Oil Extends Losing Streak on Tariff Uncertainty
Crude oil prices extended their decline from Tuesday following remarks by the U.S. Commerce Secretary that some tariffs on Mexico and Canada could be rolled back, boosting uncertainty. The news that OPEC+ had decided to go ahead with its April wind-down of production cuts also continued to weigh on prices, after plunging them lower earlier this week. At the time of writing, Brent crude was trading at $70.87 per barrel, with West Texas Intermediate at $67.75 per barrel, both down from opening. The “OPEC+ decision to start increasing production again is a materially bearish development, loosening markets at a time that U.S. macro data are starting to soften,” Citi analysts said in a note quoted by Reuters. OPEC+ will boost combined production by some 138,000 bpd from April—a small portion of its total cuts that are close to a million barrels daily. Also weighing on prices is sentiment among traders, who suspect the tariff war President Trump started against the largest trade partners of the U.S. could extend in time. “Canada is bunkering down for a fight,” a regional executive at UBS told Bloomberg. “The real risk is this thing gets drawn out,” Wayne Gordon, regional chief investment officer at the bank said. The Trump administration imposed a 25% import levy on all Mexican imports, beginning Tuesday, along with a 25% tariff on all Canadian imports excluding energy, which got a discount of 15% for a 10% tariff rate. Canada retaliated quickly enough. The retaliation began with 25% on $107 billion worth of American goods – starting with tariffs on $20.8 billion worth of goods immediately, and tariffs on the remaining $6.6 billion on American products in 21 days’ time, Canadian Prime Minister Justin Trudeau said Tuesday. “Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau also said. GasBuddy reported later in the day that it expects prices at the pump to rise as a result of the tariff exchange.
China Urges Refiners to Switch From Fuels to Petrochemicals
Chinese refiners should reduce fuel production in favor of more petrochemicals, the country’s central planning agency said in its annual report. “We will advance petrochemical industries toward fine chemical industries by cutting the output of refined petroleum products, increasing the output of chemical products, and enhancing quality,” the National Development and Reform Commission said, as quoted by Bloomberg. China’s demand for fuels has been undermined by the surge in EV sales in recent years and the introduction of LNG-powered trucks, which may have led to a peak in diesel demand, according to Sinopec. The state energy major said that diesel demand may have peaked back in 2019, and gasoline demand could have reached its highest ever in 2023. According to the International Energy Agency, all fuel demand in China may have already peaked. The agency cited 2024 that showed the consumption of gasoline, gasoil, and jet fuel in China had averaged 8.1 million barrels daily. This was 200,000 bpd lower than the average daily consumption of the three fuels in 2021—but it was marginally higher than 2019 demand levels. Weaker oil imports so far this year seem to support the view that oil demand in the world’s largest importer may be peaking. However, it seems that the reason for the import weakness is not so much organic demand as prices, driven higher by the Biden administration’s parting sanction volley at Russia. The Biden sanctions on Russian oil trade and shadow fleet crippled the supply of ESPO crude, which has been a favorite with Chinese refiners. Yet the scores of oil tankers sanctioned by the U.S. slashed the availability of non-sanctioned tankers to ship the crude to China and that led to significantly higher transportation costs that sapped demand for the crude and ultimately contributed to lower crude oil imports.
Reliance Industries says oil ministry raised $2.81 billion demand in gas dispute case
Reliance Industries Limited (RIL) said on Tuesday the country’s Petroleum and Natural Gas Ministry has raised a demand of $2.81 billion from the company, BP Exploration and Niko in a gas drilling dispute case. On February 14, a division bench at Delhi High Court ruled against Reliance and its partners in a dispute regarding extraction of gas in a deepwater field in India’s KG D6 block in the Krishna Godavari basin in the country’s eastern coast. In a regulatory filing, RIL informed, “The Company had won arbitral award issued by an eminent international arbitration panel on July 24, 2018 against the Government of India’s (GOI’s) claim on the KG-D6 Consortium for an amount of approximately US $1.55 billion on account of alleged gas migration from ONGC’s blocks. A single judge of the Hon’ble Delhi High Court, on May 09, 2023, dismissed the GOI’s appeal challenging the arbitral award. GOI had filed an appeal before the Division Bench of the Hon’ble Delhi High Court.” However, it added, following the government’s appeal to a Division Bench, the court reversed the earlier ruling in a judgment delivered on March 3, 2025. Reliance, meanwhile, is planning to challenge the latest ruling in the courts. “The Company is taking steps to challenge the judgment of Division Bench of Hon’ble Delhi High Court. The Company does not expect any liability on this account,” it said in the exchange filing.
