Oil Prices Inch Higher on Caspian Supply Disruption and Cold Weather in the U.S.
Crude oil prices rose today following a drone attack on the Caspian Pipeline Consortium and cold weather in the United States, both disruptive to production. At the time of writing, Brent crude was trading at $75.90 per barrel, with West Texas Intermediate at $71.91 per barrel. A statement by the Russian government said that flows along the Caspian Pipeline Consortium infrastructure had dropped by between 30% and 40% on Tuesday following the terrorist attack that involved seven unmanned aerial vehicles, per a statement by the CPC. Reuters said the attack was carried out by Ukrainian forces. In U.S. news, North Dakota’s Pipeline Authority has warned the state’s crude oil and gas production rate could suffer a decline of between 120,000 bpd and 150,000 bpd because of frigid weather. North Dakota is the third-largest oil-producing state in the country. Additional fuel for oil prices came from Riyadh, where top Russian and U.S. diplomats met to discuss bilateral ties and their restoration, causing anxiety in Europe about the possibility of a deal on the Ukraine war that would not reckon with European Union desires and preferences. Counterpressure on prices came from statements from U.S. officials suggesting that sanctions on Russia could be lifted soon, which would make exports much easier, boosting global oil availability. The deal is not done, however, and the U.S. and Russia will meet again before there is clarity on any issue discussed. Further counterpressure came with the news that oil exports from Iraq’s Kurdistan region could be restarted as soon as next month, after a prolonged pause amid disputes between Iraq and Turkey, to where the oil flows, and between the central government in Baghdad and the Kurdistan autonomous government on the issue of oil revenue sharing. Like the U.S.-Russia deal on Ukraine, the restart is not certain.
Iranian Oil Exports to China Rebound
Iranian crude oil flows to China have rebounded this month after a U.S. crackdown on shipments launched in late 2024 decimated them in January. In a last-minute push to sanction Iran, the Biden admin blacklisted a number of tankers, trading entities, and shipping companies as participants in sanctioned oil trade. The February average of Iranian oil exports to its biggest buyer is set to average 1.74 million barrels daily, according to preliminary data from Kpler cited by Bloomberg. The figure is an 86% increase from January flows. The boost in shipments was enabled by the opening of new receiving terminals and more ship-to-ship transfers, the Bloomberg report noted. The Trump administration has threatened to return to the maximum pressure approach of Trump’s first term in a bid to force Iran to give u developing a nuclear weapon. U.S. Treasury Secretary Scott Bessent said the target is to squeeze Iranian oil exports to a tenth of their current levels. Kpler said in a recent analysis that the return to a maximum pressure campaign against Iran on the part of Washington was likely to weaken oil exports to China, at least for a while. “Some buyers, particularly larger Chinese privately owned refiners, are likely to steer clear of such dealings as a precaution in the near term,” due to higher prices resulting from workarounds to avoid U.S. sanctions, Kpler analyst Homayoun Falakshahi wrote. China’s private oil refiners, the so-called teapots, are key buyers of Iran’s sanctioned crude, and the two sides have established a trade relationship favorable for both. Iran gets to sell its crude that nearly everyone else shuns, while China’s independent refiners, the so-called teapots, get cheap oil. However, the tougher U.S. squeeze on Iran’s oil industry will inevitably lift prices, which would affect buying decisions, as noted by Kpler.
Brazil Joins OPEC+
Brazil has joined OPEC+ two years after the group extended an invitation, but its membership will not be binding with regard to production cuts, the country’s energy minister said. At the announcement of the Brazilian government’s decision to join the group, Mines and Energy Minister Alexandre Silveira described OPEC as “a forum for discussing strategies among oil-producing countries. We should not be ashamed of being oil producers. Brazil needs to grow, develop and create income and jobs,” the AP reported. Brazil is already one of the biggest oil producers in the world but it has ambitions to climb in the ranks to the number-four spot from number seven, with a production target of 5.4 million barrels daily for 2030. Brazil has also been a focal point for non-OPEC production forecasts, regularly named alongside the United States, Canada, and Guyana as a hotspot for non-cartel production growth. Now, this will change even though the new OPEC+ member is under no obligation to comply with the OPEC+ production cuts. OPEC’s production, meanwhile, has been declining. The group booked dips for both December and January, with the January rate down by 50,000 bpd from December’s daily average of 26.53 million barrels, according to a Reuters survey. Supply from Iran and Nigeria dropped by 60,000 bpd each, the most among OPEC producers, according to the survey. The oil producer group was scheduled to start relaxing these production cuts starting in April but there have been reports that the rollback of the output caps could be delayed once again, in line with OPEC’s prioritization of actual market conditions rather than an agenda set in stone. With oil prices wobbly amid U.S.-Russia negotiations that could lead to the lifting of U.S. sanctions, OPEC will likely not be in any rush to stick to its plans for boosting production, seeing as these plans are very flexible to serve the purposes of the group.
