Oil Prices Steady as Ukraine Peace Setbacks Offset by Rising Yemen Risks

Oil prices were little changed after a volatile session as fading hopes for a Russia-Ukraine peace deal were balanced by rising geopolitical tensions in Yemen. Brent crude for February settled down 2 cents at $61.92 a barrel, while U.S. WTI slipped 13 cents to $57.95. Prices had jumped more than 2% a day earlier after Saudi airstrikes in Yemen and Russia’s accusation that Ukraine targeted President Vladimir Putin’s residence, an allegation Kyiv denied but which Moscow said could harden its peace stance. Support also came from the ongoing U.S. blockade of Venezuelan oil and a suspension of Caspian CPC Blend exports due to bad weather, though analysts noted the actual impact on Russian crude flows remains limited. Despite these risks, expectations of an oversupplied global market persist, with analysts warning prices could trend lower in early 2026 amid a growing oil glut.

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OPEC+ Set to Extend Output Pause as Oversupply Pressures Persist

OPEC+ is expected to confirm a pause in further oil production increases at its Jan. 4 meeting, delegates said, as signs of global oversupply continue to build. Led by Saudi Arabia and Russia, the group is reviewing a decision first made in November to halt supply hikes during the first quarter, after rapidly reviving output earlier this year. Oil prices have fallen about 17% this year, marking the steepest annual drop since 2020, while forecasters including the International Energy Agency warn of a record oil glut next year and even OPEC projects a modest surplus. Of the 2.2 million barrels per day of output that OPEC+ agreed to restore from 2023 cuts, around 1.2 million bpd remains offline, reinforcing expectations that the pause will stay in place.

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UAE Announces Yemen Troop Withdrawal Amid Escalating Rift With Saudi Arabia

The United Arab Emirates said it will withdraw its remaining troops from Yemen after tensions flared with Saudi Arabia over military operations and alleged support for southern separatist forces. The dispute followed Saudi-led airstrikes on the Yemeni port of Mukalla, which Riyadh said targeted a weapons shipment linked to the UAE-backed Southern Transitional Council (STC), claims Abu Dhabi denied. Saudi officials said two ships carrying more than 80 vehicles and arms arrived at Mukalla with transponders turned off, accusing the UAE of moving the cargo to a base despite objections. Yemen’s conflict, ongoing since 2014, has killed nearly 400,000 people, with the Iran-aligned Houthis controlling about one-third of the country and intermittently attacking Red Sea shipping since 2023.

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Tankers Continue to Reach Venezuela as US Blockade Slashes Exports

Despite a US-imposed blockade, at least two sanctioned oil tankers have recently arrived in Venezuela, with two more non-sanctioned vessels approaching, as PDVSA seeks to expand floating storage and sustain crude sales. The blockade announced by President Donald Trump has cut Venezuela’s oil exports this month to about half of November levels, with the US seizing two fully loaded cargoes and intensifying naval patrols in the Caribbean. Many shipowners have rerouted or turned back due to enforcement risks, leaving only a small number of vessels willing to call at Venezuelan ports. PDVSA is negotiating deeper price discounts and contract changes to prevent cargo returns, while a recent cyberattack has slowed port operations and increased reliance on tankers as storage. As a result, nearly two dozen tankers are waiting near the Jose port, with crude trapped in undeparted vessels rising to about 16 million barrels, up from 11 million barrels in mid-December.

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Ukraine Steps Up Attacks on Russian Energy Infrastructure to Record Monthly High

Ukraine has sharply intensified attacks on Russian energy infrastructure, with at least 24 strikes in December alone on refineries, oil tankers, offshore assets and major pipelines — the highest monthly total since the war began. The assaults are increasing pressure on Russia’s oil exports, already constrained by sanctions, as Moscow expects oil and gas revenue to fall to a record-low 23% of total budget income this year. Kyiv has notably expanded offshore attacks, repeatedly hitting Lukoil’s Caspian Sea oil and gas fields, Black Sea ports such as Taman and Rostov, and vessels linked to Russia’s shadow fleet. Inland strikes have continued on fuel-producing plants, including the first reported use of Storm Shadow cruise missiles against the Novoshakhtinsk refinery.

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Russian Oil Exporters Cushion Deep Discounts With Tax Relief

Discounts on Russian crude at export terminals have again neared historic highs, reaching about $20–$30 per barrel below Brent in December, the widest gap since early 2022, pressuring exporters’ margins amid weak global prices. Western sanctions have forced these steep discounts, eroding trade profits and pushing some oil projects into losses. However, many producers remain profitable due to extensive government tax relief, particularly preferential mineral extraction tax (MET) rates. Reuters estimates that more than half of Russian producers qualify for zero or reduced MET, with around 20% earning roughly $20 per barrel in trade profits at December Urals prices. Export margins vary by destination and logistics, with ESPO Blend shipments to China and cargoes to Turkey fetching higher prices, while firms facing full MET rates and higher costs may see losses of up to $5 per barrel.

