Trade Wars Spark Uncertainty in Oil Markets

Uncertainty has been rife in oil markets of late as Trump’s trade wars threaten global demand just as OPEC+ is set to boost supply and Ukraine peace talks get underway.

– US Energy Secretary Chris Wright announced that he plans to work with the Congress to cancel the mandated sales of 100 million barrels of strategic petroleum reserves in 2026-2031 to refill SPR stock.

– According to Wright, it would take 5-7 years to refill US strategic oil inventories at a cost of approximately $20 billion, boosting global crude demand by an additional 100,000 b/d until the end of the decade.

– US strategic stocks reached a 40-year low of 346 million barrels in July 2023 after the Biden administration released 221 million barrels in 2022 alone, recovering to 395 million barrels by the end of February 2025.

– Refilling the SPR to their pre-Ukraine war levels would imply purchasing some 300 million barrels, worth some $27 billion at current prices, potentially indicating that the Trump team wouldn’t fill inventories ‘right to the top’.

Market Movers

– Canadian oil producer Whitecap Resources (TSE:WCP) will be merging with Alberta peer Veren (TSE:VRN) in a $10.5 billion merger, keeping the Whitecap banner and boosting output to 370,000 boe/d.

– Norway-focused oil firm DNO (OSL:DNO) has agreed to buy North Sea peer Sval Energi from private equity group HitecVision in a deal valued at $1.6 billion, involving a $450 million cash payment plus debt.

– UK oil major BP (NYSE:BP) is expected to sign a frontier exploration deal this month for Zone I in offshore Israel – alongside Azerbaijan’s Socar and NewMed Energy – covering six blocks alongside the maritime border with Cyprus.

Tuesday, March 11, 2025

Fears of further trade wars and rumours of a potential Ukraine deal have contributed to choppy price movements this week, with ICE Brent still oscillating around the $70 per barrel mark. OPEC+ continues to loom large on the horizon, too, after Saudi Arabia’s foolhardy zeal to bring back oil in April seemed to have tamed investors’ bullish sentiment, making them wary of a prolonged period of oversupply in H2 2025.

IEA Softens Tone on Oil Investments. Fatih Birol, the director of the IEA, stated that there is a need for oil and gas upstream investments to address declines in existing fields, softening the agency’s tone after a 2021 blanket call not to invest in new oil and gas projects to reach net-zero by 2050.

Houthi’s Threaten Return of Red Sea Attacks. Yemen’s Houthi rebels have announced that if Israel will not allow humanitarian aid to enter the Gaza Strip by the evening of March 11, they will resume attacks on commercial shipping in the Red Sea following a two-month hiatus.

US Mulls Easing of Russia Sanctions. According to Reuters, the White House asked the Department of Treasury to consider ways how to ease energy sanctions on Russia quickly in case Moscow agrees to a Trump-brokered ceasefire, with Saudi Arabia set to host a Trump-Putin meeting soon.

Alberta Pushes for More US Oil Pipelines. As Canada is preparing for a new Prime Minister in Mark Carney, Alberta premier Danielle Smith signalled that if the US and Canada resolve their tariff issues, there could be two new cross-border pipelines built exporting an additional 2 million b/d by 2030.

Oil Spill Contaminates UK North Sea. The US-flagged tanker Stena Immaculate carrying jet fuel from Greece to the UK collided with a Portuguese-flagged container vessel off the coast of Yorkshire in the UK, with kerosene contaminating the waters and both vessels catching fire upon the collision.

Henry Hub Balloons Out of Control. US natural gas prices soared to $4.47 per mmBtu in Monday trading, marking the highest reading since December 2022, buoyed by Canadian gas imports dropping by 1 Bcf/d to 8.7 Bcf/d over the past week and record LNG feedgas demand.

India’s Hunger for Coal Dissipates. India’s imports of thermal coal have dropped for the sixth straight month in February, down by 15% month-over-month to 12.16 million tonnes, as higher renewable generation was amplified by a slowdown in manufacturing activity across the country.

XRG to Become the Next Energy IPO. ADNOC, the national oil company of the UAE, is considering listing its $80 billion low-carbon investment arm XRG on an exchange outside of the Emirates, asking Bank of America to advise on a future IPO strategy that could well happen on NYSE.

Venezuelan Crude Output Dips in February. Just as the Trump administration ordered US oil major Chevron to wind down operations in Venezuela by April 3, the Latin American country’s crude output posted its first monthly decline in months to 1.022 million b/d, with further downside ahead.

US-Canada Souring Leads to a Steel War. Having delayed tariffs on Canadian oil by a month, US President Trump decided to slap an additional 25% tariff on Canada’s steel and aluminium imports into the United States, concurrently declaring a national emergency on electricity.

Kazakhstan Becomes OPEC+’s Worst Overproducer. Seeing its production skyrocket to 2.12 million b/d, more than a 500,000 b/d above its 1.468 million b/d OPEC+ quota, the government of Kazakhstan started negotiations with Western oil majors operating there to cut output by 620,000 b/d.

US Iran Sanctions Send Iraq into Panic Mode. US President Trump rescinded a 2018 sanctions waiver that allowed Iraq to purchase electricity from Iran, prompting the Iraqi government to hastily lease a 500 Mcf/d floating LNG terminal and start negotiations on potential supplies with Qatar and Oman.

Nigeria’s Dangote Wants More Local Crude. Nigeria’s giant 650,000 b/d Dangote refinery has initiated talks to extend its existing crude supply contract with the country’s state oil firm NNPC, ending later this month, as payments are taking in place in the local naira currency, avoiding forex risks.