing discounted ESPO and Urals barrels into early 2026, helping sustain exports even as sanctions complicate payments and logistics.

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Libya’s Energy Reforms Lure Oil Majors Despite Ongoing Political Risks

Libya is attracting renewed interest from global energy companies thanks to its large oil and gas reserves and more investor-friendly reforms, despite persistent political instability. A new licensing round offers 22 blocks with an estimated 10 billion barrels of resources and a further 18 billion barrels yet to be discovered, according to Enverus. Improved fiscal terms, simpler cost recovery and clearer profit-sharing arrangements are drawing attention from supermajors and national oil companies. However, analysts warn that political divisions, security risks and aging infrastructure could hinder sustained growth. These challenges must be resolved if Libya is to boost production by over 40% and reach its 2030 target of 2 million bpd.

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VLCC Freight Shows Early Signs of Cooling, January Seen as Potential Turning Point

Momentum in the VLCC spot market has slowed ahead of Christmas as cargo numbers fell, raising expectations that the exceptionally strong freight market of late 2025 is beginning to normalise. Brokers note that early January cargoes have emerged at more charterer-friendly rates, with the Baltic Exchange assessing modern scrubber-fitted VLCC earnings at $94,000 per day on the Middle East Gulf–Asia route, down 20% from last Friday and 36% over the past month. Sentosa Ship Brokers said December Middle East VLCC cargo counts were the lowest since March, while the share of the global VLCC fleet that is laden has fallen from about 60% in late October to around 55%, easing pressure on tonnage. Although fundamentals supporting the rally have weakened, analysts see potential support in January from stronger West African Suezmax activity and a reported surge in Saudi crude loadings, expected to reach their highest levels since August. With early January cargo enquiries still limited and some fixing believed to be happening privately, brokers say the coming weeks could significantly disrupt the market if latent demand resurfaces.

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Hafnia Signals Possible Torm Merger to Create $5bn Tanker Giant with 300 Ships

Hafnia has signaled strong takeover intent toward Danish rival Torm after acquiring a 13.97% stake from Oaktree Capital and filing a 13D form indicating strategic ambitions. The company said it is evaluating options for combining the two businesses and plans to approach Torm’s board, potentially with formal or informal proposals, including a share-for-share deal. A merger would create a $5 billion product tanker giant controlling about 300 vessels, far outscaling competitors such as Scorpio Tankers. Hafnia is assessing synergies, net asset values, and the possible use of its own shares as consideration, while leaving open the option to increase its stake further. Momentum toward a deal strengthened after Torm appointed veteran dealmaker Simon Mackenzie Smith as chairman, aligning with Andreas Sohmen-Pao’s long track record of major shipping consolidations.