Oil prices continued their decline this week due to uncertainty around US tariffs policy as well OPEC+ decision to commence with their unwinding plans. Late week reports regarding US tightening sanctions on Iran and Russia provided little support late in the week and lifted Brent price to the $70 price level.
BKR Rig Count | The total active drilling rigs in the United States decreased by 1 last week to 592. Oil rigs remained flat at 486, and gas rigs decreased by 1 to 101. Rig count in the Permian Basin decreased by 1 at 304 | Mar 7 | BKR NAM Rig Count
US Crude Inventories, excluding those in the Strategic Petroleum Reserve (SPR), increased by 3.6 MMbbl to 433.8 MMbbl (about 4% below the 5y average for this time of year). On the products side, gasoline decreased by 1.4 MMbbl (1% above the 5y average). Distillate fuels decreased by 1.3 MMbbl (6% below the 5y average). Total commercial petroleum inventories decreased by 4.6 MMbbl | Feb 28 | EIA Weekly Report
OPEC+ has announced it is proceeding with a planned oil output increase in April of 138,000 b/d, a move that comes after US President Donald Trump renewed pressure on OPEC and Saudi Arabia to reduce prices. In January, oil prices rose to multi-month highs above $82/bbl after Joe Biden imposed new sanctions on Russia. Prices have since fallen following hopes that Trump would help secure a peace deal in the Russia-Ukraine war and boost Russian oil flows. However, Trump's plans to cut Iran's oil exports to zero and the recent cancellation of a Chevron licence to operate in Venezuela have prevented prices from falling further | Mar 3 | OPEC PR, GlobalData
China plans to cut energy use by unit of GDP by 3% in 2025 to grow its gross domestic product. That target is slightly higher than the goal of -2.5% it set in 2024, but below the actual result of -3.8% for the year. The country is targeting overall GDP growth of around 5% this year. “Despite the record expansion of renewables, an inconvenient truth is that China’s economy hasn’t become much more energy efficient in recent years,” said Zhe Yao, global policy advisor at Greenpeace East Asia | Mar 4 | Bloomberg
Kazakhstan is set to augment its oil supplies through the CPC pipeline by 12% in March compared with the previous month, indicating a boost in the country's oil production. The anticipated increase in exports equates to approximately 1.71 million mbbl/d of crude oil and gas condensate and is primarily attributed to the Tengiz field operated by Chevron. The field's production climbed to 904,000 bpd in February from 640,000 bpd in January, following maintenance completion and an expansion programme. This rise comes as Kazakhstan frequently exceeds the production quotas set by OPEC+ | Mar 6 | GlobalData
China wants its refiners to produce less fuel and more petrochemical products as its electric-vehicle boom alters the country’s consumption of diesel and gasoline. China’s diesel demand likely peaked in 2019, with gasoline consumption cresting in 2023, Ma Yongsheng, chairman of Sinopec. Still, the nation’s overall oil consumption hasn’t peaked yet, he said, and that’s down to rising demand for chemicals products. Beijing has a mandate to cap total refining capacity under 1 billion tons a year by this year, from current levels of about 960 million tons | Mar 4 | Bloomberg
US Gulf Coast refineries had placed 17% less orders in March for crude oil from Mexico, compared with February, even ahead of President Donald Trump’s tariffs put in place this week. Analysts have warned that tariffs on Mexican crude imports are likely to raise gasoline prices around the US and cause supply-chain issues for the refiners that make the fuel. Some 40% of the crude oil processed at US refineries is imported, with Mexico coming in as the No. 2 foreign supplier, trailing Canada. Overall, Pemex plans to export 749,000 b/d in March, down 9.7% from last month. Volumes would have been even lower, were not for cargoes that were delayed in February. Without the cargoes that had been rolled over, Mexican exports would have plunged to around half a million barrels a day | Mar 5 | Bloomberg
Europe rejects talk of reviving Nord Stream 2 | The European Union has said that the Nord Stream 2 subsea gas pipeline linking Russia and Germany “is not a project of common interest” following recent media reports that US investors are seeking to revive the project | Mar 4 | Upstream
A diplomatic spat is brewing after Venezuelan naval vessels entered ExxonMobil’s Stabroek block offshore Guyana, reportedly threatening its floating production, storage and offloading vessels operating there including the Prosperity FPSO amid an escalating territorial dispute between the two nations. The US State Dept shared ““Further provocation will result in consequences for the Maduro regime. The US reaffirms its support for Guyana’s territorial integrity” | Mar 2 | Upstream
Indonesia's Energy Minister Bahlil Lahadalia has stated that the government has plans to build an oil refinery with a capacity of 500,000 b/d of both domestic and imported crude, requiring a $12.5 billion investment, to reduce reliance on imported refined products | Mar 5 | S&P