Why Analysts Think Oil Prices Will Remain Subdued
Oil prices will likely remain around current levels or even lower this year, analysts and economists in the monthly Reuters poll said last week. Sufficient oil supply and spare capacity within the OPEC+ group will be enough to keep prices in the low $70s per barrel, the experts said. Supply shocks would be balanced out with the 5 million barrels per day (bpd) of spare capacity that OPEC+ currently has, mostly within the Middle Eastern producers in OPEC. Major trade and geopolitical developments since last week are likely to put additional downward pressure on oil prices—the tariffs on Canada and Mexico and the higher tariff on Chinese imports into the U.S., and the possibility of some eased sanctions on Russia. The four dozen analysts participating in the Reuters poll last week saw Brent Crude prices averaging $74.63 per barrel in 2025, slightly higher compared to the forecast of $74.57 in January. For WTI Crude, analysts expect an average 2025 price of $70.66 per barrel, up from $70.40 in January. At the time the survey was carried out, oil prices were more or less trading around these levels. But early this week, oil slumped after the Trump Administration confirmed that tariffs on Canada and Mexico are going ahead as planned on March 4, and the tariff on Chinese goods is lifted to 20% from 10%. Canada and Mexico tariffs are at 25%, with Canadian energy facing a lower, 10%, import tariff. Economic Fallout from Tariffs On the first trading day of March, major Wall Street indexes turned sharply lower after the Trump Administration announced that the tariffs on Canada and Mexico, and higher levies on China are going into effect on Tuesday. The S&P 500 index fell by nearly 2% for the steepest one-day drop so far this year. The broad-based index has erased nearly all the 6% gain since Election Day and is now only 1% higher compared to early November when President Donald Trump was elected. The Dow Jones Industrial Average (DJIA) slumped by 1.5%, and the Nasdaq composite dipped by 2.6%. The rally in the weeks since November has been largely due to hopes that the Trump Administration would boost U.S. businesses and the economy. But tariffs could undermine the growth plans of many businesses, and the economy is likely to slow down, analysts say. A weakening economy, the world’s largest at that, could dampen oil demand in the U.S. and globally—that’s why the market hasn’t been very bullish about oil prices in recent weeks. Some estimates have even started to point to the U.S. economy contracting in the first quarter. The GDPNow model of Atlanta Fed, not an official forecast but a running estimate of real GDP growth based on available economic data, shows a forecast of real annual GDP growth for Q1 at a negative -2.8% on March 3, down from a -1.5% forecast on February 28. The estimate was revised down after releases from the US Census Bureau and the Institute for Supply Management. The GDPNow forecast of first-quarter real personal consumption expenditures growth and real private fixed investment growth fell from 1.3% and 3.5%, respectively, to 0.0% and 0.1%.
GAIL issues tender seeking nine LNG cargoes, say sources
GAIL (India) has issued a tender seeking nine cargoes of liquefied natural gas (LNG) to be delivered over three years, two industry sources said on Tuesday. India’s largest gas distributor is seeking three LNG cargoes for delivery on May 16-22, June 6-12 and July 1-7 this year, with submissions due on March 7. It is also seeking six LNG cargoes in two shipments, with delivery dates of April 24-30, May 16-22 and June 1-7 in 2026 and the same dates in 2027, with submissions due on March 27.
