The Officials

Brent fell back but more slowly than the Ukrainians did from Sudhza. At least until the line collapsed and Brent dumped to a $69 handle again as Putin said a truce should lead to a long-term peace. Woohoo! But only under certain conditions. So in terms of actual movement, we remain staunchly at square one! Not going anywhere, just as French wine will under the new 200% Trump tariffs. Neither side is yet to acquiesce to the other’s conditions or soften their position… “We agree with the proposals for the ceasefire”, said Putin. But only on his own terms, having resolved certain “nuances”. A non-headline if ever we’ve seen one!

April allocations are here and they are down bad. Total allocations fell to 36.5 mil bbl – the lowest since December’s allocations! Unipec was among those having to tighten its belt, with its allocation halved from March to just 3 mil bbl. Remember they were getting 14.5 mil bbl in October! A cut even Elon Musk would be impressed by – but maybe he’s not been as successful as he would have liked… Read more on page 2! Meanwhile, PetroChina and CNOOC were the only recipients granted a larger allocation, up by 1 mil bbl and 2 mil bbl, respectively. Hengli’s allocation was slashed from 5 mil bbl to just 2 mil bbl.

Just as Trump says he is “very happy” that oil prices are down, they climb back up again. Back up to $71 even! Talk about comic timing. Reports Putin is likely to accept a ceasefire at some point, but on his own terms, tells us one thing: he’s not happy with the proposals coming from the other side. Numerous Russian officials have been reiterating the need to eradicate the “root causes” of the conflict. Ukraine’s hand looks weaker by the day, as the Kursk incursion collapses and Russia has even taken Sudzha, a key town in Kursk previously held by Ukraine. It’s all falling apart for Zelenskyy!

Every time that Brent sneaks above $70, the peak is getting lower. On 7 March, it made it all the way up towards $71.40, then on 10 March to $70.85, and yesterday to $70.40. This morning it hardly reached $70.20. As the peaks get gradually lower, it looks like $70 is on its way to becoming a ceiling.

As of the week ending 7 March, our momentum table shows all our key futures contracts seeing significant increases in exchange traded volumes across tenors, as we rolled into a new month. In the May contract, WTI saw the greatest increase, as exchange traded volumes doubled w/w. Further down the curve, exchange traded volumes of July RBOB futures more than tripled w/w.

Ukraine wants a 30-day truce. They agreed with America that they should make peace. Sounds great! But nobody bothered to ask Russia… The two also said they are ready to sign the critical mineral resources deal. We’ve heard that one before. Peace isn’t here yet. And there are plenty of obstacles in the way. The massive Ukrainian drone attack and the US agreement to resume sharing intelligence and aid don’t make us think peace is right around the corner. Now Rubio says it’s up to Russia to accept the truce – which means no deal!

As Zelenskyy meets Rubio in Riyadh, the uncertainty that infected markets yesterday spread to oil, which fell at the Asian open to below $69. But it built back up steadily through the Asian session and closed at $69.56/bbl. What goes up must come down and what goes down must bounce on the dead cat. Brent still isn’t ready to fully relinquish its grip on the $70 level and climbed consistently to surpass it again at 10:30 GMT. The structure strengthened accordingly, with the front month spread bulking up to 54c – its strongest so far in March!

Europe had Brent safe and well above $70 throughout the morning, steadily plodding along towards $71. But Team America awoke in a frenzy and had almost every financial indicator in the red! Along with the stock market, Brent collapsed, dropping from around $70.80 to $69.80 in little more than an hour. It kept going and closed at $69.62/bbl.

For now, Brent is clinging on to $70. Tariff uncertainty fights with geopolitical tensions bubbling up to see Brent fluctuate above and below $70. The geopolitical order has never been more muddled and confused. Mark Carney won the race to become the next Prime Minister of Canada but will likely now call an election; Germany is yet to form a new government; the US is diverging from its Western allies and the G7. The old order is exactly that: old.

Just as we’re getting used to the 60s, Brent clambers back up above $70. That was even before Trump threatened more sanctions on Russia. If Putin doesn’t get to the table with Zelenskyy, further sanctions could be imposed on Russian banking. Honestly, he sounded like an exasperated parent shouting at his kids to stop fighting. And then the threat of sanctions – quite a reversal from Trump’s previously rather warm disposition towards Russia – gave flat price another leg up and it made a break for $71! But then: peace time! Nearly. Hopefully. Putin is apparently ready to agree a ceasefire, with certain conditions. As one witty trader said, this is neither a bull nor bear market: it’s a kangaroo market! Maybe a kangaroo with ADHD getting distracted by one thing and another, back and forth, closing at $70.61/bbl.

They kept us waiting but it was worth it for the show! The Saudis chopped like an expert hairdresser. We expected OSPs to Asia for April to be cut by around 25c, according to the maths with a little extra cherry on the cake, but they went one further, chopping the light OSP by a chunky 40c. Dubai structure eased slightly between calendar January and February (the physical premium averaged 7.5c lower in Feb than Jan), we expected a cut but not as extreme as the one the Saudis finally went for. But then again, happy customers will be repeat customers . A naughty source pondered, ‘are they trying to gain market share?’

Belligerent Bessent said the US will shut down Iran’s oil sector and drone manufacturing, yeah. sure! Of course, nothing’s actually happened yet, but we have heard this before. 🤣 Yet, price bounced from below $69 to $69.40 by 17:30 GMT. To tariff or not to tariff, these tariffs are just fuelling uncertainty. Especially when they keep changing. The ‘will they, won’t they’ works well for a romcom, but it’s not a great way to manage international commerce and business.

Brent flat price still holding below $70, with some traders were hoping for China to come in and do the usual thing, i.e. buying low. But, in a short survey from The Officials, we could not identify anyone publicly bullish. Where have all the braves souls gone? OPEC overproduction bit them? And to add insult to injury, China’s refineries are about to go into maintenance…and while this was expected, the details have come out. Read below. Meanwhile, in Dubai, traders also noted tradehouse buying of spreads… Are some hoping for another installment of the Totsa show? And what is going on with the Saudi OSPs, everybody waiting for some relief. We think about 25 cts down, others are less hopeful.

60s. Convincingly. No fifteen minute foray today. This time, Brent dipped below $70 for the second time in two days and continued to descend steadily before dumping further to a $68 handle! Battered and bruised, it ended the session at $68.50/bbl. A little reconnaissance mission yesterday before diving headfirst today! For anybody without access to a long-term Brent chart, that’s a new low since November 2021!

The producers will have a bottle of Beaujolais ready for the French as soon as the new vintage is released! Totsa’s back! The Dubai window hadn’t been the same without the Taureau, as serious buyers were few and far between throughout February. But today the French struck back, returning in force to place plenty of bids. Vitol remained on the buyside, while Gunvor joined in too. After trying its hand at some selling in February, Chevron popped over to buy as well. It was all too much for an isolated PetroChina on the sellside. When the Taureau’s on the rampage, nobody can stop him collecting his Camembert. The Dubai physical premium bounced from yesterday’s low of 63c, back up to $1.12. PetroChina made an admirable effort on the sellside but was overwhelmed by the horde of buyers throwing in bids.