Europe’s LNG Tango: A Love-Hate Relationship with Reality
The European Union, ever the conflicted protagonist in its own energy saga, is gearing up to throw its weight around in the global LNG market—again. A leaked draft from the European Commission suggests Brussels will “immediately engage” with LNG suppliers to stabilize energy prices, all while still pretending it’s on track to kiss fossil fuels goodbye by 2050. The cognitive dissonance is almost admirable. At issue is Europe’s chronic dependence on imported gas. Having sworn off Russian pipeline supplies (at least officially), the bloc now finds itself tethered to liquefied natural gas imports—primarily from the U.S., which it may soon be paying even more for if Donald Trump follows through on tariff threats. Meanwhile, Russia remains Europe’s second-largest LNG supplier, because, well, energy security is a funny thing when reality checks your moral grandstanding. Now, Brussels wants to emulate Japan’s strategy of investing in overseas LNG infrastructure to lock in long-term contracts, Reuters reported on Tuesday. Sensible, perhaps. But in true EU fashion, there’s a regulatory catch: European gas contracts must vanish by 2049 to meet the net-zero commitment. This means suppliers will be asked to commit to deals that evaporate just when they start getting lucrative. A tough sell. Meanwhile, natural gas prices have jumped to nearly $4/MMBtu, and power prices across Europe remain tethered to gas market volatility. The EU’s latest plan also includes joint LNG purchasing, an attempt at leveraging collective buying power to force lower prices. But as past attempts have shown, pooling desperation doesn’t necessarily translate to bargaining strength. The takeaway? Europe still needs LNG—more than it cares to admit. And the longer it dithers between energy realism and green ambition, the more it will pay.
G7 Weighing Tightening Russian Oil Price Cap
The Group of Seven is considering collectively tightening an oil price cap on Russian petroleum in an effort to cut Moscow’s oil revenues as the war in Ukraine rages on, Bloomberg has revealed. A draft statement seen by Bloomberg shows that these nations could task their finance ministers to collectively redraw the price limit–currently set at $60 a barrel for Russian crude. Last December, the Biden administration tightened sanctions on Russian oil. Middlemen who supply Russian oil have stopped offering cargoes after the latest U.S. sanctions imposed by the Biden administration targeting Russian producers, tankers and insurers, Bharat Petroleum CFO has revealed. The sanctions have targeted Surgutneftgas and Gazprom Neft, two Russian oil firms that handle 25% of Russian oil exports. The two companies shipped an average of 970,000 bbls a day in 2024. Bharat Petroleum and other Indian state refiners buy Russian oil in the spot market, mainly from traders. “We have not received any new offers for the March window (delivery). Traders are asking us to wait. We are waiting to get offers,” Vetsa Ramakrishna Gupta told Reuters on Wednesday. “We are not expecting the similar number of cargoes that we used to get in the months of December and January,” he added. Earlier, India announced that it will abide by the sanctions and turn away sanctioned tankers. Previously, we reported that the sanctions would severely disrupt Russian oil exports to India and China–the biggest buyers of Russian crude–and could also give Trump more leverage in future negotiations as he tries to end the war in Ukraine. Last year, India briefly overtook China as the largest buyer of Russian crude. However, India’s import of Russian oil in November plummeted 55% Y/Y to its lowest point since June 2022. This could be the result of the country trying to diversify its oil supplies to avoid overlying on a single country.