Hedge Fund Claims Clean Energy Sector Is “Dead for Now”
There is currently no money to be made from things like wind and solar, a hedge fund set up specifically to profit from that niche has concluded. “The whole sector — solar, wind, hydrogen, fuel cells — anything clean is dead for now,” Nishant Gupta, the founder of the UK-based fund, Kanou Capital, told Bloomberg, hours after one of the largest solar energy players in the U.S. warned it has doubts about its state as a going concern. “The fundamentals are very poor,” Gupta, who manages some $100 million, told Bloomberg, adding “I’m not talking about long term. I’m talking about where I see weakness right now.” The hedge fund executive added, however, that the long-term outlook for the transition remains bullish, with investments in transition technology expected to increase substantially by the end of the decade. “Energy transition–related investments are expected to increase from around $1.8 trillion per year to $5–to-$6 trillion by the end of the decade,” Gupta told Bloomberg. “With roughly a third of that spending directed toward the supply chain, we’re highly focused on identifying supply-chain bottlenecks as core investment opportunities.” The energy transition, hailed as both inevitable and profitable, has run into trouble over the past three years for reasons ranging from the energy crunch that began in Europe in the autumn of 2021 to higher interest rates following the fallout of the pandemic lockdowns, and supply chain snags resulting from ambitious generation capacity targets adopted by various pro-transition governments. Wind and solar have recently become a lot less profitable also because of declining subsidies as governments find that they cannot keep supporting their selected champion industries indefinitely. The return of Donald Trump to the White House has also contributed to the increasingly negative outlook for transition industries specifically in the United States.
Mexico’s Energy Sector Poised for Private Investment Revival
After six years of energy nationalisation under former President Andrés Manuel López Obrador (AMLO), the new President Claudia Sheinbaum administration is expected to once again welcome more private companies into Mexico’s energy sector. While Sheinbaum plans to maintain some of AMLO’s nationalisation policies, she is expected to allow greater participation from foreign companies in both fossil fuels and renewables, to diversify the country’s energy mix and boost energy security. President Sheinbaum came into power in Mexico in October as the leader of the Morena Party, which was voted in for a second term. In November, the government launched a new National Electricity Strategy, part of the National Energy Plan 2025-2030, which established rules to allow private companies to add up to an additional 9.6 GW from renewable sources by 2030. The new framework permits 46 percent of electricity generation to come from private investments. At the end of January, Sheinbaum sent a draft energy reform to Congress, which aims to accelerate the energy transition and improve access to energy, partially by allowing greater private sector investment in the sector. The Senate approved the reform on the 26th of February with 85 votes in favour, 39 against, and one abstention. The law allows for new partnerships between private companies and Mexico’s state-owned utility Federal Electricity Commission (CFE) and national oil company Pemex, but only when the state holds a majority stake. The legislation states that at least 54% of all electricity supplied to the national grid must be provided by the CFE. The state-owned firm currently generates 57% of Mexico’s electricity. It is uncertain whether electricity produced by privately owned plants and sold to CFE will count towards CFE’s share or that of the private sector. In terms of oil and gas, under the law, Pemex will no longer need to undergo a bidding process overseen by an independent regulator to migrate existing agreements to mixed participation contracts. It is worth noting that Pemex remains one of the most indebted oil companies in the world, with a debt of around $5.1 billion. The state-owned oil company has also had various safety failures in recent years. Pemex’s poor financial situation and safety concerns have led to a distrust of the company at the international level, which could make it difficult to foster public-private relationships. Through the new legislation, Sheinbaum aims to ensure Mexico’s energy sovereignty and move away from former President Peña Nieto’s 2013 privatisation reform. However, she appears to be far more open to private participation in the energy sector than her predecessor AMLO, who sought to close Mexico’s energy sector off almost entirely from foreign investment. The legislation is expected to provide clear rules for private companies seeking to operate in the market. Fluvio Ruiz Alarcón, a former Pemex board member stated, “The overall design is positive.” Ruiz added, “It is still early days, but they are on the right track. They will give more coherence to the sector by aligning legislation