Supply, Demand Disruption Puts Oil Prices Under Pressure

OPEC+ has been apprehensive ever since it started telegraphing its readiness to unwind production cuts, but the market now believes it will happen, prompting a slump in oil prices. So far, ICE Brent has shed $4 per barrel this week alone. Balancing on the edge of $70 per barrel, oil has remained immune to Trump’s tariffs on Canada and Mexico, fearing the US-China trade war much more.

Following President Trump’s tariffs on Chinese consumer electronics, Beijing announced its retaliatory tariffs on U.S. agriculture goods, slapping a 15% levy on U.S. imports of chicken, beef and cotton, 10% on beef and pork as well as adding 15 US firms to its Export Control List, OilPrice.com reports.

Hedge funds and other money managers have increased their short positions on WTI Nymex crude futures by a whopping 20% week-over-week to some 133,000 contracts, all the while long positions have remained unchanged at 330,000 lots.

China’s LNG demand dipped to its lowest since February 2020 as February arrivals totalled only 4.5 million tonnes amidst warm weather, high stocks and weak manufacturing growth, making Japan the world’s largest LNG importer for the second time in a row.
 
Europe’s largest upstream project that is still yet to be launched, Equinor’s (NYSE:EQNR) 220,000 b/d Johan Castberg field located in the Barents Sea, has been delayed once again due to bad weather, initially expected to come online in December 2024.

Mexico’s national oil company Pemex reported a $9.1 billion Q4 2024 loss, a stark contrast to net profits posted a year ago amidst declining production, ending last year with $97.6 billion in financial debt and another $24.2 billion owed to service providers.

Buoyed by booming production from the Tengiz field, oil and condensate production in Kazakhstan soared to 2.12 million b/d last month, which would put crude-only output in the country some 350,000 b/d above its OPEC+ quota of 1.468 million b/d.

Masoud Suleman, the acting chairman of Libya’s NOC, announced that the North African country plans its first exploration bidding round in more than 17 years, seeking to garner the $3 to $4 billion required to reach output of 1.6 million b/d. 

The government of Ecuador has vowed to transfer the operation of its highest producing asset, the 75,000 b/d Sacha field, to a consortium led by China’s Sinopec (SHA:600028) as Quito seeks to reverse production declines.

Heavily affected by the deteriorating U.S.-China trade war, iron ore futures have been declining for seven consecutive trading sessions with China’s benchmark Dalian May contract dipping to ¥780 per metric tonne ($107/mt).

India’s Petroleum and Natural Gas Ministry has raised a demand of $2.81 billion vis-a-vis the country’s largest private energy firm Reliance Industries, citing gas migration to its offshore KG D6 block from the acreage run by state-controlled ONGC.

Saudi Arabia’s national oil company Saudi Aramco (TADAWUL::2222) announced that it expects to pay an annual dividend of $85.4 billion, a 30% decline year-over-year, a much bigger cut than the 12% dip in annual net profits last year.

Chinese copper production is set to rise by 5% in 2025 to 12.45 million tonnes, squeezing smelting margins to the lowest reading ever with processing fees currently being $20 per metric tonne negative, preferring to retain market share at the expense of profit.

Iraq failed to reach a comprehensive deal with international oil firms operating in the semi-autonomous Kurdistan region, agreeing on the initial volumes of 185,000 b/d but seeking to introduce a third-party consultant to oversee future transactions.