The benchmark February-26 Brent contract has traded in a narrow USD 62.2–63.8 range over the last week, and both traded and realized volatility have fallen. Considering the many geopolitical developments on one side and the almost daily news pointing to an oversupplied market, this may be a bit of a surprise. It seems that geopolitics/sanctions are mitigating weaker fundamentals, keeping oil in a narrow range.
Fujairah
The Fujairah market has plenty of fuel stocks with total oil product stocks in Fujairah reported at 20.849 million barrels as they held above the 20-million-barrel level for the third week running.
Overall, there was a net build of 197,000 barrels or an overall rise of 1% week-on-week. The weekly stocks movement in Fujairah saw a rise in middle distillates and heavy residues while light distillates posted a draw.
Local suppliers though have seen barge lead times push out to 7-10 days for VLSFO and HSFO, so ensure inquries are sent timely to avoid prompt premiums.
New York
Demand from liners for .5 and HSFO remains steady. Avails for both products waning into year end. Barge for LSMGO have been reduced recently in NYH, due to a change of equipment to different charterers.
Panama
Light inquiries.
Gibraltar
Weather is expected to be not so good in the coming days.
Malta
Weather is not expected to be good in general in the MED.
Durban, Port Louis and and Walvis Bay will report later.
For port availability and demand, download the full report here.
The key event last week was Tuesday’s meeting in Moscow between the diplomatic inexperienced Wittkoff and Kushner and a Russian delegation led by Putin. Very symptomatic: Putin led the US delegation to wait for 3 hours. Ahead of the meeting, Putin sharply escalated his rhetoric, threatening both war with Europe and attacks on ships belonging to Ukraine’s allies as retaliation for recent Ukrainian strikes on Russian tankers in the Black Sea.
In fact, very few details have been released, but we know that no agreement has been reached between Russia and the United States. Russian officials stated that the talks were “very useful” and “constructive and informative”. Trump said there was no “easy solution” to the situation. Foreign Secretary Marco Rubio said that “some progress” had been made.
Overall, nothing suggests that a peace agreement is imminent. The war will continue for now. Fundamentally, Putin appears determined to continue the war, and from the Russian side, the meeting was likely more about optics than substance. This was probably also what the market had already priced in, which explains why we did not see any volatility in the aftermath.
In the coming week, the market will await further news on the negotiations. There is a growing concern in Europe and in Ukraine that Trump will once again throw Ukraine “under the bus” like the appalling White House meeting between Zelensky and Trump in February.
Yesterday, Trump complained that Zelensky hadn’t read the latest agreement between the Ukrainian negotiators and US representatives.
That said, there are no indications that the White House will materially ease sanctions on Russia, though that may change if the talks yield no progress and the White House decides to step up the pressure on Ukraine. The market will also continue to focus on the tense situation between the US and Venezuela.
Supporting the oil price on Friday was a Reuters report that the G7 is considering a ban on maritime services for Russia’s shadow fleet. If implemented, it would be the closest the Western world has come to a full ban on buying, transporting, or servicing the Russian oil sector and its exports.
There is, however, doubt as to whether the United States will actually support such a proposal. The US has recently shown itself to be rather Russia-friendly. There are also reports suggesting that the G7 price cap could be scrapped, which, in any case, would become redundant if the new measures are adopted.
Hence, geopolitics and sanctions so far point to higher oil prices. But on the other hand, fundamentals in the oil market continue to weaken, mitigating any impact from geopolitics. We already see record-high volumes of oil on the water, and last week Saudi Arabia cut the premium, or OSP (Official Selling Prices), at which its crude is sold to Asia relative to the Oman or Dubai benchmark, to 60 cents for January 2026 from 100 cents for December. This is the lowest level since January 2021, when the market was under pressure due to the pandemic.
The lower OSP underscores that Saudi Arabia is finding it difficult to place its increased production amid sanctions on Russian crude. The oversupply in the market will be in focus this week as the IEA, EIA, and OPEC publish their monthly oil market reports. Notably, the IEA and EIA reports are expected to paint a bearish picture.
The European distillates market, and especially the benchmark ICE gasoil crack – the difference between a barrel of gasoil and a barrel of Brent – is susceptible to geopolitical shifts. After two weeks of significant declines, we saw signs of stabilisation last week around USD 25 per barrel, and we once again consider the crack low. Over the weekend, there were renewed reports of Ukrainian attacks on Russian oil infrastructure, including a refinery.
The VLSFO market, on the other hand, continues to stay weak, and the VLSFO crack in Rotterdam continues to trade negative, that is, VLSFO trades with a discount to Brent.
This week, the market will focus on oil market reports from the IEA, EIA, and OPEC. The first two, in particular, may paint a picture of an oversupplied oil market. On the other hand, the expected Federal Reserve rate cut may support equity markets and further weaken the dollar, both factors that could support oil prices. We will pay close attention to the central bank’s communication. The market will also continue to focus on the weekly inventory data. US crude oil inventories remain at the low end of the range for this time of year, underscoring the continued strong demand for US crude oil.
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