A week of ambiguous U.S. threats, Iranian military signaling, and domestic repression drove markets higher on fear while leaving diplomacy stalled and tensions unresolved.
Politics, Geopolitics & Conflict On the US-Iran front, this week was full of bluster with Trump 's trademark tactic of ambiguous escalation, roiling markets and sending gold and crude soaring on apocalyptic hedging.
Trump publicly said the U.S. is ready to strike Iran, which was purposefully ambiguous. Alongside the rhetoric, the U.S. military is maintaining an elevated posture in the Middle East. Iran responded on the military front by announcing live-fire drills in and around the Strait of Hormuz with U.S. warships in nearby waters. Inside Iran, the regime escalated its internal crackdown. Authorities carried out mass arrests following the suppression of protests, detaining thousands across multiple provinces. The government imposed sweeping internet blackouts, restricted access to satellite communications, and tightened censorship as violence continued and the death toll mounted. As expected, against this backdrop, Turkey's president has offered to facilitate direct communication between Trump and Tehran, hoping for yet another leverage-buying mediation role. Mexico has halted oil shipments to Cuba, stopping crude deliveries that had been supplying Cuban power generation and refining through state-to-state arrangements involving Pemex. The shipments were not conducted on commercial terms and had continued despite Pemex's production limits and financial strain. No restart date or conditions were announced. The halt removes one of the few remaining external supply streams available to Cuba as Venezuelan deliveries decline and become less reliable. With fewer barrels arriving, Cuba's fuel balance tightens, increasing pressure on electricity generation and refinery throughput. Mexico did not announce a replacement arrangement, leaving Cuba dependent on irregular suppliers. This week's Houthi threat to resume attacks in the Red Sea was tied directly to U.S. naval movements focused on Iran. The Houthis said they would target U.S. and allied shipping after American destroyers and an aircraft carrier group moved into the wider Red Sea and Gulf of Aden. At the same time, friction between Saudi- and UAE-aligned actors in Yemen continues to benefit the Houthi camp, which is now attempting to position itself as more of a 'regional' actor. While the threat was issued earlier this week, the Houthis have not made their move as of the time of writing. Syria's interim president, Ahmed al-Sharaa, held talks this week with Vladimir Putin on the future of Russia's military presence in the country, including the bases at Tartus and Hmeimim. The discussions mark a shift from the Assad-era assumption that Russia's footprint was permanent. Moscow's access is now being reviewed rather than treated as settled. Russia's position in Syria is not limited to its bases. During the war, Damascus granted Russian state-linked companies long-term offshore oil and gas exploration licenses covering blocks in the eastern Mediterranean off Syria's coast. The most prominent license was awarded in 2013 to Soyuzneftegaz, giving it rights to explore a large offshore area under terms that reflected Russia's military backing of the Assad government. Subsequent agreements expanded Russian claims across additional offshore acreage. Little physical work has taken place under these licenses due to sanctions, security risks, and Syria's inability to support offshore operations, but the contracts remain formally in place. The military bases and the offshore energy licenses were negotiated as part of the same wartime bargain security in exchange for long-term strategic and economic access. With Syria's leadership now reassessing inherited agreements, both elements are back under discussion. No changes were announced, but the fact that Russia's bases and energy rights are being revisited at the highest level indicates that arrangements once treated as fixed are now subject to renegotiation. Discovery & Development Chevron CVX and NNPC found oil and gas in its Awodi-07 appraisal and exploration well offshore Nigeria. The shallow-water well, located in the western Niger Delta, was drilled late last year. Chevron operates the JV holding 40%, with NNPC holding the remaining 60%. No volumes have been disclosed but have been described by NNPC as 'highly encouraging'. This is the venture's third discovery since 2024. Houston-based Beacon Offshore Energy said this week that it has brought its Zephyrus oil project in the U.S. Gulf of Mexico into initial production. The field delivered first oil toward the end of last year. Zephyrus is located about 130 miles southeast of New Orleans in water depths of roughly 3,100 to 3,600 feet and was discovered in 2023. Production is tied back to existing subsea infrastructure and processed at a