Oil Prices Sink Nearly 20% in 2025 as Oversupply Pressures Outweigh Geopolitical Risks

Oil prices recorded their steepest annual decline since 2020, with Brent crude down about 19% and WTI nearly 20% lower in 2025, as expectations of global oversupply intensified. On the final trading day, Brent settled at $60.85 a barrel and WTI at $57.42, reflecting persistent pressure from rising OPEC+ output and resilient US shale production. Analysts expect further weakness in early 2026, with BNP Paribas forecasting Brent could fall to $55 a barrel in the first quarter before stabilizing near $60 later in the year. Despite multiple geopolitical disruptions — including the Ukraine war, Iran-Israel conflict, Venezuelan oil blockade and Yemen tensions — markets were weighed down by strong supply growth, including record US oil production in October. OPEC+ has paused output increases after adding 2.9 million bpd since April, but most forecasters, including the IEA, still expect supply to exceed demand by up to 3.84 million bpd next year, capping price recovery.

___________________________________

Ukrainian Drone Strike Hits Russia’s Tuapse Refinery, Causing Fire and Injuries

A Ukrainian drone attack injured two people and caused a fire at Russia’s Tuapse oil refinery in the Krasnodar region, authorities said, with the blaze extinguished after burning about 300 square metres. The strike damaged refinery equipment, one port berth, and five homes, breaking windows in four apartment buildings and one private house, though officials did not specify whether refinery operations were halted. Tuapse lies on the Black Sea, around 350 km (218 miles) from the nearest parts of Ukraine’s mainland across the Sea of Azov. The export-oriented refinery, owned by Rosneft, has a processing capacity of about 240,000 bpd and supplies products including naphtha, fuel oil and diesel. The port and refinery have been repeatedly targeted during the nearly four-year-old war, while Ukraine has not officially commented and Reuters could not independently verify the damage.

___________________________________

US Targets Chinese Firms and Tankers in Escalation Against Venezuela’s Oil Trade

The Trump administration expanded sanctions on Venezuela’s oil sector by targeting four China- and Hong Kong–based companies — Corniola Ltd., Aries Global Investment, Krape Myrtle Co and Winky International— along with four associated tankers: Della, Nord Star, Rosalind and Valiant. US officials said the entities were helping Venezuela evade sanctions through a “shadow fleet,” generating revenue for President Nicolás Maduro’s government, which relies on oil for about 95% of national income. Targeting Chinese-linked firms is unusual and appears aimed at signaling Beijing to avoid involvement, as China remains Venezuela’s largest oil buyer and its “teapot” refiners account for up to 20% of China’s refining capacity. The sanctions come amid an intensified US campaign that includes a blockade of sanctioned tankers, vessel seizures, and strikes on alleged drug-trafficking boats, with US Southern Command reporting multiple vessels sunk and at least eight deaths in late December. The escalation also follows confirmation by President Donald Trump of a covert US strike inside Venezuela, highlighting growing military and economic pressure on the Maduro regime.

___________________________________

US Blockade Leaves Venezuela With 25 Million Barrels of Residual Fuel in Storage Crisis

Venezuela’s state oil company PDVSA is facing a severe storage crunch as a US blockade has cut oil and fuel exports to a minimum, causing residual fuel to pile up in onshore tanks, according to four sources. With most tankers turning back and only a few — mainly Chevron-chartered vessels — still sailing, Venezuela’s December oil exports have fallen to about half of November’s 950,000 bpd. PDVSA has accumulated roughly 25 million barrels of residual fuel, largely high-sulfur fuel oil normally shipped to Asia, and is rapidly running out of storage capacity. To avoid shutting down refining units at the 955,000-bpd Paraguana Refining Center, the company has begun reopening idle tanks and diverting residual fuel to oil waste pools, an extreme and costly measure. The situation marks PDVSA’s most serious operational crisis since the 2020 US sanctions, as continued tanker seizures and blocked departures leave the company with “nowhere else to store” its output.

