The Officials

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.

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.