The Officials

Trump did it and is ending the Ukraine/Russia war!!!! Our joy! Senseless deaths of young sent to fight by old will stop and Europe can stop its economic bleed. Details are being worked out but Russian molecules, gas, liquids and solids will flow back into Europe. A shot in the arm to moribund Germany! This is bearish for crude; it’ll be shipped normally. For diesel, fuel and lighter products too. Shipping routes will be cut again so instead of going from Russia to India for refining and back to Europe, it’ll flow direct to Europe. Bad for shippers, good for consumers. We feel bullish Europe again. Trump’s soliloquy on Truth Social stated in no uncertain terms the mutual respect with Putin and how well their phone call went. They spoke about all sorts of stuff. Including (among other things): Ukraine, the Middle East, Energy and AI. Putin apparently echoed Trump’s “COMMON SENSE” campaign slogan and Trump said the war must end and that “our respective teams [will] start negotiations.” An end to the needless campaign of destruction is in sight! At last! It’s just debilitatingly sad it’s taken 3 years to get here… US Secretary of Defense, Hegseth, said returning to the 2014 borders is “unrealistic”. This is huge! Everything’s changing fast.

Our sources in China report that one cargo ready to discharge to the account of PetroChina was affected by the prompt enactment of the 10% tariff on crude imports from the US. Including the freight cost, PetroChina would face a tariff bill around $8.00/Bbl. This would force PetroChina to redirect the cargo elsewhere. But separately our sources in Beijing say, not too many cargoes are scheduled to ship in from the US. So, regarding tariffs, one source says, “ready steady, go”. The Dubai window has really settled into a pattern for February: lots of bidders outnumbering the sellers, but nobody stepping up to set the pace, all afraid to pick up the Totsa mantle. On the sellside, only Chevron and Reliance actually got involved today, while the buyside was awash with bidders – the usual suspects, Vitol, Equinor, PetroChina being some of the most active – raising bids, but they seemed largely to concur that sellers were asking for too much.

And when we thought we had seen it all, some compliance folks are now set to lose their jobs while others have permission to loosen the purse strings. Just as the inimitable Trump swishes in and stops the enforcement of the Foreign Corrupt Practices Act to Further American Economic and National Security. In other words ! Here is the link: https://www.whitehouse.gov/presidential-actions/2025/02/pausing-foreign-corrupt-practices-act-enforcement-tofurther-
american-economic-and-national-security/. He adds: “overexpansive and unpredictable FCPA enforcement against American citizens and businesses — by our own Government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security.” No need to carry brown bags it’s routine, and it is ok!

The Chinese are back, the economy is firing, the Indians remain short and the products market is not too bad. So the market is set on going higher! Brent flat price liked the feeling of heading upwards it got yesterday and this morning decided it wanted another hit. After ending the Asian session at $76.69/bbl, it just kept going, even challenging $76.80/bbl by 09:30 GMT and the front spread finally got some relief, building back up towards 50c. Remember, keep an eye on the Brent structure’s move against the Dubai structure. The spread between Brent and Dubai is now $2.61/bbl and has narrowed by 17c since yesterday. Please take note that the Dubai flat price is nearing $80.00/bbl, very expensive a consumer would say and kudos to the producers. And for those lifting term barrels are paying $1.50/bbl premium on top of the nearly $80.00/bbl.

The Officials Team is launching a Liquidity Report covering major futures markets and also key swap instruments. The Report contains average daily traded volumes for five working days periods and compares them with the previous five working days giving an indicator of liquidity flows into major instruments from week to week. You may consider this, as we do, as a momentum financial indicator into or out of an instrument. In addition, we also provide comparison with the previous year which gives an indication of a discrepancy year on year. These are indicators that are used to market practitioners.

The market is turning. And crude is up and breaking through the downward channel. Why? Gasoil/heating oil have been supporting crude, but gasoline tanked in the West today. And fuel oil is the darling. Brent found support at $74.10/bbl Thursday and is now perking up. Just yet, not convincingly, if gasoline is in trouble.
Throughout the London morning, Brent climbed towards $75.50/bbl, where it settled in for the rest of the day until rising through the window. Despite this flat price recovery, the front month spread remained stubbornly in the low 40c region, apart from some very brief lunges to 46c. By the close, it had declined again, to 43c. Even as the Dubai structure is doing its utmost to hold onto its recent strength (the physical premium was still $3.34 as of this morning), Brent’s structure has suffered since early Feb.