China LNG Tariffs Put Future Contracts in Jeopardy
Ten days ago, China announced retaliatory tariffs on American energy imports and also announced an antitrust investigation into Google, just minutes after a sweeping levy on Chinese products imposed by U.S. President Donald Trump took effect. Beijing said it would implement a 15% tariff on coal and liquefied natural gas (LNG) products as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars. Well, the tariffs came into force on 10 February, marking the beginning of another trade war between the world’s biggest economies under Trump. Commodity analysts at Standard Chartered have delved into the potential effects of the tariffs on the U.S. energy sector. StanChart has pointed out that China first levied a tariff of 10% on US. LNG imports in September 2018 and then increased to 25% in June 2019. StanChart notes that whereas some imports continued at the 10% rate, there were none at the higher rate. Beijing then granted tariff waivers for LNG in February 2020 as part of a trade war de-escalation and after 11 months of zero flows, with the first US cargo arriving in April 2020. According to the analysts, in the following 59 months, there have been cargoes in all but three months. Further, the relationship between U.S. producers and Chinese LNG buyers has deepened with some long-term contracts signed. In contrast, no long-term LNG contracts between the two countries were signed prior to 2021. However, the potential negative effects of the latest tariffs on LNG are likely to be limited. The U.S. currently provides less than 6% of China LNG imports, while China accounts for just 6% of U.S. exports. With Europe’s demand for U.S. LNG likely to remain robust, StanChart has predicted that displaced flows are unlikely to become distressed. StanChart sees the tariffs cutting the flow of spot cargoes to China dramatically, with some flows under longer-term contracts likely to continue, depending on the nature of re-export clauses. The experts have warned that the biggest threat of these tariffs is the economics of future long-term contracts, including contracts amounting to at least 15 million tonnes per annum (mtpa) that have already been signed. U.S. Gas Prices Surge On Strong LNG Demand U.S. natural gas futures climbed to $3.7/MMBtu, the highest in three weeks, driven by lower output, rising LNG exports and colder weather forecasts. Gas flows to the eight major U.S. LNG export plants averaged 15.3 bcfd so far in February, up from 14.6 bcfd in January, close to record levels. Daily LNG feedgas hit 15.9 bcfd on Thursday, surpassing the previous high of 15.8 bcfd on January 18. Meanwhile, extreme cold froze some wells, causing daily gas output to drop by 3.7 bcfd over the past week to a two-week low of 103.0 bcfd. Weather forecasts indicate colder-than-normal temperatures through February 22, boosting heating demand. Additionally, the EIA reported that U.S. utilities withdrew 100 bcf of natural gas from storage in the week ending February 7, bringing total inventories down to 2,297 bcf, more than the expected 92 bcf draw. Meanwhile, European natural gas futures pulled back below €51 per megawatt-hour on Thursday from a two-year high of 58.039 per megawatt-hour (MWh) they hit on 10 February driven by milder weather forecasts that are expected to reduce heating demand.EU inventories stood at 56.95 billion cubic metres (bcm) on 9 February according to Gas Infrastructure Europe (GIE) data, 21.45 bcm lower y/y and 8.09 bcm below the five-year average. The w/w draw to 9 February was 4.9 bcm, 37% higher than the five-year average (3.58 bcm) and almost twice the draw for the same period last year (2.5 bcm). Cessation of Russian gas transit through Ukraine accounted for the bulk of the m/m reduction (1.47 bcm), although a 0.824 bcm m/m fall in flows from Norway also played a significant role. Excluding transit flows, EU imports of Russian pipeline gas totaled just 1.362 bcm in January 2025, 90% lower than in January 2021. Commodity analysts at Standard Chartered have projected that If temperatures for the rest of the northern hemisphere winter were to normalize, inventories would finish March at close to 44 bcm, while a continuation of the recent larger-than-usual draws would result in an end-season inventory level of 39.1 bcm. The latter forecast for the end-season minimum would be 29 bcm less than last year’s number, but ~10 bcm higher than in 2022 in the immediate wake of Russia’s invasion of eastern Ukraine.
Experts question viability of more oil, gas imports from United States
With the US pushing for significantly increasing its oil and gas supplies to India, experts have questioned the cost viability of the proposal. They said the US, currently India’s fifth-largest crude oil supplier, may become a costly import option for Indian refiners due to higher landing costs as against traditional suppliers in Central Asia or Russia, which offer significant discounts. However, they still see possibilities of increasing in imports from the North American country. Gaurav Moda, partner and Leader of the Energy Sector, EY-Pantheon, says that increasing crude imports from the USA is possible, as it was done earlier with aligned interests. According to him, LNG can be sourced more quickly, but sourcing WTI crude requires more effort. “For crude, supply timeline and cost considerations like 6-7 days from Middle-East against 40-45 days from Texas. Alignment of US crude specs with Indian refineries may have to be evaluated. Irrespective, quick volumes growth is possible with aligned interests as we have seen in recent past with respect to supplies from other countries. Increasing gas volumes could be quicker, as Henry Hub prices are discounted against other sources, while discounting WTI crude on realtime basis could require effort,” said Moda. Prashant Vasisht, senior VP and co-Group Head of ICRA, is of the view that Indian refineries will procure oil from the US only if it is cheaper. However, he says it is not improbable given India has procured oil from Brazil and other countries. A joint statement by Prime Minister Narendra Modi and US President Donald Trump emphasized to make the US a leading supplier of crude oil, petroleum products, and liquefied natural gas (LNG) to India. India imports 85% of its crude from all the top producers in the world. The US has always been among the top five suppliers of crude to India, and India buys petroleum worth $20 billion from the US. Following the war between Russia and Ukraine, India raised its crude purchases from Russia, resulting in a decrease in imports from the US. As per data, India’s crude oil imports from the US have seen a major decline year-on-year, both in volume and percentage share. For instance, in 2021, the average monthly import was roughly 450,000 barrels a day, representing 10% of India’s total crude imports.
