Oil Daily | Freight Rates Surge for Russian Oil to India Amid New Sanctions; India Tops Oil Demand Growth

【Global Oil Supply and Demand】

Nigeria, Algeria, and Niger signed deals for the Trans-Saharan Gas Pipeline construction to supply natural gas to Europe. The 4,400 km pipeline aims to replace Russian gas amid Europe's energy crisis. Yet, Europe's hydrocarbon phase-out goals pose challenges to African gas infrastructure investments.

Global electricity demand is predicted to grow at 4% annually through 2027, driven by industrial production, air conditioning, and transport electrification, says the IEA. Developing nations, particularly China, will contribute 85% of this growth, although challenges remain for governments to maintain secure, affordable, and sustainable electricity supplies.


【Oil-Producing Countries Dynamics】

Freight rates for shipping Russian oil to India rose by 20% after new U.S. sanctions targeted Russian oil firms. Indian refiners are adjusting supply chains to manage risks, with India surpassing China in oil demand growth. India is exploring additional U.S. energy imports amid this geopolitical backdrop.

Turkey’s Tupras will halt purchases of Russian oil not complying with the G7 price cap, aligning with international sanctions. India continues buying Russian oil below the price cap, while Indian refiners reconfigure trade relationships to avoid breaching U.S. sanctions.


【Latest Oil Policies】

The Biden administration's harsher sanctions on Russian oil aim to curb Russian market influence. Sanctions have targeted major Russian oil companies and transport vessels. However, price cap mechanisms allow Russian crude trade below $60 per barrel, using Western insurance and financing.


【Industry News】

Adani Green Energy withdrew from a $1 billion wind project in Sri Lanka due to tariff disagreements. Despite securing permits, Adani opted out after Sri Lanka sought to renegotiate tariffs. The withdrawal comes amidst increased scrutiny of Adani's investments following U.S. corruption investigations.

China began constructing 94.5 GW of new coal power projects in 2024, the highest since 2015, alongside significant wind and solar capacity additions. The new coal projects underscore China's ongoing dependency on coal, challenging its renewable energy leadership and energy transition goals.


【Company News】

PBF Energy reported a fourth-quarter loss due to declining refining margins, marking a third consecutive quarterly loss. Despite a difficult refining market, PBF Energy declared a quarterly dividend. Other U.S. refiners also struggled, although some exceeded earnings expectations.

Elliott Management is pressuring BP for asset sales to address undervaluation after acquiring a near 5% stake. BP's Q4 earnings missed expectations, prompting plans for strategic realignment to improve cash flow. Elliott also targets Phillips 66 for strategic changes.

ADNOC Gas signed a 14-year LNG supply agreement with Indian Oil Corporation, valued at $7-9 billion. This deal strengthens UAE-India energy ties and supports India's growing gas demand, expected to rise 60% by 2030 amid increasing industrial use.