___________________________________

US Oil Output Reaches All-Time High in October as Demand Also Rises

US crude oil production climbed to a record 13.87 million barrels per day in October, up 31,000 bpd, according to the Energy Information Administration. New Mexico output also hit a record, rising 31,000 bpd to 2.38 million bpd, while production from the federal offshore Gulf of Mexico increased 46,000 bpd to 2.0 million bpd, the highest level since August 2019. Texas, the largest oil-producing state, was an outlier as output fell 45,000 bpd to 5.8 million bpd. Product supplied — a proxy for overall petroleum demand — rose 158,000 bpd to 9.0 million bpd. Within that, gasoline demand increased 36,000 bpd to 9.0 million bpd, while distillate fuel oil demand surged 249,000 bpd to 4.1 million bpd, the highest in three years.

___________________________________

China Starts Second Round of 2026 Crude Import Quotas for Independent Refiners

China has begun issuing the second batch of 2026 crude oil import quotas to independent refiners, with at least one major eastern China refiner receiving allocations, according to sources. That refiner has obtained about 11 million metric tons (around 220,000 bpd) across the first two batches combined, covering roughly 70% of its total 2026 quota. Other independent refiners, particularly in Shandong province, are expected to receive their allocations in the coming days, with the first two batches similarly accounting for about 70% of annual quotas. In contrast, during 2025, the first two batches covered refiners’ entire full-year allocations, though the reason for the reduced share in 2026 remains unclear. China has kept the total 2026 quota for non-state-owned refiners unchanged at 257 million tons, after issuing an initial 8 million tons in late November for cargoes arriving by year-end.

___________________________________

Indian Oil Secures First Colombian Crude Cargo as Russian Imports Slide

Indian Oil Corp (IOC) has bought its first Colombian crude cargo under an optional supply contract with state oil firm Ecopetrol, as India’s largest refiner seeks to diversify away from Russian oil, sources said. The purchase comes as tighter U.S. and EU sanctions disrupt Russian supplies, with India’s Russian oil imports expected to fall to a three-year low of 1.2 million bpd in December, down from 1.84 million bpd in November. IOC has bought 2 million barrels of Colombian Castilla crude for delivery in late February under a contract that allows purchases of up to 12 million barrels, equivalent to six VLCCs, each carrying 2 million barrels. The deal was originally signed in late 2021 and has been renewed annually, though IOC typically sources most of its crude from Russia and the Middle East. South American crude has rarely been competitive on price, and IOC and Ecopetrol declined to comment on the transaction or its pricing terms.

___________________________________

UK's Harbour Energy Takes Operatorship of Mexico’s Major Zama Oilfield

Harbour Energy has been appointed operator of Mexico’s Zama oilfield after partners Pemex, Grupo Carso and Talos Energy agreed to the move. The decision follows Harbour’s $3.2 billion acquisition of LLOG, which gives the company a foothold in the Gulf of Mexico and positions it as operator of two major offshore Mexican projects. Discovered in 2017, Zama is estimated to hold about 750 million barrels of oil equivalent, making it one of Mexico’s largest private-sector oil finds in decades. Harbour holds a 32.22% operating interest in Zama, while former operator Pemex and other partners can nominate key personnel to the project team. Once operational, Zama is expected to significantly boost Mexico’s domestic energy supply and Harbour’s overall production.

___________________________________

Capital Maritime Tied to $540m VLCC and Capesize Newbuilding Spree at Hengli

Greece’s Capital Maritime is being linked to a six-ship newbuilding order at China’s Hengli Heavy Industry, comprising two 306,000-dwt VLCCs and four capesize bulkers, with an estimated value of about $540m. Hengli’s parent, Guangdong Songfa Ceramics, disclosed a contract for six vessels valued between $400m and $600m, with deliveries scheduled from the second half of 2027 through 2028. Recent VLCC orders at Hengli have been priced at around $118m per vessel, while Capital was previously linked to 181,000-dwt bulker orders at $73m–$75m each. According to Clarksons data, Capital Maritime already has 10 VLCCs on order across Chinese and South Korean yards, including a scrubber-fitted, LNG-ready 306,000-dwt Aristotelis II due in February. The deal contributes to Hengli’s strong momentum, lifting its 2025 order intake to 115 vessels worth more than CNY 100bn ($14.3bn).