The Officials

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.

As of the week ending 28 February (crucially this was IE week), volumes for key exchange traded M1 futures contracts fell w/w. However, M2 and M3 tenors saw broad-based increases in exchange traded volumes on the week. Stay tuned for the next edition to see how things develop this week!

Brent huffed and puffed, stamping down on the $70 floor, trying to break through to the 60s. It smashed through just before 15:00 GMT all the way down to $69.77! 60s secured! Doesn’t matter if it bounces back within 15 minutes – dead cats always bounce . By the close it had solidified slightly, reaching $70.40/bbl. Brent dipped its toes into the 60s and could take the plunge soon…

After well over 2 months, Brent is back on top. Not pricewise because it is way down nearly touching the 60 handle, but back on top of Dubai. Minor victory in a really bad day for prices. The spread between Brent and Dubai finally flipped positive for the first time since December 19th, with prompt Brent futures pricing $0.18/bbl above Dubai partials. According to traders B/D started roofing last night following the announcement from OPEC, before continuing to gain aggressively through the Singapore window this morning. But traders also suggested the move was more due to Mr Taureau’s absence than the OPEC announcement, as spreads continue to sell off. Oh such big French boots to fill.

The Ides of March! Markets collapse! Or to put it more bluntly, OPEC torpedoed the market. Brent closed at $72.56/bbl. But the real action happened after the European close as Brent collapsed by over 2% to $71.20/bbl by press time after an OPEC delegate said the group will go ahead with a 138 kb/d production increase from April! This is the first increase and a prelude of the return of 2.2 mil b/d over 18 months. An executive at a trading firm saying, “Time to test 70 again”.

The Dubai physical premium rolled out of bed. From $4.20 on Friday, it dropped to $1.22 today! That’s a massive move, far bigger than the other monthly rolls we’ve seen. After the sanctions and mega squeeze, we’ve returned to a comfortable cruising altitude where we were in December.And, in the window, February’s pattern got turned on its head. In February, a well-bid window became almost run of the mill. But today, sellers were back in full force. Exxon, Trafi, Phillips, Unipec and PetroChina all featured on the sellside. But no sign of Reliance. Alongside Trafi, PetroChina was the most aggressive seller, placing plenty of offers and hitting some bids – quite a shift from their consistent presence on the buyside in February

February has been a mega month for The Officials. We launched our Dated Brent assessment and introduced The Liquidity Report. Read them and if you have any questions we are here to help you, not to charge you crazy money but to help you. February ended with a bang. Zelenskyy blew himself up in dramatic fashion in the Oval Office. Trump said he “disrespected the United States of America in its cherished Oval Office”. Zelenskyy had a veritable brain gaseous emission with some H2S added in to completely alienate the US. Now you done it! Any notion of retaining US support went up in smoke on live TV. Mr Z was really missing his common sense and the scheduled news conference was cancelled. Like Mr. T, we just want to see a peace deal.

It is all about Trump, Tariffs and Threats. And the world is on its feet if not at the man’s feet waiting for the latest edict. If you strip out all the bluster, the man is saying: we are broke, we are pulling out, grow up and take care of your own problems, we will tariff you so we can pull industry in AND… I like low oil prices. It’s been a month of trepidation and more bombastic rhetoric. IE week synthesised the market’s sense that everyone’s anxious, concerned Trump will turn up and throw another spanner in the works. Repeated calls on OPEC to lower oil prices fell on deaf ears – who believes they’ll unwind production cuts from April? We’ll take a straw poll – let us know if you’re in Team Hold Back or Team Let Loose!

Markets were falling with the mood all sappy during IE week but then Mr. T decided to spice it up but issuing another sanction, this time to Venezuela. If I’m you think there is a free market, think again. Between Mr. T threatening or missing sanctions or tariffs and OPEC desperately selling a story of demand growth and tight production trading has been reduced to guessing what the next blabber will be. We noticed this morning that Chevron disappeared from the Dubai window and soon it will have to disappear from Venezuela too as the orange storm comes to Venezuela. About a quarter of exports currently end up in the US. After weeks under review, Trump announced yesterday he will revoke the permit Biden awarded to Chevron to operate in the country in November 2022. From bringing in upwards of 600 kb/d in 2018 and January 2019, US imports of Venezuelan crude collapsed to 0 between July 2019 and January 2023. Trump argued on social media that Venezuela failed to take back migrants from the US – ask Colombia how that went for them…

Murban futures volumes have exploded in February and the Murban premium is flying ever higher! Read more page 2… A key theme of IE week has been to be a good boy or lady about OPEC quota compliance. There is a lot of pressure to publish or come up with analysis that paints a compliant bullish story. We were shocked about the widespread nature of the pressure tactics, the big names under the cosh and the consequences people have been threatened with. “I was there when XY called XX and said what we should publish,” said an employee at one of the companies. The chromosomal markers may help you solve the riddle. There have been calls, emails and direct pressure on media, consultants, ship trackers, and even government organizations! One of our sources said, regarding an international organization; wink, wink, “I was in a recent meeting (like really recently) where they were calling the entity all kinds of names.” My source was in the Middle East recently, and if you are in the oil circles you know where.