Donna Dong
Research Analyst, Flux
Brent Strengthens to $72.04/bbl
Brent firms as Ukraine hits Druzhba link; Aramco sells Jafurah crude, Chevron eyes Iraq field, US diesel flows shift.
The Apr’26 Brent futures contract has strengthened this afternoon, from $71.75/bbl at 12:15 GMT to $72.04/bbl at 16:30 GMT (time of writing).
In the news, Ukrainian drones have struck a Russian pumping station that supplies the Druzhba oil pipeline, which provides Moscow's crude oil to Eastern Europe. The overnight strike caused a fire at the Kaleykino station, roughly 750 miles from the Russia-Ukraine border. There have been no further details of broader impact(s) on the pipeline. Elsewhere, Saudi Aramco has sold multiple cargoes of ultra-light crude oil from its Jafurah gas plant to US majors and an Indian refiner, as it gears up to export its first shipment later this month. Chevron has purchased two Jafurah condensate cargoes for loading later this month and in March, while ExxonMobil and Indian Oil Corp have purchased cargoes scheduled for next month. According to Reuters sources, the cargoes were sold at premiums of $2-3/bbl to Dubai quotes on a free-on-board basis. In related news, Chevron has begun exclusive negotiations with Iraq regarding the West Qurna 2 oilfield, advancing toward acquiring the asset from Russia’s Lukoil. The discussions, which Chevron has stated will involve sharing confidential data, may increase the US oil company's presence in Iraq following the country's decision to nationalise the West Qurna 2 field. The office of Iraqi Prime Minister Mohammed Shia al-Sudani confirmed that a deal between Chevron and the Basra Oil Company has been signed. The agreement involves BOC, Lukoil, and Chevron, allowing for the temporary transfer of the West Qurna 2 contract to BOC. BOC will then assign the contract to Chevron once the terms of the new agreement are finalised. In other news, US diesel exports to Europe reached an all-time high in January (410kb/d as per Vortexa) amid Europe's enhanced ban on Russian-derived fuel imports. Simultaneously, discounted Russian diesel replaced US fuel in Brazil. Finally, at the time of writing, the front-month (Apr/May) and 6-month (Apr/Oct) Brent futures spreads are at $0.43/bbl and $3.41/bbl, respectively.
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