OPEC+ Extends Blackouts: Impact on VLCC Prices and Demand

OPEC+ is maintaining its production cuts until September, causing fluctuations in crude prices and increased demand for VLCC carriers, according to experts.
Prolongation des coupures OPEC+

Partagez:

OPEC (Organization of the Petroleum Exporting Countries) and its allies (OPEC+) have decided to extend their production cuts by 2.2 million barrels per day (b/d) until September, before gradually reducing them from October onwards. This decision comes as the price of crude oil plummeted from $80.18 a barrel at the end of May to $76.05 at the beginning of June, its lowest level since January.

Price Fluctuations and Market Reactions

Despite the reduction in global supply, crude oil prices have fallen, which could paradoxically stimulate demand for crude carriers, particularly VLCCs (Very Large Crude Carriers). Analysts at BRS Shipbrokers forecast an increase in demand for these tankers in the fourth quarter, particularly in Asia. However, this increase could be marginal. A more substantial increase in OPEC+ production would be needed to really boost this market segment in 2025, according to the same analysts.

Impact of OPEC+ Decisions on the Long Term

The gradual increase inOPEC+ production by almost 2.5 million b/d between October 2024 and September 2025 could see oil prices fall to as low as $60 a barrel next year. Jim Burkhard of Commodity Insights believes that although this fall is not the base scenario, it remains possible. Brent crude futures for August are valued at $77.58 a barrel, falling to $76.78 in November, according to Platts.

Non-OPEC+ sources of growth

Production growth in non-OPEC producers such as the USA, Canada and Guyana could offset the reduction in OPEC+ supply, increasing long-term exports to Asia and boosting freight rates. Since the start of the second quarter of 2024, requests for crude loadings on VLCCs in the Atlantic Basin have exceeded 70 per month, a sign of the growing contribution of non-OPEC producers to global supply.

Growing demand in Asia and the role of China

In April and May, around half of VLCC shipments were destined for China, indicating strong demand from Chinese refiners after the spring maintenance season. The 120-day round trip from the Atlantic Basin to China generates substantial demand for VLCCs.

Influence of refining activities in West Africa

Increased refining activity in West Africa, notably at the Dangote refinery in Nigeria, is creating new trade routes. Dangote has secured 300,000 b/d of crude from NNPC (Nigerian National Petroleum Corporation) and plans to supplement this with other light grades, including imports from the USA. Since the beginning of the year, at least four VLCCs and one Suezmax have been chartered to import American crude oil to Dangote. In May, rates on VLCC routes from the US Gulf Coast reached a three-month peak. The tariff for carrying a 270,000-ton cargo of crude on the USGC-China route increased from $8.9 million to $9.8 million in May, according to Platts. Platts valued this rate at $8.7 million in early June, against a five-year average of $7.5 million.
This dynamic shows that OPEC+ production adjustments and the response of other producers have a complex influence on global energy and shipping markets.

Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.
Shell group publicly clarifies it is neither considering discussions nor approaches for a potential takeover of its British rival BP, putting an end to recent media speculation about a possible merger between the two oil giants.
The anticipated increase in the tax deduction rate may encourage independent refineries in Shandong to restart fuel oil imports, compensating for limited crude oil import quotas.
Petro-Victory Energy Corp. starts drilling of the AND-5 well in the Potiguar Basin, Brazil, as the first phase of an operation financed through its strategic partnership with Azevedo & Travassos Energia.
The Texan Port of Corpus Christi has completed major widening and deepening work designed to accommodate more supertankers, thus strengthening its strategic position in the US market for crude oil and liquefied natural gas exports.
BP Prudhoe Bay Royalty Trust is offering its interest in Prudhoe Bay, North America’s largest oil field, as part of its planned dissolution, assisted by RedOaks Energy Advisors for this strategic asset transaction.
CNOOC Limited’s Hong Kong subsidiary and KazMunayGas have concluded a nine-year exploration and production contract covering nine hundred and fifty-eight square kilometres in Kazakhstan, sharing investment and operations equally.
Donald Trump announced that the United States will no longer oppose Chinese purchases of Iranian oil, immediately triggering a drop in global crude oil prices and profoundly reshaping international energy trade partnerships.
Research firm S&P Global Commodity Insights lifts its outlook for the fourth straight year, betting on three point five mn barrels per day from 2025 despite lower prices.
Enbridge plans to expand its infrastructure to increase oil transportation from the American Midwest to the Gulf Coast, anticipating rising exports and addressing current market logistical constraints.
US commercial crude inventories significantly decline by 3.1 million barrels, widely surpassing initial forecasts and immediately pushing international oil prices higher.
The UK could have hydrocarbon reserves twice as large as current official estimates, according to Offshore Energies UK, highlighting the impact of fiscal policies on forecasts and the economic future of the North Sea.
Following US strikes in Iran, international energy companies partially evacuate their teams from Iraq as a precaution, while Lukoil maintains its entire personnel on southern oilfields.
Chinese independent refineries remain cautious amid rising Iranian crude prices driven by escalating Iran-Israel tensions, potentially threatening access to the strategic Strait of Hormuz.
Gazprom, affected by a historic $6.9bn loss in 2023, is offering Pakistani state-owned firm OGDCL its petroleum assets in Nigeria to strengthen its presence in Asia’s energy market, according to Pakistani sources.
Donald Trump urges control of oil prices following U.S. military action against Iranian nuclear facilities, amid escalating tensions around the strategic Strait of Hormuz, threatening to significantly impact global markets.
PermRock Royalty Trust announces a monthly distribution of $539,693 to unit holders, impacted by reduced oil volumes and prices in April, partly offset by increased natural gas sales.