February 4, 2025/Oilprice.com

Michael Kern
Editor, Oilprice.com

In this week’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week. 
    
We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

– Canada’s oil industry has dodged the bullet with the United States’ 25% tariff threat, only to be penalized by a 10% levy on Saturday and then subsequently lifted for a grace period of 30 days, taking oil sands producers to a rollercoaster of emotion this week.

– Almost all of Canada’s 4 million b/d flow to the United States, with some 65% of those exports taken in by refiners in the Midwest, a region that has no other supply route because infrastructure in the Gulf Coast is geared towards exporting light barrels from the US.

– Analysts have found that Canadian tariffs would have the biggest impact on US Atlantic coast gasoline markets, with a 25% tariff on imports hiking prices by $0.50 per gallon to $2.5/USG, whilst higher oil sourcing costs adding some $0.20 per gallon to Midwest gasoline prices.

– Bypassing US sanctions would be easier for Mexico as all its US-bound flows are seaborne and could be re-routed to Asia, however Valero Energy’s term contract with Pemex could become a point of legal contention.

Market Movers

– US offshore producer Talos Energy (NYSE:TALO) appointed Paul Goodfellow, formerly the global deepwater chief of UK-based energy major Shell (LON:SHEL), as its new chief executive.

– Azerbaijan’s state oil firm SOCAR has agreed to purchase a 10% stake in Israel’s offshore Tamar gas field from Union Energy, the investment vehicle of Israeli businessman Aaron Frenkel.

– US oil firm EOG Resources (NYSE:EOG) won production sharing contracts for two offshore blocks in Trinidad and Tobago, with the Caribbean nation seeking to halt production declines and allocating one block each to BP and Shell in 2024.

Tuesday, February 04, 2025

The US-Canada tariff flare-up lifted oil prices for a brief period, but with the 30-day postponement of those restrictive measures, the oil markets are now assessing the impacts of another trade war, a potentially even bigger one between the United States and China. With ICE Brent dropping dramatically to $74 per barrel, the main fear is that the US-China spat could seriously damage oil demand growth this year, already under pressure from weakening margins.

Gold Prices Hit Record Highs on Tariff Frenzy. Prices of the bullion skyrocketed to an all-time high this week, with Monday seeing gold hitting $2,830.49 per ounce in intra-day trading, driven by market uncertainty surrounding Donald Trump’s tariffs and the probability of retaliatory trade wars.

OPEC Ditches The EIA as Secondary Source. In its Monday JMMC ministerial meeting, OPEC+ agreed to stick to its policy of gradually returning cut production from April 2025 onwards, all the while scrapping the US Energy Information Administration and Rystad Energy as secondary sources.

Ukraine Hits Major Russian Refinery, Again. Following last week’s strik on Russia’s Ryazan refinery, Ukrainian forces struck another refinery in the Volga region, the 300,000 b/d Volgograd plant that is the largest in southern Russia, whilst also targeting a condensate splitter in the city of Astrakhan.  

Trafigura Top Official Gets Jail Time for Bribes. Switzerland’s top criminal court convicted Trafigura and its former chief operating officer Mike Wainwright, sentencing the latter to 32 months in prison for bribing Angolan officials in exchange for oil contracts between 2009 and 2011.  

Iraq Moves Closer to Settle Kurdish Row. Iraq’s parliament approved a budget amendment that would allow Baghdad to subsidize production for international oil firms operating in the semi-autonomous Iraqi Kurdistan region, setting the rate at $16 per barrel and edging closer to the restart of Kurdish exports.

Beijing Retaliates with Oil and Gas Tariffs. In retaliation to Donald Trump’s across-the-board 10% tariff on any Chinese product, China’s State Council imposed a 15% tariff on coal and liquefied natural gas imports from the US, and a 10% tariff on crude oil and heavy machinery.

Nigeria Mandates Domestic Supply Quotas. Nigeria’s upstream oil regulator NUPRC said it would deny export permits for oil cargoes for producers that fail to meet stipulated supply quotas to local refineries, as the country ramps up long-stalled NNPC plants in Port Harcourt and Warri.  

Wright Confirmed As US Secretary of Energy. Former chief executive officer of drilling firm Liberty Energy, Chris Wright was confirmed as the US Secretary of Energy by a vote of 59 to 38, using the agency’s 50 billion budget, pledging to unleash a new LNG expansion and modernize the power grid.

Norway’s Largest Oilfield Suffers Power Outage. Europe’s largest producing oilfield, the Equinor-operated (NYSE:EQNR) Johan Sverdrup, has suffered a power outage that left the platform without electricity for 8 hours, just two months after a similar incident in November.  

EU Struggles to Meet Its Own Inventory Targets. Europe is struggling to meet its self-declared natural gas inventory targets as regional storage levels were 53% full as of February 1, only slightly above the 50% goal set forward by the EU, with France’s gas stocks as low as 35% in recent days.

ADNOC Eyes Canadian Petrochemical Producer. ADNOC, the national oil company of the UAE, is considering the joint acquisition of Canadian petrochemical firm Nova Chemicals alongside Austria’s OMV (VIE:OMV), with the Calgary-based firm currently owned by UAE’s sovereign fund Mubadala.

South Korea Eyes First Ever Oil Discoveries. US geoscientists have appraised and identified 14 oil and gas prospects in South Korea’s East Sea, potentially containing between 0.7 and 5.2 billion boe, raising hopes of an upstream breakthrough for a country that has never produced oil in its history.  

Beijing Tightens Export Controls on Defense Metals. China’s Commerce Ministry announced export restrictions on five metals used in defense and clean energy in response to US tariffs, ranging from tungsten and tellurium all the way to molybdenum, prompting a price rally outside China.