The Officials

Or to continue paraphrasing Shakespeare, hell knows no fury like a woman who grew up on corn. La Presidenta spoke and Trump had to stand up and listen. OMG, imagine that! The Man pedalled back tariffs by a month. And anything can happen later including a reduction in the tariffs or no tariffs at all. The Donald is not omnipotent as he seemed a week ago. Claudia Sheinbaum said tariffs on Mexico have been delayed for a month – one day before they were meant to come into effect. Mexico and the US agreed to add further controls on each side of the border – Sheinbaum apparently raised the problem of weapons entering Mexico from the US just as Trump bemoaned thousands of pounds of fentanyl entering the US. The Mexican standoff didn’t last too long. Lesson learned, fight hard and look for alternatives.

Tariff time! North American free trade is dead! Trump saw to that. Not day 1 but pretty pronto. The pieces are moving on the chessboard. China, Canada and Mexico all got smacked. 25% tariffs on imports to the US from Canada and Mexico, but only 10% on energy imports from Canada. Trump broke USMCA. Power is intoxicating… hence the problem. Countries bent over and Trump thinks he can push through anything… But global trade gums up and GDP suffers. US companies get hit. What a mess! Is Dated Brent under threat as a benchmark, as Europe threatened retaliatory tariffs. Maybe no Midland?? We see this as highly unlikely, but anything US is UNSTABLE. Shooting from the hip means sometimes you hit your own leg.

We bid farewell to 2024 and President Biden’s parting gift of extensive sanctions sent buyers of Russian crude mad with panic! The shadow fleet will always find workarounds – it’ll just take some time. Shipping got some good news at least, as the Houthis pinky promised to halt indiscriminate attacks in the Red Sea. Hallelujah! Physical Brent couldn’t compete with Dubai and, while Dubai’s physical premium was surging to over $5, the physical diff for Brent barely managed to recover from negative at the start of the month to around 83c by its peak mid-month. The North Sea window started with some PetroIneos buying, followed by a period of quiet, before Mercuria picked up the slack in the final week.

We say this when it comes to every monthly review but: What a month! January kicked off 2025 with a flurry of action, from broadside sanction barrages, to a record-setting Dubai physical premium, to aggressively waving the tariff stick. It’s been one thing after the next, with trading scrambling to dissect cause and effect. We bid farewell to 2024 and President Biden’s parting gift of extensive sanctions sent buyers of Russian crude mad with panic! Chinese, and particularly Indian refiners charged onto the market, calling traders and grabbing whatever barrels they could. Nowhere has the price action been more intense than in Dubai. We starter the month with physical premiums around $1, but Biden’s final sanction binge leant a helping hand to Totsa’s spot market marathon.

Down! That was the way Brent went in the morning, just failing to break below $76. A big afternoon bounce even saw it exceed $77 again in the mid-afternoon and finally close at $77.26/bbl, though it struggled to hold onto that after the window. The snake undulates! As they did yesterday, BP offered an Ekofisk in the North Sea and Mercuria set off in hot pursuit. This time, BP had both a FOB and CIF cargo to offer. However, the two were interested in different dates and weren’t willing to compromise. Instead, Glencore jumped in and grabbed BP’s 13-15 Feb FOB offering at Dated +$0.75. Upon this snatch, BP withdrew its other, CIF, Ekofisk offer.

It looks like 75 is coming, not quite yet but it is almost in the bag Great if you are short or otherwise you may get it on the neck! For The Officials it is an intellectual exercise in case you wonder. For now back into $76! A post-window drop saw flat price tumble into the mid-$76 range before 18:00 GMT. Yet it still feels heavy. Asia’s asleep and the rest of the world’s in droopy eyelid mode! We told you this would happen that the market would feel long when the Chinese are celebrating the year of the Snake. Look at their tech from DeepSeek to Dancing Humanoids. In the absence of Asian trading, Europe was quick to knock flat price down, on the first day of Chinese New Year. After a morning tumble, some choppiness going into the window saw it close at $77.29.

Brent bounced back early and traded above $78! The longs were happy. But the afternoon didn’t fill their dreams to go into Chinese New Year with their pockets bulging, as flat price crashed back down. By the close it had fallen to $77.13 and kept it going to below $77 again. The mid seventies are calling…Trump’s pronouncements weigh heavily on the market. In the North Sea window, the interest in Forties has been relatively muted of late, but that didn’t discourage Totsa from coming out to bid all alone for the grade. The real fun was in Midland again, although everyone was firing blanks after yesterday’s sharpshooting display from Mercuria. Today, Equinor, Gunvor and Exxon were lowering offers with aplomb, but Mercuria’s aim seemed to be off and the stars didn’t align today. Gunvor and Exxon were both offering cargoes for earlier than Mercuria seemed to want, while Equinor’s offer for a late Feb (which appears Mercuria’s preferred flavour) didn’t come down low enough to tempt the Midland glutton into a trade, and nor did Exxon’s late-Feb offer.

