Oil markets are showing cautious optimism as traders bet Donald Trump may soon wind down the conflict.
Hormuz Bottleneck Sparks Middle East Mega?Cuts
– With the closure of the Strait of Hormuz entering its second week, Middle Eastern producers have started to collectively curb output as laden tankers continue to pile up in the Persian Gulf.
– Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates have already slashed their production by as much as 6.7 million b/day, with Iraq taking the lead with a massive 3 million b/day cut.
– The Middle East has historically low crude storage capacity, accounting for only 5% of global storage (320 million barrels), even though the region represents one-third of global oil flows.
– Meanwhile, Saudi Aramco posted a 12% drop in annual profit for 2025, reporting a net income of $93.4 billion as the world’s leading NOC has been posting consecutive year-over-year drops for 12 quarters already.
– With its gearing ratio falling to 3.8% by the end of 2025, Saudi Aramco has now set its sight on its first-ever buyback, pledging to repurchase up to $3 billion worth of shares this year.
Related: Little-Known US Company Lands Important Pentagon Contract in Rare Earth Race
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Market Movers
– US oil major Chevron (NYSE:CVX) is reportedly in advanced talks with Brazilian industrial conglomerate Ultrapar to purchase a 30% stake in retail fuel distributor Ipiranga.
– London-based energy giant Shell (LON:SHEL) has agreed to sell its North American lubricants business Jiffy Lube to private investment firm Monomoy Capital Partners for $1.3 billion.
– Latin America-focused upstream firm GeoPark (NYSE:GPRK) has refused to hike its $375 million offer for the Colombian oil and gas assets of Frontera Energy, which deemed a competing $500 million offer from Parex Resources to be ‘superior’.
– Norway’s state oil firm Equinor (NYSE:EQNR) announced the discovery of two oil and gas fields in the North Sea, Byrding and Frida Kahlo, to be fed into the offshore Sleipner production hub.
Tuesday, March 10, 2025
Oil markets have shown their optimistic side this week, hoping that US President Trump would call off his war soon as the Strait of Hormuz remains blocked and panic-buying is taking over many commodity markets that depend on the Middle East. For the time being, Trump’s market placation has succeeded in lowering oil prices, with ICE Brent falling back to $92 per barrel after a Monday rally that almost reached $120 per barrel.
IEA Mulls Releasing Millions of SPR Barrels. Seeking to calm down soaring oil prices, G7 finance ministers discussed a possible joint release of strategic petroleum reserves, up to potentially 400 million barrels. The IEA-coordinated event ended with its members deciding against it.
Saudi Arabia Starts Cutting Production. Saudi national oil firm Saudi Aramco (TADAWUL:2222) has reportedly started cutting crude oil production at two of its giant oilfields, even though it is trying to maximize the re-routing of its flows from the Gulf to the Red Sea via the East-West pipeline.
The Greeks Have Done It Again. Greece’s Dynacom shipping company is gradually becoming the daredevil of the shipping industry, with its Shenlong tanker becoming the first non-Iranian crude oil carrier to pass through the Strait of Hormuz since Iran initiated its blockade on March 1.
India Struggles to Join SPR Release Drive. India, a country with notoriously low strategic oil inventories as its three SPR sites currently hold only 30 million barrels of crude, will not join the IEA’s initiative to release strategic stocks and will seek to maximize short-haul Russian imports instead.
Russia’s Key Black Sea Port Restarts. Russia’s main Black Sea port of Novorossiysk has resumed loadings this week, following a week-long halt caused by Ukraine’s drone attacks and stormy weather that slashed oil exports to just 250,000 b/d, bringing some relief to tight oil markets.
Bahrain Calls It Quits After Drone Strikes. Bahrain’s national oil company Bapco Energies declared force majeure on all of its group operations after Iranian drones targeted its 405,000 b/d Sitra refinery again, marking the second Middle Eastern refinery to be shut after critical drone damage.
Exxon Wants to Move Back to Texas. US oil major ExxonMobil (NYSE:XOM) is seeking to relinquish its corporate registration in New Jersey and reincorporate in Texas, where the firm’s headquarters are located, in a move that is poised to mitigate risks from activist investors and climate advocates.
South Korea Caps Transportation Fuel Prices. The government of South Korea implemented a price cap on domestic gasoline and diesel prices, following a sharp jump to $1.30/litre in the price of both last week, with Seoul stepping up inspections and audits to detect potential price collusion.
Rare Venezuela Cargo to Israel Derailed by Hits. A cargo of Venezuelan crude, loaded on the Poliegos tanker and presumably shipped by global trading house Vitol, left Israel’s 197,000 b/d Haifa refinery without unloading and sailed to Greece instead, presumably due to damage to the plant.
Chinese Oil Imports Soar Ahead of War. According to China’s General Administration of Customs, the country’s crude oil imports jumped a hefty 16% year-over-year to average 11.99 million b/d in January-February, suggesting Chinese refiners continued to build stocks they can now benefit from.
India Faces Severe Cooking Gas Shortage. India’s oil companies are hiking LPG cylinder prices after a year of keeping prices unchanged, with 14 kg cylinders now going for $10 per unit as the country is facing a severe shortage of cooking gas as 90% of its supply routinely comes from the Middle East.
Related: No Missiles, No Drones: What Happens When Rare Earths Stop Flowing?
Mongolia Seeks Better Terms for Its Copper. Mongolia is trying to renegotiate the commercial terms of Rio Tinto’s (NYSE:RIO) $18 billion Oyu Tolgoi copper mine, calling them ‘unfair’ as the floating interest rate on the multibillion-dollar loan that Rio offered to Mongolia is now over 11%.
Drone Strikes Force UAE’s Refining Offline. The largest oil refinery in the Middle East, ADNOC’s 922,000 b/d Ruwais plant, halted operations after a drone strike caused a fire, making it the heretofore largest victim of downstream warfare after Saudi Arabia’s Ras Tanura and Bahrain’s Sitra.
Glencore Eyes Australian Listing. Mining giant Glencore (LON:GLEN) is reportedly considering a secondary listing in Australia if it proves to be beneficial to the company, reacting to the recent collapse of its $200 billion merger talks with Rio Tinto as an ASX listing could attract more investors.
By Tom Kool for Oilprice.com
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