Oil prices are on the rise despite concerns about potential tariffs and a possible peace deal in Ukraine. The easing of backwardation and increased demand from India are contributing to the upward trend.
Oil prices are experiencing a surge despite concerns about President Trump's potential imposition of tariffs on trading partners and ongoing discussions about a peace agreement between Russia and Ukraine. This upward trend is poised to conclude the week with a gain, marking the end of a three-week losing streak. The easing of backwardation in global crude futures suggests a rebound in oil prices following a period of consecutive losses.
A significant geopolitical development this week has been the prospect of a negotiated settlement between Russia and Ukraine. Surprisingly, this hasn't significantly driven oil prices downward, even though it had an immediate and substantial impact on European natural gas prices. As a result, ICE Brent futures are projected to close the week trading slightly below $76 per barrel.Meanwhile, President Trump has claimed to have secured an agreement with Indian Prime Minister Narendra Modi to increase US oil and gas exports to India. Trump stated that US crude exports to India would be halved from their 2021 peak, accounting for just 220,000 barrels per day (b/d). OPEC has maintained its optimistic forecasts for global demand growth over the coming years, predicting growth of 1.45 million b/d and 1.43 million b/d in 2025 and 2026 respectively, despite acknowledging the potential disruptive effects of Trump's tariffs. India has indicated a preference for compliant Russian oil, stating that its refiners will only purchase Russian oil if it is supplied by non-sanctioned firms on tankers not on the OFAC list.This month has witnessed a rebound in Russian oil imports to India, reaching 1.8 million b/d. In its monthly oil report, the International Energy Agency (IEA) has raised concerns that Chinese demand for road and air transport fuels may have peaked. The IEA predicts that total fuel consumption in China could drop to 8.1 million b/d by the end of 2024, representing a decline of approximately 200,000 b/d compared to 2021. ExxonMobil, leading the NYSEXOM consortium operating Guyana's Stabroek block, has requested environmental permits from Guyana for its eighth offshore project, centered around the Longtail field. This project is expected to contribute an additional 250,000 b/d of output by 2030.The potential for a peace settlement between Russia and Ukraine, as discussed in a telephone call between President Trump and President Putin, has led to a significant decrease in Europe's TTF gas futures benchmark. This benchmark shed almost 15% over two days, trading around 51 per MWh following a two-year high of 59.27 per MWh reached on Tuesday. Major US oil companies are beginning to reduce their workforce. Chevron announced plans to lay off 15% to 20% of its global workforce by the end of 2026, impacting approximately 8,000 employees out of its total of 40,212 at the end of 2023. This move aims to cut costs associated with the $53 billion acquisition of Hess.Mexico, despite facing challenges with the long-awaited ramp-up of its 340,000 b/d Dos Bocas refinery, is committed to increasing its petrochemical output. Pemex, Mexico's state oil firm, has allocated $1 billion to achieve this goal over the next six years, with plans to produce 690,000 mt of polyethylene by 2030. Brazil's state oil firm, Petrobras, is exploring opportunities beyond its domestic production. Petrobras intends to acquire stakes in African oil assets, targeting southern African plays in Angola, Namibia, and South Africa. This strategic move aims to bolster reserves as Petrobras anticipates a decline in its domestic production from 2030 onwards.Tropical Cyclone Zelia has disrupted operations in Western Australia, forcing the closure of ports. Rio Tinto's iron ore shipments from Dampier port have been hampered, while Shell has suspended LNG loadings from Prelude LNG until February 16. China's BYD, the world's largest electric vehicle (EV) carmaker, has ventured into lithium mining outside of China. BYD acquired mineral rights to two lithium-rich blocks in southern Brazil, marking its first foray into lithium mining outside its domestic territory. This move aligns with BYD's goal of mining lithium near its Minas Gerais car factory.Amidst growing pressure from environmental groups, both Italy's largest bank, Intesa Sanpaolo, and the Asian Development Bank have announced their decision to finance the $10 billion Papua LNG project. This adds to the 13 banks that have already declined to participate in the project. The spread between US and London copper futures has widened further following Donald Trump's announcement of a 25% steel tariff. The premium of the Comex copper contract over the LME has surged to a record $920 per metric tonne this week, up from $560/mt last Friday.Saudi Arabia's ambitious Neom project is expanding into artificial intelligence (AI). Neom has signed a $5 billion deal with Riyadh-based data centre investor DataVolt to develop a 1.5 GW net-zero AI data centre in the city. The first phase of this investment is expected to be operational by 2028
OIL PRICES TRUMP TARIFFS RUSSIA UKRAINE GLOBAL DEMAND OPEC INDIA PETROCHEMICALS BRAZIL CYCLONE AI NEOM
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