Another round in the brutal battle for Dubai supremacy, with seemingly the same winner. Despite Unipec’s best efforts, the Dubai physical premium even strengthened to $4.95! Totsa’s bids were incessant and plentiful. Unipec put in a major shift to clear many of them out and even tried to drag the market down by hitting a Gunvor bid 10c below Totsa’s once it had cleared through the hailstorm of Totsa bids but couldn’t make it stick and Totsa was quick to pounce, throwing in another bid and hauling the market back up to $81.25. While the two usuals were dominating the bar, others were quietly bidding and offering too: Gunvor threw down its fair share of bids, while Shell was a persistent seller, hitting Totsa bids and making its own offers.

Afternoon dump! Prices cracked as the year of the snake beckons. The flat price smashed through the $77 resistance level and hovered tenuously above the temporary $76 floor with prices tumbling from just after 15:00 GMT, falling from the mid- $78 range. Just a pitstop on the way to $75? Yes, we are confident to say. Our earlier call that we’d be returning to trading around $76/77 may prove overly conservative! $75 certainly looks like the next target. With this collapse in flat price, the front month spread took a dive from around $1 to just 80c within 2 hours.

Another bout of Totsa frenzy. The French threw in bids faster than Unipec and its fellow sellers could clear them out. To be fair, Unipec was the only seller making a serious effort in hitting Totsa bids. Reliance was happier to put its own offers down and let Totsa snap them up – which it did with pleasure . With this showing, Totsa gained a convergence with each of Unipec and Reliance. Unipec declared another Oman cargo to Totsa – the eighth such convergence in January so far. Meanwhile, Reliance declared a standard Upper Zakum to Totsa – its second of the grade following the convergence on 22 January. The Dubai physical premium strengthened to $4.64. But, relative to Brent futures, Dubai partials underperformed. Remember there are only 2 more Dubai windows this month!

Trump can only do so much with his rhetoric, but somehow it works. He spoke, Putin listened and countered, and prices reacted. We are in a juncture where prices are almost fully in the whims of the politicians and a few strong squeezers. Brent flat price rose steadily to begin with today, climbing back towards $79. But 2025 could be The Year of the Headline: Putin said he’s ready to talk to Trump about oil prices and energy, whereupon prices dumped. WTI got hit the hardest and dropped 90c in just a few minutes. The dump took us back to square one where we began the morning and prices go into the weekend far down on Trump’s consecutive comments.

The window was a brutal slugging match between Totsa and Unipec as the French and Chinese went toe to toe. Totsa bids. Unipec sells. Totsa bids. Unipec sells. Ad infinitum. They also even found the time for Totsa to lift a few Unipec offers. Having parted the waters and sifted through Unipec’s offers, Totsa grabbed the opportunity to pivot to a higher price and smashed Reliance’s $82.25 offer – a big payday for the Indians! But Unipec wasn’t going to let that pass and managed to haul the trading back to $81.84.

Never a quiet day with Donnie back in action. Trump’s speech to the Davos conference was characteristically bombastic. For one, he said he’ll ask OPEC to reduce oil prices. Welcome back to the days of Trump making subtle hints that he wants prices lower . Many traders had been bemoaning the lack of volatility in 2024, but Trump 2.0 looks set to put an end to the dull days of tedium for traders dreaming of bouncy prices and rapid moves to pump up the adrenaline again!
Donald knocked a dollar off with a few words halfway through the window. From just over $79.40/bbl as his speech began, Brent flat price dumped to $78.40/bbl by the close! WTI got butchered even worse, falling from near $78.80/bbl to $74.70/bbl. In his ever-delicate approach to foreign policy, Trump accused the EU of treating the US poorly and he also suggested pursuing denuclearisation with Russia and China. He’s got ambition! Buckle up guys, we’ve got 4 years of this fun!

Convergences galore! Today was the busiest day in the Dubai window of January so far. A total of 7 cargoes declared, of which 6 to Totsa! The Taureau collected an Upper Zakum from each of Vitol and PetroChina, while Exxon declared it an Al Shaheen. It also received three Oman cargoes – two from Unipec and one from Trafi. Idemitsu scrounged the remainder, gaining an Upper Zakum from Koch. And to show just how hard the French were working against the onslaught of sellers, Totsa collected one third of all January convergences so far, just in today’s window!

Bring out the Global Warming brigade, we need some blankets! Wrap up warm if you’re in the American south! The region is feeling the cold pinch now, with several refineries and pipelines cutting down or halting operations due to infrastructure struggling to cope with the subzero temperatures. Marathon’s near 600 kb/d Garyville refinery in Louisiana halted operations and Motiva has also reportedly halted operations at certain units. Neither provided more details when we asked. It’s snowing in New Orleans for the first time in decades and Houston fell as low as -7 Celsius this morning!