Oil Daily | Geopolitical Tensions and Weak Refining Margins Impact Oil Prices and Industry Performance

【Global Oil Supply and Demand】

Goldman Sachs predicts a potential temporary rise in Brent crude prices to $93 per barrel if sanctions curb Iranian and Russian oil exports by 1 million barrels per day. Geopolitical tensions and potential supply disruptions are being closely monitored by traders for any significant policy changes impacting the market.

According to StanChart, OPEC is unlikely to change its production plans despite pressure from the US President to increase output to lower oil prices. The current plan delays production ramp-up until April and extends unwinding until the end of next year to prevent market oversupply.

【Oil-Producing Countries Dynamics】

Petronas plans to boost Malaysia's oil and gas production to 2 million barrels of oil equivalent per day by 2027, focusing on key development projects and maintaining its commitment to Malaysia's economic growth. The company will also explore carbon capture and storage as a vital segment, particularly in the Kasawari project.

【Latest Oil Policies】

President Trump's proposed tariffs on Canadian imports could result in US reliance on Venezuelan crude. Canadian Foreign Minister Melanie Joly emphasized the importance of US-Canada energy collaboration to ensure long-term economic security and avoid reliance on less favorable countries.

【Industry News】

The refining industry is experiencing a downturn as margins ease from record highs achieved after the Russian invasion of Ukraine. Refining margins for US refiners have plunged to multi-year lows due to weak fuel demand and increased global supply, ending the supercycle of high profits and margins.

Orsted announced that Mads Nipper will step down as CEO, with Rasmus Errboe taking over due to challenges in the offshore wind industry arising from supply chain issues, interest rate hikes, and regulatory changes. The company aims to navigate these difficulties under Errboe's leadership.

【Company News】

Phillips 66 reported a smaller-than-expected loss for Q4 2024, attributed to profits from its renewable fuels division. Despite declining refining margins, the company plans to prioritize shareholder returns by allocating over 50% of operating cash flow to shareholders through 2027.

Chevron reported lower-than-expected Q4 earnings due to weak refining margins and higher operating expenses. Although upstream earnings increased, the downstream division saw its first loss in four years, with continued weakness predicted by CEO Mike Wirth.

ExxonMobil achieved consensus-beating Q4 earnings driven by record production in the Permian and Guyana, despite lower commodity prices and refining margins. The company maintained strong cash flow, making 2024 its third-best year in a decade, and distributed significant payouts to shareholders.