Later today, The Officials will publish a liquidity report on exchange traded volumes, so keep an eye on Onyx Hub, X and LinkedIn to discover our newest report and findings! In the meantime, Unipec’s Saudi allocation fell to 6 mil bbls, from 10.5 mil bbls in the February allocation. But Petrochina seesawed from 2 million bbls in February to 4 mil bbls in March. Overall, the allocations fell 2.5 mil bbls to 41 mil bbls, their lowest since December. Of course, Rongsheng is still the biggest recipient, after all they are a joint venture partner, with a steady 16 mil bbls for the past 3 months. It’s all go among Middle Eastern producers – don’t forget ADNOC OSPs released on Friday. Murban is priced at $80.22/bbl but the big surprise is that Upper Zakum is priced at Murban +$0.10! That’s to say $80.32/bbl, while Umm Lulu is Murban +$0.25 and Das is Murban -$0.40. And don’t forget fuel oil is looking good, providing support to some of the heavies. This is on a relative basis as Dubai is still inflated post Totsa’s squeeze.

Like yesterday, the European morning saw lots of lateral movement as Brent flat price fluctuated mildly in the gentle market wind, like those idling wind turbines in Germany… Today, $75 really was the ceiling, as flat price bounced along in the upper $75 range, edging above $75 for the close of the Asian session this morning but otherwise failing to smash through that glass ceiling. Flat price plunged in the window, dumping to $74.46/bbl at the close. The North Sea window was another Midland fest. Early on, Gunvor and Equinor barged in, trying to get yet more Midland off their hands. Equinor was really keen to shift Midland, offering a 25 Feb-1 March cargo down to Dated +$0.70. Gunvor apparently liked the look of that enough to flip from the sellside and grab it. But Gunvor kept its own Dated +$1.25 Midland offer on the table. That’s not the first time we’ve seen Gunvor offering yet opportunistically buying. Bargain hunters! Gunvor was firing on all cylinders and shifted its attention to offer an Ekofisk too.

Trump is creating the volatility in the crude oil price and then the market does its thing in the products side. And boy, there is a lot going on. As Dubai rose it pulled up the price of fuel oil; many traders see the bunker fuel as a Dubai linked product and HSFO is performing big time. The prompt Sing380 high sulphur fuel oil crack closed positive for the first time since 2019 and climbed as high as $0.79/bbl this morning! Traders also noted lots of March to Q3 spread buying and also pointed to higher seasonal demand due to structural factors such as greater refinery complexity.

On Tuesday, Glencore grabbed a Midland cargo from Gunvor in the window. Now, it’s trying to get its hands on another – for almost exactly the same dates! Equinor and Gunvor were happy to offer again. But then Glencore packed up and went home as the market closed in and Equinor lowered its offers threateningly close. Fortunately for the Norwegians, PetroIneos swept in and lifted its offer for 23-27 Feb at Dated +$0.80. Midland has really been the hot commodity this week. It’s dominated the North Sea window. We suppose a lack of competitiveness for Chinese buyers will have it bleeding out into the market somewhere…

In a legal tussle between Dare and two former employees (Soliman and Hikmet), traders supposed to join Onyx, the High Court judgement makes it clear that the judge found “no evidence that [Mr Soliman] performed any preparatory work for Onyx”, though concluded that Mr Hikmet “breached his contract of employment [with Dare] in a number of ways”. The judge determined that Soliman’s start date will be unaffected and Hikmet’s start date is delayed. Quoting: “I grant injunctive relief against D2: he is ordered to comply with the non-competition restraint until 11 July 2025 and is restrained for a further period of one month (that is, until 11 August 2025) from taking up employment with Onyx.” Damages, if any, will be addressed at a hearing at later date, the judgement said. The judgement also said: “I dismiss the claims for unjust enrichment against both Defendants”, referring to Soliman and Hikmet.

