Donna Dong
Research Analyst, Flux
Brent Trades Up to $71.80/bbl
Middle East-China tanker freight surges to highest since 2020 amid US-Iran tensions; Russia shifts Urals exports to China as India cuts purc
The May’26 Brent futures contract has traded up this afternoon, from $69.25/bbl at 13:15 GMT to $71.80/bbl at 16:40 GMT (time of writing).
In the news, the cost of hiring a supertanker from the Middle East to China (TD3 freight route) has surpassed $200,000 for the first time since 2020. Prices have nearly quadrupled from the start of the year. Elsewhere, Russia plans to maintain Russian Urals crude oil exports in March by increasing shipments to China, as India has reduced its purchases following a trade agreement with the US. Next month, export options for seaborne Urals cargoes are expected to tighten, as India is anticipated to significantly cut its imports. Meanwhile, suppliers are increasingly turning to China, since Turkey is unable to process additional Russian barrels. Reuters sources have stated that they anticipate discounts for Urals in China to increase by $2–$5/bbl from the current $10-12 delivered-to-port, with some anticipating even deeper reductions in the coming months. In the US, the Trump administration has chosen a plan requiring large oil refineries to compensate for at least half of the biofuel blending volume obligations that were waived in recent years through the Small Refinery Exemption program. EPA officials have recently indicated they plan to reallocate at least 50% of the waived volumes over those three years, though the percentage could increase. A final rule is expected by the end of March. In other news, Venezuela can now pay for gas from Eni with oil, following the recent easing of US sanctions that previously left it with a large debt to the Italian oil major. Chief Executive Claudio Descalzi confirmed that the nation owes Eni ~$3bn. Finally, at the time of writing, the May/Jun and May/Nov spreads are at $0.48/bbl and $3.26/bbl, respectively.
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