with institutional design and with energy policy. It gives more certainty and clarity to investors, which wasn’t there before.” While Sheinbaum has generally continued on the same track as AMLO in terms of energy reform, the president has been more favourable about renewable energy. AMLO focused primarily on the expansion of Mexico’s oil and gas industry to ensure the country’s energy security, greatly overlooking the vast renewable energy potential. By contrast, Sheinbaum said in January that the government aimed to add 27 GW of power generation capacity between 2025 to 2030, with a large proportion coming from renewable energy sources. Sheinbaum vowed to expand renewable energy to 45 percent of total power generation by 2030, compared to around 24 percent in 2022. While the new reform shows promise for greater private sector participation, some government decisions in recent months have left private investors uncertain about their role in the sector. In October, Sheinbaum signed a constitutional reform to alter the legal status of the CFE and Pemex, thereby making them “public companies” rather than “productive state companies”. This means that third parties will not be permitted to supply power transmission and distribution services. Then, in November, Mexico’s Senate approved a constitutional reform dissolving the Energy Regulatory Commission (CRE) and National Hydrocarbons Commission (CNH), combining them within the government Energy Ministry (Sener). This will lead to seven autonomous agencies being dissolved in 2025. Private companies are concerned about what that means for them when partnering on energy projects, as they must work with government-controlled agencies rather than autonomous industry regulators going forward. Mexico’s President Sheinbaum has begun to transform the country’s energy sector since coming into office in October, with new reforms opening the doors to renewable energy production and greater privatisation. While the role of foreign companies in Mexico is still expected to be limited, as state actors continue to dominate the country’s energy sector, the new law paves the way for more public-private partnerships and supports greater energy diversification.
Reliance Industries says petroleum ministry raised $2.81 billion demand in gas migration dispute case
The Ministry of Petroleum and Natural Gas has issued a demand for $2.81 billion to Reliance Industries Limited (RIL) and its consortium partners – BP Exploration (Alpha) Limited and NIKO (NECO) Limited – over a long-standing dispute regarding gas migration from ONGC’s blocks to the KG-D6 block, RIL said on Tuesday. The claim stems from a case dating back to 2018, when the Government of India (GOI) had raised allegations against the KG-D6 Consortium, which includes RIL, for allegedly causing gas to migrate from ONGC’s neighboring blocks. The Ministry had initially sought compensation of around $1.55 billion in relation to the supposed migration. This legal dispute was further complicated by a series of judicial proceedings, with the case reaching the Delhi High Court. In May 2023, a single judge bench of the Delhi High Court had dismissed the GOI’s appeal challenging an arbitral award in favor of RIL. However, following the government’s appeal to a Division Bench, the court reversed the earlier ruling in a judgment delivered on March 3, 2025. As a result of this reversal, the Ministry of Petroleum and Natural Gas has now raised a demand for $2.81 billion, citing the updated legal developments and the revised assessment of the gas migration issue.
U.S. Sanctions, Not Demand, Behind Weak Start for Asian Oil Imports
Weaker-than-expected oil flows to Asia have led to some questioning the validity of oil demand forecasts for the year. Imports have indeed been 780,000 bpd lower in January and February than a year ago—yet it has already been an eventful year. Anything might happen yet—including even more bearish things for oil. The 780,000 bpd figure comes from LSEG Oil Research, as reported by Reuters’ Clyde Russell. The decline put the average daily intake of oil in Asia at 26.17 million barrels. Unsurprisingly, it was China that drove the decline, with its crude imports falling by a sizable 840,000 barrels daily over the first two months of 2025. The total daily average stood at 10.42 million barrels, down from 11.26 million barrels over the first two months of 2024. The trend chimes in with reports about Chinese refiners slashing their run rates due to the end of cheap Russian crude, as reported last month. The cause of the price rise: the Biden administration’s last sanction package against Russia’s oil industry. The Biden Administration’s farewell sanctions on Russian oil trade and shadow fleet crippled the supply of ESPO crude, which is shipped from the Far Eastern Russian port of Kozmino. ESPO has been a favorite with Chinese refiners, but the scores of oil tankers sanctioned by the U.S. slashed the availability of non-sanctioned tankers to ship the crude to China. With the cost of procuring ESPO going up, run rates at independent refineries have gone down. However, this