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Russian Oil Exports to India Fall to Three-Year Low while Reliance Returns

Russian crude oil flows to India are set to fall to about 1.1 million bpd in December, the lowest level since November 2022, though volumes may rebound early next year as Reliance Industries resumes purchases. Imports dipped after heightened U.S. scrutiny and sanctions on Rosneft and Lukoil in late October, prompting Reliance — previously the biggest buyer — to pause purchases before restarting sourcing from non-blacklisted suppliers. Overall deliveries briefly dropped to as low as 712,000 bpd in the second week of December, compared with 1.8 million bpd in November, and below earlier official forecasts of around 800,000 bpd. The decline also reflects reduced flows to the HPCL-Mittal Mundra terminal and zero imports this month by Mangalore Refinery for the first time since September 2022. Looking ahead, imports could be supported by Nayara Energy, which may delay maintenance at its Vadinar refinery, potentially lifting demand for Russian crude despite ongoing sanctions pressure.

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Ghana Restarts Tema Refinery After Nine Years, Targets Capacity Expansion

Ghana’s state-owned Tema oil refinery restarted operations on December 19 after being shut since 2017, ending a nine-year shutdown caused mainly by debt issues and crude supply shortages. The refinery currently operates at about 28,000 barrels per day, below its nameplate capacity of 45,000 bpd. Commissioning of a new furnace and air-cooler is expected to raise capacity to 60,000 bpd in the medium term. Prior to the restart, Ghana relied heavily on fuel imports averaging around 165,000 bpd in 2025. The restart marks a significant step toward reducing Ghana’s dependence on imported refined fuels.

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South Korea Approves Saeul No. 3 Reactor, Targeting 2026 Start

South Korea’s nuclear regulator has approved the Saeul No. 3 reactor to begin operations, marking the country’s first new reactor approval in about two years after nearly a decade of construction. Korea Hydro & Nuclear Power plans to start commercial operations in 2026 following a six-month pilot run, according to Yonhap News Agency. The decision comes as President Lee Jae Myung shifts national energy policy toward renewables, with their share of electricity generation set to rise to at least 30% by 2035 from 9% last year, based on South Korea’s latest UN submission. Lee has said building additional nuclear plants is unrealistic given construction timelines exceeding 15 years, though his government supports completing and operating reactors already under construction. Bringing Saeul No. 3 online is expected to help cut reliance on imported coal and natural gas as the country pivots toward renewable energy.

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DHT Sells Two 2007-Built VLCCs for $101.6 Million Amid Strong Secondhand Market

DHT Holdings has sold its two oldest VLCCs, the 317,800-dwt DHT China and 317,700-dwt DHT Europe (both built in 2007), for a combined $101.6 million, capitalizing on a buoyant secondhand tanker market. After repaying $5.6 million of existing debt on the vessels, the transaction is expected to generate approximately $95 million in net cash proceeds for the New York-listed owner. According to VesselsValue, the ships were sold at a premium of about $3.88 million over their estimated combined market value of roughly $97.7 million. DHT expects to book gains of $30.4 million on the DHT China and $29.7 million on the DHT Europe, with delivery to buyers scheduled for the first quarter of 2026. Following the sale, DHT’s fleet will comprise 20 active VLCCs, with four newbuildings due for delivery in 2026 from Hanwha Ocean and Hyundai Samho.

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d’Amico Orders $86 Million Methanol-Ready MR1 Tankers in China

Italian shipowner d’Amico International Shipping (DIS) has ordered two firm and up to two optional 40,000-dwt MR1 product tankers at Guangzhou Shipyard International, marking its first newbuilding deal in two years after raising nearly $56 million from selling older ships. The two firm vessels, priced at $43.2 million each, are methanol-ready, biofuel-capable and shore-power prepared, with deliveries scheduled for April and July 2029. DIS has three months to decide whether to exercise options for one or two additional units, as part of a fleet renewal strategy following the sale of four ageing vessels over the past two years. The new MR1s will be the company’s most fuel-efficient in the segment, consuming about 20% less fuel and carrying roughly 8% more cargo than existing eco MR1s. The order comes amid a tight MR orderbook, with Clarksons data showing MR vessels at 13.8% of the fleet and an average product tanker age of 14.1 years, supporting DIS’s view of strong long-term demand.