ADNOC has started trading Dubai crude oil through the S&P Global Platts pricing process, a rare action for a Middle Eastern national oil company. These trades impact the Dubai/Oman average, a key benchmark for Middle Eastern crude pricing to Asia and influence Saudi Aramco's pricing decisions. The move comes amidst market fluctuations and U.S. sanctions affecting Russian crude trade, impacting regional crude premiums | Mar 6 | OilPrice
Looking ahead
Tariff talk delivers rollercoaster ride for crude prices | Less than a week into his new presidency, Donald Trump made clear his views on crude oil prices: “Opec ought to get on the ball, and they ought to drop the price of oil,” the US President said. Whether it was in response to Trump’s comments or not, Opec+ announced it will push ahead with a planned oil output increase in April, the first such increase since 2022. Yet despite his calls on Opec to take measures on crude prices, it would seem that Trump himself has done a pretty good job himself in lowering oil prices. This week’s slump in benchmark futures has been the victim of something of a perfect bearish pincer movement: increased output from Opec+ taking care of the supply side of the equation, and Trump’s tariff ‘strategy’ weighing on the demand side. While the timing of the increase in Opec+ supply was something of a surprise, return of paused production wasn’t entirely unexpected. And while it means more barrels available, a bearish input on prices, markets are still braced for supply to be potentially removed amid anticipation that Trump will target Venezuelan and Iranian crude in the coming months. A far more uncertain input on oil prices is the impact of tariffs. The on again-off again pattern of announcements from the White House, as well as the uncertainty of the impact they will have on global trade and associated demand for energy, has preoccupied markets. As analysts at ING pointed out this week, the current price weakness poses a problem for US producers. While front month WTI futures have traded close to $65 per barrel this week, contracts for delivery further into the future are even lower. The contract for June 2026 is currently around $63 per barrel, about 50 cents above the December 2026 contract. Prices at those levels reduce incentives for producers to increase drilling. Meanwhile, the Crude Oil ETF Volatility Index (OVX) – which measures short-term anticipated fluctuations in prices — is itself “going through one of the most volatile periods in its history”, David Goldman, head of trading at global oil broker Novio said. With uncertainty continuing to shroud future pronouncements from the White House, oil markets are likely to continue their rollercoaster ride in the weeks to come | Mar 7 | Upstream
Macro oils short-term outlook: March 2025 | Considering announced US tariffs on Canada, Mexico and China, as well as OPEC+ planned April start to ease some production restraint, Woodmac forecasts 2025 global demand growth of 1.1 mb/d. Non-OPEC production growth dominates the near-term forecast, which rises by 1.4 mb/d, and OPEC crude oil supply forecast to increase 0.8 mb/d. That creates small implied stock builds in each quarter this year except for Q3 2025 when a stock draw of 0.7 mb/d is expected. Brent is forecast to average $73.00/bbl for 2025. A key risk for the market is if this initial round of tariffs becomes the first step on a path to a global trade war, forming a downside risk to economic growth and demand (not factored into the base case). Impact on GDP could lead to decline from 2.8% in 2025 and 2.7% in 2026, to 2.5% and 2.0% respectively, as well as a global oil demand growth closer to 0.7 mb/d in 2025 (down by 0.4 million b/d from the base case), with a subsequent drop in Brent price of $3-$5/bbl for 2025. The exact outcome would depend on OPEC+ decisions. The group could postpone the easing of production restraint due to start in April, which could strengthen prices in Q2 2025 above the forecast of $72.00/bbl toward $74.00/bbl for the quarter depending on the status of additional tariffs. The fundamentals for 2026 are weaker than this year with an oversupply for the year of 0.5 mb/d. The quarterly trend is for a 2 mb/d implied stock build in the first quarter, putting pressure on prices, with a quarterly average forecast of $68.00/bbl for Brent. The first quarter is followed by a Q2 2026 build, at a moderate 0.5 mb/d. Global stock draw of 0.9 mb/d is expected in Q3 2026 and a small build in Q4 2026 of just 0.2 mb/d. On balance, the trend is for prices in 2026 to weaken early in the year under the pressure of a large oversupply. OPEC+ is assumed to agree to end production restraint early in 2026 and to cut production during Q1 2026. To provide a measure, for OPEC crude oil production, as opposed to OPEC+, averages of 27.3 mb/d are expected in Q1 2026, down 0.5 mb/d in Q4 2025. The annual average for OPEC crude oil production is 27.4 million b/d, up just 0.1 mb/d from the average in 2025 of 27.3 mb/d. Brent is forecast to average $71.40/bbl with moderate recovery after the weak Q1 2026 | Mar 5 | Woodmac
