Oil Daily | Russia Focuses on China and India as EU Sanctions Cut Baltic Oil Shipments by 10%

【Oil-Producing Countries Dynamics】

President Donald Trump considers excluding crude oil from planned tariffs on Canada and Mexico, aimed at curbing fentanyl smuggling and illegal immigration. Analysts view these tariffs as tactics to pressure the neighbors rather than a final decision. Canada and Mexico are crucial oil suppliers to the U.S.

Russia's oil shipments via the Baltic Sea fell by 10% in the last four months of 2024 due to EU sanctions. The Biden administration imposed further sanctions targeting Russian oil companies like Surgutneftgas and Gazprom Neft. Russia is focusing on increasing oil exports to China and India.

Russia's crude oil production decreased by 2.8% in 2024, while natural gas production rose by 7.6%. Russia submitted a compensation plan to OPEC for overproducing in previous months. Russian pipeline gas exports to China reached full capacity, compensating for reduced supplies to Europe.

Brazilian President Lula approved non-interference in Petrobras' pricing strategy. Petrobras plans to invest $102 billion from 2024 to 2028, despite a corruption scandal and pressure to create jobs. Brazil's oil and gas production hit record highs, with private companies increasing output significantly.

Some EU officials suggest resuming Russian gas supplies as part of a Ukraine peace deal, halted since January 2025. The idea faces resistance amid concerns over energy leverage and recent high LNG imports from Russia. Hungary and Germany reportedly support the proposal.

【Industry News】

Global investments in green energy reached $2.1 trillion in 2024 but need to increase to $5.6 trillion annually to meet net-zero goals by 2050. Electrified transport remains the top investment segment. China leads investments, while U.S. and EU investments stagnate or decline.

Oil traders are capitalizing on U.S. sanctions on Russian oil, increasing interest in the Brent-Dubai spread contract. The sanctions have led to record-high premiums for Dubai crude over Brent, forcing buyers to seek alternatives in the Middle East, affecting global oil flows.

【Company News】

Baker Hughes' Q4 2024 profits soared 54% due to strong natural gas technology business. The company reported increased cash flow and a significant order book, attributed to gas field expansion contracts and LNG sector demand in the U.S. Oilfield services revenues, however, dipped.

Valero Energy booked higher-than-expected earnings in Q4 2024, aided by renewable diesel earnings and stable throughput volumes. The refining industry faced declining margins in 2024, but Valero managed to maintain cash flow through strategic operational adjustments.

Shell raised its Q4 dividend by 4% and announced a share buyback program despite earnings below expectations. The earnings drop was due to lower prices and margins and LNG trading losses. Shell's cash flow remained strong, enabling continued shareholder returns.

【Others】

Ukrainian drone strikes targeted Russia's Andreapol oil station, disrupting oil flows via the Baltic Sea. Ukraine increased these attacks as the war's third anniversary approaches. Russia's Baltic Sea shipments declined due to EU sanctions, with older vessels posing operational risks.

Potential buyers from India, Japan, and Kuwait are negotiating with U.S. LNG exporters amid Trump's tariff threats. Asian countries seek diverse energy supplies, with Japan's JERA planning to increase U.S. LNG purchases. Europe is also drawing U.S. LNG away from Asia due to supply constraints.