Macro analysis of the global oil markets to distill the evolving risks and opportunities for energy industry stakeholders and wealth managers.
Case studies, research and analysis tailored to meet government policy as well as business needs. Specializing in market trends, commodity pricing, deregulation.
Connecting the dots between fundamentals, economics, financial markets, regulatory and policy changes, demographics, geopolitics and more.
Crude steadies, awaiting the latest on US' Canada, Mexico tariffs - March 3, 2025
Blitz of tariffs, sanctions leaves crude skittish but rangebound - March 1, 2025
Crude has been pulled down by growing concerns over the US economy triggered by the Donald Trump administration’s import tariffs and threats of more to come, and propped up by Washington tightening oil sanctions against Iran and Venezuela. It has been jumpy, but unable to pick a direction. “Rangebound volatility” sounds like an oxymoron, but that has been crude’s reality.
Though worries over Trump’s trade wars fuelling US inflation, turning the Fed more hawkish, and weakening the job market and consumer spending have been hanging over the financial markets for a few weeks now, the worries were validated in recent days by a clutch of weak US macro-economic data.
After deferring its 25% import tariffs against Canada and Mexico by a month, the US now appears poised to implement them from Tuesday, March 4. Unless they get postponed again, of course. And it has slapped an additional 10% import duties on Chinese goods, on top of the 10% imposed early last month.
Meanwhile, another round of sanctions against Iranian entities and “shadow fleet” tankers involved in hauling the country’s sanctioned crude to China – the second tranche in less than a month – and a surprise revocation of Chevron’s license to operate in Venezuela renewed market worries over supply disruptions.
As the week went by, economic jitters, serving as a proxy for sluggish oil demand, overwhelmed concerns over supply and crude recorded a weekly loss, with Brent futures settling at $73.18 on Friday. But all-in, prices had flitted in a relatively tight range of $72-75 through the week.
To top it all, Friday brought a dramatic, public spat between President Trump and Ukrainian President Volodymyr Zelensky as the two disagreed over the US’ proposed minerals deal and ceasefire with Russia.
Next week could have more surprises in store, as that appears to be par for the course for now. But crude may not stray far from its current range.
Feb 2025: Neutral near-term, mildly bearish March - Feb. 21, 2025
After weighing the factors supporting and weighing on crude, we conclude:
The neutral sentiment for the near-term corresponds to Brent futures remaining in the $75-77 range.
The mildly bearish sentiment for March corresponds to Brent dropping back into the $72-74/bbl band.
US' tough new Russia oil sanctions may have a short shelf life - Jan. 12, 2025
The Biden administration took oil market players by surprise on Friday by announcing the most expansive sanctions yet against Russia’s oil sector.
We suspect it was not only the oil market; the US’ European Union allies across the pond may have also been caught unawares – we couldn’t find a single reaction from any of the region’s leaders! The UK, for what it is worth, joined the US, simultaneously announcing sanctions against Gazpromneft and Surgutneftegas,
It was curious to see Biden fire the bazooka just 10 days before handing over charge to Donald Trump, who is clearly going to have a vastly different approach to resolving the Ukraine war.
What does the upcoming change of guard in the US say for the durability of the latest round of sanctions and crude’s 4% spike on Friday? Our succinct insights in this report.
OIL IN 2025: Softer crude prices but not because of oversupply - Dec. 27, 2024
Benchmark Brent crude prices averaged just under $80/barrel in 2024, about 2.7% lower versus last year.
We expect the average to dip into the $70-75/barrel band in 2025, but not because of a sizeable oversupply in the market, let alone a “glut”.
A sombre economic outlook for 2025, bolstered by China’s uphill battle to jump-start growth and amplified by expectations of a fresh round of trade wars under Trump 2.0, has shaped a bearish narrative around oil demand.
But we would caution against leaning too much into the gloom-and-doom scenario.
Crude is more likely to come under pressure from an evaporating geopolitical risk premium and worries over economic stability than any severe economic downturns or recessions.
Oil demand could remain relatively resilient, helped by softer prices, leading to a largely balanced market, especially with OPEC+ remaining extra cautious and conservative in bringing back the barrels it has locked away.
What challenges our baseline views? We also bring you the contrarian perspective and wildcards!
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
