The Officials

Venezuela is in trouble! In a move he dramatically called “Liberation Day in America,” Trump slapped a 25% “secondary tariff” on any country buying Venezuelan oil and gas. He accused Venezuela of “purposefully and deceitfully” sending to the US “tens of thousands of high level, and other, criminals”. Never mind that Venezuela just agreed to resume U.S. deportation flights, with 199 people deported from the US landed in Venezuela today.

Shenanigans with one of the world’s benchmarks continue with PetroChina and ADNOC seemingly intent on destroying the reliability of the Dubai index. How can the number be trusted to be used as a benchmark to power the Saudi OSPs, Kuwait, and other Gulf producers when sellers offer Dubai below where buyers bid for Dubai? How can an inversion happen? You tell me, but this thing is broken and for it to break, one could question how in charge is the host of the wagering establishment. This mechanism is too important for no one to be in charge to ensure best market practices.

The same faces rolled into the North Sea window again! Exxon and Shell have been playing ‘will they won’t they’ for several sessions and finally they got down to it! Exxon lifted Shell’s offer for a 2-4 Apr FOB Forties at Dated +$0.25, whereupon Shell immediately withdrew its other Forties offering. Again, Exxon wasn’t picky about the freight situation and was also bidding for a CIF Forties, which Shell was happy to offer too. Shell also tried to tempt the Americans with a Midland, but Exxon knew what it wanted today and only pursued the Forties.

As an update on yesterday’s window shenanigans, let’s remember that PetroChina has been delivering Murban and Upper Zakum into the window. And this means PC buys a lot of Abu Dhabi crude and also means ADNOC delivers a lot of oil to the Chinese. Otherwise, PC would not be able to deliver Abu Dhabi crude to Vitol as they have been doing. They clearly trade with one another, just not in the window! In today’s riveting activity, there was no crossing, but the two were still stubbornly avoiding each other while matching in price. This obviously, should not happen among reasonable adults. And today, PC pulled the Uno reverse card and switched to declare an Oman to Vitol, rather than the deluge of Upper Zakum and Murban we’ve seen up to now. No more UAE crude for you! But anyway – Vitol, remove that beret! Surely 9 mil bbl of Abu Dhabi crude in 15 trading sessions should be tasty enough!

Brent flat price spiked on US sanctions against the Shandong Shougang Luqing teapot for taking in Iranian crude – as well as another 8 tankers. Are they testing the waters, dipping their toes in to see how China reacts to additional sanctions and restrictive measures?
Does China care? Less every day. So, get excited about sanctions but they do not mean much. Whatever the game plan, Brent jumped to over $72 and the front spread recovered from its dip this week to surpass 50c again. The market remained worried about the impact of those sanctions, as flat price held strong near $72 to close at $71.83/bbl.

There were some funny goings on in the Dubai window this morning; there was a cross in the market between PetroChina and ADNOC. First, PC offered on $72.90, then ADNOC raised its bid to $72.90 too, but the two did not trade. Later in the window, ADNOC bid on at $70.92 but PC hit Vitol’s lower bid at $72.90. Why were PC and ADNOC crossing and not trading together? Repeated attempts to contact both companies went unanswered.

The big wigs will meet in Riyadh this weekend (or over combed hair as the case may be) . Despite its protestations, Ukraine will not have a seat at the table. If you’re not at the table, it’s because you’re on the menu! Just look at Medvedev’s tweets… They’re sharpening the kitchen utensils before carving up Ukraine like a Christmas turkey, even if Trump had “a very good call” with Zelenskyy today. Turkey’s kicking off too, check the protests, as Erdogan blocked the presidential candidacy of Istanbul’s mayor and chucked him in a jail cell. Messy!

They’re straining and fighting! The shorts and longs battle over the $70 line, biceps bulging. Brent’s battling!
Who will win in the latest long/short battle over in Dubai? The Chinese or Vitol? Want to take sides or just watch… We’re breaking out the popcorn and fizzy drinks to enjoy the screening of this blockbuster! By our counting, there have been 16 convergences in Dubai so far in March. Remember in February there were only 3 in total! And 15 of these have gone to Vitol – more than one per trading day this month so far. Gunvor picked up the other cargo.

As of the week ending 14March, our momentum table shows most of the key futures contracts seeing declines in exchange traded volumes across tenors, except for gasoil contracts. The gasoil contract saw the largest gain in the May tenor, while the June and July tenors underwent smaller increases. For the May tenor, Brent saw the greatest decrease, while RBOB and WTI saw the biggest drops in the June and July tenors.

Brent felt spicy and made it all the way to above $72 this morning. But then slumped in the afternoon, while Trump and Putin were having a chat, and close at $70.78/bbl. Those two were having such a good time yapping they ran overtime and agreed to keep in touch. A match made in heaven? Eventually, it came out they had agreed to a ‘limited’ ceasefire, including a halt on strikes against energy and infrastructure for 30 days. All good for Putin, then: his refineries don’t get bombed and Ukraine gets no guns. And no foreign intelligence to Kyiv either! Russian state news agency Tass reported that they will also discuss an initiative to ensure safety of shipping in the Black Sea.

Man down! Kazakhstan fired its oil minister! After months of ignoring quotas, finally a head rolls. But back in the market, flat price remains firm with Brent holding up near $72.00/bbl as the tension remains at a peak level in the Middle East. But we think Trump has no desire to widen the conflagration despite bombing Yemen, the weakest enemy the US forces could find. The Israelis are doing the same in Gaza. The nominal ceasefire between Israel and Hamas was always fragile, but the repeated blame game between the two, each accusing the other of violating it, was only going to end one way. Now that Israel’s struck at Hamas, of course Netanyahu was quick to blame Hamas for violating the ceasefire. Israel has now ordered evacuation of certain areas of Gaza… we feel like we’ve been here before.

For a change of pace, Mr Trump kept his cool and his mouth shut for most of today. Until he said the US will consider any Houthi attacks as Iranian attacks and thus Iran will suffer “dire consequences”. Flat price shorts suffered the immediate effects, as Brent jumped back up 30c, undoing some of the afternoon’s decline. The White House press secretary also reiterated that reciprocal tariffs will kick in from 2 April.

Brent strengthened away from the perilous $69 handle and it is now safely at the $71.00/bbl level. Even Goldman Sachs with their Delphic powers forecasted a price in line with what one can see on any screen. That’s really smart, we say, as the institution known for some wildly off the mark forecasts has chosen a self-evident route – Brent will bob around between $65 and $80 this year, as GS says “…we reduce by $5 our December 2025 forecast for Brent to $71/bbl.” Oy vey! Sometimes may be easier to say, “we don’t know”.

Dated Brent surged post-IE week from around flat while everyone was busy nattering and sipping on cocktails to above 80c on 4 March, with thanks to the ever formidable Totsa and Trafi duo. And then the diff steadied or stuck at the same levels, one could say, through last week. But this week it has declined steadily from a peak of 88c on Monday to 80c today!

Gold! It’s going for top spot! $3000! Gold has been on a run, and we told you several times it would hit $3,000 per troy ounce and finally broke through this level for the first time in history. Safe haven flows have been gushing since the Trump tariff fiasco kicked off. Complement this with continued buying from central banks and governments around the world – including China – and you get one potent cocktail. A pretty bullish thesis. As debt piles up while governments around the world borrow more beyond their means, it is unsurprising people are looking for a store of value which protects them against potentially erratic currencies! Just wait for the fuse to burn down on the Molotov cocktail of sovereign debt! It’s a ticking time bomb.