Oil prices declined this week, posting their first monthly drop since November, as markets braced for Washington’s new tariffs and Iraq’s decision to resume oil exports from the Kurdistan region. Uncertainty surrounding OPEC’s production resumption plans in April and ongoing talks to end the war in Ukraine also weighed on investor sentiment.
BKR Rig Count | The total active drilling rigs in the United States increased by 1 last week, to 593. Oil rigs dropped by 2 to 486, and gas rigs increased by 3 to 102. Rig count in the Permian Basin increased by 1 to 305 | Feb 28 | BKR NAM Rig Count
US Crude Inventories, excluding those in the Strategic Petroleum Reserve (SPR), decreased by 2.3 MMbbl to 430.2 MMbbl (about 4% below the 5y average for this time of year). On the products side, gasoline increased by 0.1 MMbbl (slightly below the 5y average). Distillate fuels increase by 3.9 MMbbl (8% below the 5y average). Total commercial petroleum inventories decreased by 2.2 MMbbl | Feb 21 | EIA Weekly Report
Oil consumption in China contracted last year, raising the prospect that the world’s largest importer has reached peak demand. Crude usage fell 1.2% in 2024, the National Bureau of Statistics said Friday. It was the only fuel to suffer a decline, as coal and natural gas both rose along with overall energy demand. Still, peaks in commodity demand are difficult to call, and last year’s drop doesn’t necessarily represent an inflection point. Oil usage also fell in 2022, before rebounding in 2023. | Feb 28 | Bloomberg
President Trump said 25% tariffs on Canada and Mexico will go into effect on March 4, and China will likewise be charged an additional 10% tariff on that date, Trump said in a post on Truth Social. The April 2nd reciprocal tariff date will remain in full force and effect, he added | Feb 27 | Bloomberg
President Trump said he plans to revoke Chevron’s oil license to operate in Venezuela, in a move that could cut the country’s overall oil production by 100,000 bpd and may affect other foreign oil producers, potentially boosting domestic energy costs in the US. Chevron, the only US oil major left in Venezuela, has helped tame runaway inflation and boost overall output above 1 million barrels a day | Feb 27 | Bloomberg
The Trump administration imposed a new round of sanctions on oil brokers, ships and people it said were linked to illicit shipments of Iranian crude, framing the move as a return to a “maximum pressure” strategy to squeeze the country’s economy. Twenty-two people and 13 vessels were targeted in the latest sanctions, the State and Treasury Departments said in statements Monday | Feb 25 | Bloomberg
The US and Iraq discussed the resumption of a major pipeline that can transport oil from the Middle Eastern country to global markets, after the link was shut almost two years ago following regional cost disputes. The potential restart of the pipeline, which Baghdad has said is likely to resume with about 185,000 barrels a day of initial flows, has weighed on oil prices since Iraq said that it was ready to bring it back online | Feb 26 | Bloomberg
More than a half dozen of the biggest US shale operators to keep oil production growth to 5% or less, while maintaining the same capital budgets or even cutting them from last year, including ConocoPhillips, Devon Energy Corp. and APA Corp. Exxon Mobil Corp. and Chevron Corp. are targeting about 10% output growth this year, while Permian Resources is forecasting 8% year-over-year growth. Crude output in the Continental US is on pace to grow this year by 165,000 barrels a day, or 1.2%, according to energy consultant Enverus | Feb 28 | Bloomberg
US drops Biden-era methane fee on oil and gas producers | The US Senate voted to nullify the rule, which would have applied to oil and gas facilities reporting more than 25k tonnes of CO2 equivalent per year. The fee, mandated by the IRA, would have started at $900/ton of excess emissions in 2024 and escalated to $1200 in 2025 and $1500 for 2026 and beyond. Biden’s EPA estimated the rule would reduce methane emissions by 1.2 million tonnes, equivalent to removing 34 million tonnes of carbon dioxide or taking nearly 8 million petrol-powered cars off the road for one year | Feb 28 | Upstream
The US economy grew at a 2.3% annualized pace in the fourth quarter, driven by a 4.2% increase in consumer spending. Inflation was more stubborn than initially estimated, with the personal consumption expenditures price index excluding food and energy climbing 2.7%. The economy is expected to expand 2.3% this year, down from 2.8% last year, due to cooler job growth and sticky inflation | Feb 27 | Bloomberg
Shell expects global demand for LNG to rise by around 60% by 2040, largely driven by economic growth in Asia, emissions reductions in heavy industry and transport and AI impact, according to their LNG Outlook 2025. Industry forecasts LNG demand to reach 630-718 million tonnes a year by 2040. Significant growth in LNG supply will come from Qatar and the USA, with the US set to potentially reach 180 million tonnes a year by 2030 and account for a third of global supply | Feb 25 | Shell PR