Shell-operated platform. OKEA said this week it has made a new oil discovery near the Brage platform on Norway's continental shelf. The 31/4-A-15 D well, drilled from existing Brage facilities, encountered a 38.5-meter hydrocarbon column in Upper Jurassic formations with moderate to good reservoir quality. Recoverable volumes have been estimated at 0.5 to 1.5 million standard cubic meters if oil or 0.4 to 0.9 million cubic meters if gas. The discovery was made during development work at the Talisker well. License partners are assessing a potential tie-in to existing Brage infrastructure. Murphy Oil said this week that drillstem tests at its Hai Su Vang-2X appraisal well offshore Vietnam delivered a combined flow rate of about 12,000 bpd from the primary reservoir, doubling earlier test results. The well previously intersected 429 feet of oil-bearing pay and flowed roughly 6,000 bpd of 37 API crude during initial testing. Murphy has now moved recoverable resources toward the high end of its earlier 170430 MMboe estimate, with additional upside possible in shallower zones. The Hai Su Vang discovery sits in the offshore Cuu Long basin and is shaping up as a potential standalone development that could help slow Vietnam's long-running oil production decline. Cairn Oil & Gas said this week it has made a new natural gas discovery below the Ambe field in India's western offshore. The find was made in the Ambe-2A appraisal well in the CB/OSDSF/AMBE/2021 block and has been notified to the regulator. The discovery sits in reservoirs beneath the main Ambe gas accumulation within the Miocene Tarkeshwar formation. Cairn holds a 100% participating interest in the block and is evaluating development options. The company plans to drill two additional wells as part of the ongoing campaign. Brazil's oil regulator said companies are expected to invest about $900 million in exploration activity in 2026. Plans call for drilling 19 exploration wells, including five offshore, with most spending tied to offshore drilling. Petrobras is expected to lead activity with wildcat and prospect drilling in the Potiguar, Campos, and Santos basins. BP is also planning offshore appraisal and exploration drilling this year. Deals, Mergers & Acquisitions Libya signed a 25-year oil agreement with TotalEnergies and ConocoPhillips involving more than $20 billion in foreign investment. The deal was signed through Waha Oil Company, a unit of Libya's National Oil Corporation, and is expected to lift production capacity by as much as 850,000 bpd. Libya also signed a separate memorandum with Chevron and said results from its first licensing round in 17 years will be announced in February. Vitol and Trafigura agreed this week to resume purchases of Venezuelan crude under existing U.S. sanctions licenses. The deals are structured through PDVSA and linked to operational and debt-related arrangements rather than direct cash payments. No volumes or contract values were disclosed. The agreements add to the limited trading activity allowed under current U.S. policy. Citgo Petroleum has reportedly bought Venezuelan crude for the first time since 2019, purchasing a 500,000-barrel cargo for February delivery from Trafigura. Citgo's U.S. refineries are well-suited to process Venezuela's heavy sour crude, making the purchase operationally straightforward. Sources have said Valero and Phillips 66 bought Venezuelan crude cargoes this week. Both refiners purchased cargoes from Vitol for delivery to the U.S. Gulf Coast. The crude was sold at discounts of roughly $8.50 to $9.50 per barrel to Brent, according to the source. India's state-run Bharat Petroleum Corp will buy 12 million barrels of crude worth about $780 million from Brazil's Petrobras in fiscal 2027. The contract is twice the size of BPCL's deal with Petrobras for fiscal 2026 and is aimed at partly replacing Russian oil. The agreement is due to be signed next week on the sidelines of India Energy Week. Indian refiners are increasingly sourcing crude from the Middle East, Africa, and South America as Russian supplies decline. Kuwait is said to be preparing to launch a sale of stakes in its oil pipeline network that could raise up to $7 billion as early as February. Kuwait Petroleum Corp has brought in advisers, including HSBC, JPMorgan, and Centerview Partners, to work on the deal. Carlyle Group has agreed to an initial deal to buy most of Lukoil's foreign assets as the Russian oil producer moves to comply with U.S. sanctions. The transaction covers assets held under Lukoil International but excludes operations in Kazakhstan, including CPC-linked projects. No valuation was disclosed, but some have estimated the foreign portfolio at about $22 billion. The deal is conditional on due diligence and approval from the U.S. Treasury's sanctions office. Lukoil said it remains in talks with other potential buyers.
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