SAM, A&O Shearman act on IndianOil – ADNOC 1.2 MMTPA LNG deal
Shardul Amarchand Mangaldas & Co (SAM) and A&O Shearman acted on IndianOil Corporation Limited entering into a long-term sale and purchase arrangement for LNG with Abu Dhabi Gas Liquefaction Company Limited. (ADNOC) ADNOC will be supplying 1.2 MMTPA of LNG to IndianOil for a period of 14 years. The deal is valued in the range of $7 billion to $9 billion and was signed on February 12, 2025. SAM advised Indian Oil on the deal. The transaction team consisted of V.R. Neelakantan (Partner), Prashant Sirohi (Partner) and Siddharth Jain (Associate). This deal marks the first long-term LNG import contract between an Indian company and ADNOC. Deliveries are scheduled to commence in 2026, with LNG sourced from ADNOC’s facilities on Das Island, which has a production capacity of up to 6 mmtpa. This agreement is crucial for India as it seeks to raise the share of natural gas in its energy mix to 15% by 2030, compared to the current 6.2%. Additionally, the deal benefits from the UAE-India Comprehensive Economic Partnership Agreement (CEPA), which waives the 2.5% import duty on LNG, making the imports more cost-effective. ADNOC Gas is a key player in the global LNG market, known for its extensive natural gas infrastructure and its plans to expand through the upcoming Ruwais LNG project, which is expected to commence operations by the end of 2028. IndianOil, on the other hand, plays a pivotal role in India’s energy sector, with a strong presence in refining, pipeline transportation, and marketing of petroleum products.
Rs 250 billion relief for Indian Oil, BPCL, HPCL? Oil ministry approaches Finance Ministry
Oil marketing companies could soon get a big monetary relief of up to Rs 250 billion soon. The oil ministry is expecting financial support for OMCs like Indian Oil , Bharat Petroleum Corporation, Hindustan Petroleum Corporation in the second supplementary demand for grants for the financial year 2025. ET NOW has learnt from sources that the oil ministry has reached out to the finance ministry to compensate oil marketing companies once again with additional input. The ministry has sought financial assistance for OMCs to cover the losses incurred on LPG sales. Financial Relief for OMCs ET NOW had on Dec 16, 2024, reported about the oil ministry’s proposal to compensate the oil marketing firms. Now, sources have told ET NOW that the government is likely to provide assistance of Rs 200 to Rs 250 billion to cover companies’ losses. It is worth mentioning here that OMCs are incurring a loss of around Rs 150 on the sale of each domestic LPG cylinder. Moreover, the companies have been facing losses on domestic LPG for the past several months. Notably, IOC has an under-recovery of around Rs 90 billion on LPG sales.
India can lessen reliance on Russian oil if US emerges as key supplier
US President Donald Trump’s recent proposal to sell more oil and gas to India could significantly reduce New Delhi’s purchases of discounted Russian oil, thought to be funding Moscow’s war with Ukraine. Analysts expect Delhi to welcome the move by Washington, which could induce Russia to sell its oil at market rates. India and China are among the top buyers of cheap Russian oil.“Russian oil will remain important [for India] but the wartime surge will decline soon enough. The US will fill that gap,” said Uday Chandra, a political scientist at Georgetown University. Trump has suggested he would meet Russian President Vladimir Putin this week, raising hopes that negotiations could end three years of fighting in Ukraine. India, which imports 85 per cent of its oil needs, has increasingly relied on supplies of discounted Russian oil in recent years. From less than 1 per cent before the Ukraine war, Russia later accounted for 40 per cent of India’s oil imports. But its share is estimated to have dropped to 25-30 per cent since the US imposed fresh sanctions on entities transporting Russian oil late last year. Russia’s share of Indian oil imports could drop to 15-20 per cent in the near term, given Trump’s plan to sell more US oil to India to reduce a trade deficit between the two countries, Chandra said. Trade between India and the US totalled US$118 billion in the 2024 financial year, with the South Asian country recording a surplus of US$32 billion.