Pemex’s losses are worsening, swinging to a $9.31 billion loss during the final three months of 2024. It was the third straight period of negative results and topped off a whopping $30 billion in red ink for 2024 | Feb 27 | Bloomberg
Looking ahead
S&P Global Fundamentals Crude Oil Markets Price Long-Term Outlook | World liquids demand will hit 108.45 million b/d in 2030, before steadily declining to 107.2 million b/d by 2035, driven by EVs, BioJet, and greener initiatives. OPEC+ production will fluctuate until 2030 before stabilizing to balance global supply and demand as non-OPEC+ output declines. Crude production will rise to 34.9 million b/d by 2027, then decrease to 33.1 million b/d by 2032. After 2032, production will stabilize to align with shifting demand as non-OPEC+ output continues to decline. Non-OPEC+ production will grow steadily until 2030, then begin to decline as global demand drops. Non-OPEC+ crude production will peak at 39.2 million b/d in 2030 but will gradually decline to 37.6 million b/d in 2035 as demand reduces, putting downward pressure on crude oil prices. S&P has revised down its Short-term Dated Brent prices due to the high volume of spare capacity in the market. S&P expects Dated Brent (Constant $) to fall to $64/b by 2027. However, as the market rebalances, prices are forecasted to recover to $75/b by 2032, supported by stabilizing production. After this recovery, prices may soften again as demand weakens in the longer term. US production is expected to peak at 14.7 million b/d in 2032. After reaching this peak, production will gradually decline by approximately 200,000 b/d each year through 2035, reflecting slower growth and the impact of maturing resources and shifting market conditions. Limited investment in Russia’s oil production will cause volumes to decline 1.7 million b/d over the next decade, falling from 10.2 million b/d in 2025 to 8.5 million b/d by 2035. However, if western sanctions are eased or eliminated, Russian upstream investment could support flat capacity or even an increase. In Iran, sanctions under the Trump 2.0 administration will likely cause production to hold steady at 2.5 million b/d through 2030, with a post-2030 rise to 3.2 million b/d by 2035 as sanctions ease. As with Russia, an easing or elimination of sanctions could lead to higher Iranian production. In Venezuela, crude production is expected to hold steady at 800,000 b/d through 2035, with close monitoring on potential shifts under a Trump 2.0 administration | Feb 28 | S&P
Russia oil balance dynamics in 2024 and outlook to 2030 | The crude oil production decline that began in 2023 accelerated in 2024 and is expected to continue irrespective of OPEC+ policy in the coming years. After contracting by approximately 1% in 2023, aggregate Russian oil production fell by about 3% to around or 10.3 million b/d in 2024. The higher 2024 decline rate partly reflects Russia’s greater OPEC+ program commitments. However, Russia will likely struggle to restore these volumes even if OPEC+ policy allows in the future, due to ongoing sanctions, fiscal headwinds and geological constraints as the share of harder-to-recover reserves in Russian crude oil output rises, all leading to higher production costs. Crude oil and condensate exports fell in 2024 at about the same rate as in 2023 but may return to a slight growth trajectory by 2026. Russia’s 2024 crude oil and condensate exports declined by about 3% to 4.8 million b/d; China remained the primary destination, followed by India and Turkey. A reduction in price discounts for Russian barrels boosted Russian oil export earnings despite somewhat weaker Brent prices in 2024, but industry economics are still weighed down by the higher transactional costs associated with the post-invasion logistics of Russian exports — involving long-haul tanker shipments on an unprecedented scale among other knock-on effects of sanctions. Western sanctions remain a major uncertainty, with a wider range of potential outcomes in 2025 that could impact Russian oil industry activity. The tough new US measures introduced in January 2025 by the outgoing Biden administration spell additional constraints on the Russian oil sector if vigorously enforced. For example, additional “shadow fleet” tankers included in the US sanctions list accounted for an estimated 31% of Russia’s total crude oil exports in 2024. However, President Trump’s current efforts to forge a peace deal between Russia and Ukraine raise the prospect of a significant easing of sanctions in the event that such an agreement is reached. Nonetheless, complete dismantling of Western sanctions regimes is unlikely anytime soon, if only because of the many other preconditions for removal of sanctions, including congressional authorization in the case of various US measures | Feb 25 | S&P