We made the call! Saudi OSPs are pretty mega! But they’ve been kinder than mechanics alone would imply – aggressive backwardation in Dubai structure throughout calendar January suggested a hike of around $2.50 for Arab Light to Asia but as we expected (and previously discussed), the Saudis took the edge off and bumped it up by only $2.40 to Oman/Dubai plus $3.90/Bbl. Arab Heavy is up $2.60/Bbl. Last time the Arab Light OSP to Asia was this high was December 2023! OSPs to Europe across grades are up $3.20! But on flat price, down we go! The morning saw Brent flat price deflate after the Trump panic of yesterday afternoon. Before 13:00 GMT, it was approaching $75 again and had dropped a buck from its high yesterday. The EIA stats provided the little push flat price needed to edge below $75 – just. A few cents drop for a build of over 8.6 mil bbl to inventories… It’s as if the market is coming to almost completely disregard the weekly data. Once upon a time, such an extreme build would have sent the market into a frenzy, dropping through a trapdoor. But now, it’s just another regular occurrence.

Has Trump thought this through? Iran’s oil exports are less vulnerable now than they were in his first term when he turned the screw on Khamenei’s regime. According to the state news agency Shana, Iran’s 2017 crude exports averaged 2.13 mil b/d, plus almost 500 kboe/d of gas condensate. Based on OPEC’s most recent monthly report, Iran produced 3.259 mil b/d of crude last year. And China imported over 1.6 mil b/d of crude from “Malaysia” (winky face) in December – slightly above the year’s average. The (clearly non-partisan) United Against Nuclear Iran organisation recorded a 10.75% y/y increase in Iranian oil exports in 2024. Iran’s oil minister proudly boasted this morning that his country had broken a 10-year record in oil exports in January, though he didn’t provide a figure – convenient timing. Also, why would China conform to Trump’s sanctions? It’s a sovereign country with its own legislation and the US has no jurisdiction to impose international rule of law… The Iranian minister also hinted a massive new oil contract will be signed soon.

Prices rocketed up in a straight line to the heavens after a technically erroneous media headline blared that Trump would apply Maximum Pressure on Iran. ‘Look at that,’ said observers in disbelief as the price climbed up over two dollars in minutes. Everyone got excited, charging about in mad panic but it turns out the report was misleading; he only intends to sign a memorandum, not an executive order… for now at least. Into the window, flat price turned back and declined to close at $76.09/bbl. But the difference between an error and reality was razor thin as players tried to discern the merits of an executive order and a presidential memorandum. ‘The Man’ is angry after being wound up by bud Netanyahu. Before that, Brent struggled to hold above $75 for much of the morning, dipping below then scrambling back above repeatedly. After lunchtime, it plunged deep blow the $75 handle. By mid-afternoon, dipping below $74 looked plausible.

Bullish consultants, where art thou? Still misleading your employers? Let’s be realistic here, the Big T wants low oil prices, and he is gumming up the works with tariff sands in the economic gears. This will slow down somewhat world GDP, reducing even the US potential. And OPEC needs money and Saudi Arabia among other has a ton of oil waiting to be released. And then there’s Guyana and… Kazakhstan. Let’s not forget that the EV revolution continues at incredible pace. BYD’s electrical commercial vehicle sales excluding buses rose 2,454% y/y in January! What gives? The price of course. Today Brent broke through the $75 defence line, reaching a low of 74.82/bbl. After a minor bounce we are hanging precariously at $75.15 by press time. It is bad, there is just too much oil waiting in the wings and the high prices we have seen are more the result of 1) trading games or 2) freak outs by Indians and Chinese buyers and then suddenly they wonder why they did what they did. Or maybe they were getting ahead of the ban! The Chinese did not wait for a mano a mano between Trump and Xi and they just fired their retaliation. ‘You tariff us and… we tariff you!’ ‘You think we are afraid or give the opportunity to threaten us with an oil ban or tariff, guess what we are tariffing not only your oil, your LNG and your coal!’ Kapow! LPG was exempted our Chinese sources tell us.