might change because Russia has reportedly started to reshuffle tankers to prioritize shipments to China. Aframax tankers that serviced crude exports from Russia’s western ports are now being redirected to the Russian Far East-China route to service the exports of ESPO crude. The above is according to Bloomberg and suggests that it is not demand for oil that is the problem in Asia but rather complications around securing affordable supply. Indeed, an earlier report by Reuters suggested that Chinese oil imports from Russia—and from Iran—were set for a rebound as the tanker market adjusted to the new challenges. The adjustment involved as many as 11 tankers that haven’t been sanctioned by the U.S. that have recently joined the oil delivery route from Russia to China, including vessels that have previously carried Russian oil to India, according to LSEG data cited by Reuters. That followed a surge in freight rates resulting from the last Biden sanctions against Russia. This, too, suggests that demand for crude oil in Asia is not really an issue—access to supply is the issue. Indeed, while analysts ponder whether China’s oil demand growth has already peaked, one of the world’s largest energy traders recently predicted that global oil demand will remain at current levels until at least 2040. According to Vitol, long-term oil demand will remain stable at around 105 million barrels daily, even as the drivers behind this growth change. The trading major expects gasoline demand to decline but demand from the petrochemicals industry to rise, offsetting the decline. Over the shorter term, China will continue to be among the chief drivers of oil demand growth despite the weak start of the year, seeing as the causes of that weak start have nothing to do with organic oil demand. Its contribution to global oil demand growth, however, is going to be smaller, as the pace of demand growth moderates. In the years to 2020, China accounted for some 60% of global oil demand growth, according to the International Energy Agency. This decade, this contribution is seen by the IEA declining to 19%. Yet others in Asia are going to replace China with fast demand growth. India is expected to account for 25% of global oil demand growth this year, the U.S. Energy Information Agency said in December, estimating the rate of oil demand growth at 330,000 barrels per day. Estimates also say that India’s gas consumption could double by 2040 and triple by 2050. So, with India, forecasters see both a strong 2025 and a strong long-term trend in oil demand growth. All this suggests that the weak start to the year in Asian imports of crude oil may well be a glitch, driven by the former U.S. administration’s foreign policy rather than any fundamental factor. The new administration, meanwhile, is making an effort to drive demand for oil higher—including by ending the war in Ukraine and clearing the way for freer Russian oil exports once U.S. sanctions are lifted. Should this scenario play out, it is quite likely that bearish oil demand forecasts will change significantly, as they tend to do when fundamentals point to stronger, not weaker demand ahead. After all, even the IEA has had to repeatedly adjust its forecast numbers because demand kept surprising it to the upside.
Petroleum regulator firms up new guidelines for transporting petroleum products by road
India’s Petroleum and Natural Gas Regulatory Board has issued fresh guidelines on transporting petroleum products by road in the wake of recent tragic accidents involving trucks carrying liquified petroleum gas, or LPG. The regulator has prohibited transporting petroleum products by road at night and mandated quarterly safety checks of vehicles to ensure that all safety fittings are installed, maintained and tested, as per its regulations. PNGRB suggested avoiding roads to transport bulk petroleum products over long distances and using pipelines or railway rakes instead. It added that spare pipeline capacity of oil marketing companies be utilized under product sharing or as common carriers to transport petroleum products. On 10 December, the regulator proposed developing nine LPG pipelines with a cumulative length of 3,470 km to connect 50 bottling plants with ports and refineries. “In view of the recent road incident involving the transportation of LPG in tank truck resulting in several casualties and injuries, PNGRB has reviewed the relevant existing statutory rules/regulations, contractual obligations between the entity and transporter, existing practices, etc.,” the regulator said in a recent notification. “While deciding the mode of travel, commerciality should not be the only consideration. Public safety is also an important consideration, particularly when the travel is over long distance and through congested areas,” PNGRB added. The board has asked oil marketing companies to develop comprehensive journey management plans covering aspects such as authorized stops along a particular route, sensitising drivers and crews on black spots and accident-prone areas, emergency actions to be taken in case of accidents, weather forecast for the route.