Oil Daily | U.S. Sanctions on Iranian Oil Sales to China Amid Permian Producers' Focus on Financial Discipline

【Oil-Producing Countries Dynamics】

The Department of Treasury has imposed new sanctions targeting individuals and vessels involved in the sale and transportation of Iranian crude to China. The move comes as President Trump reinstates a "maximum pressure" strategy on Iran to curb its nuclear ambitions and reduce its oil exports. Amid this, Iranian officials urge OPEC to unite against U.S. sanctions, citing potential market destabilization.

Despite Trump's aggressive energy policies, U.S. Permian oil producers are slowing growth intentionally, focusing on financial discipline over volume. At a Houston conference, executives highlighted a shift from rapid expansion to cost management, contrasting the past production boom. This cautious approach aligns with Wall Street's emphasis on profits rather than new production floods.

Canadians support retaliatory tariffs against the U.S. following Trump's threat of imposing duties on Canadian oil. With trade tensions escalating, Canada's energy exports to the U.S. have surged, leading to a significant trade surplus. The potential for tariffs on Canadian oil reflects public anger and gives the government leverage to respond.

Australia needs to enhance its competitiveness in energy supply by expediting new oil and gas project approvals amidst U.S. deregulation. Woodside Energy's CEO stresses the importance of science-based policy and warns that slow approvals hinder Australia's position in the global market, especially as the U.S. incentivizes new investments.

【Company News】

Nikola is considering a sale or restructuring as it faces bankruptcy, according to the Wall Street Journal. The company's initial market success was overshadowed by claims of overhyped business plans, leading to a market value collapse. Nikola produced 80 hydrogen trucks last year, incurring significant losses due to battery development challenges.

TotalEnergies plans to increase investments in U.S. LNG supply and consider expanding existing export projects. The company, a major LNG exporter and trader, aims to grow its U.S. position significantly. TotalEnergies' CEO emphasizes the role of infrastructure in managing domestic gas prices amidst increased exports.

ConocoPhillips plans to boost shareholder returns by $1 billion in 2025 following strong fourth-quarter earnings for 2024. Despite lower oil prices, the company increased production and completed the acquisition of Marathon Oil. It aims for significant 2025 production and capital expenditures, emphasizing integration and shareholder returns.

【Others】

German coal power generation has reached a one-year high due to low wind energy output. Persistent low wind speeds have forced reliance on coal and natural gas, increasing electricity prices. Germany may need extended coal use to stabilize power systems during renewable shortfalls.

China's tariffs on U.S. energy imports prompt traders to seek waivers for already booked oil cargoes. The tariffs could disrupt global trade flows, though U.S. energy exports to China were already modest. Analysts expect limited impact on Chinese purchases but potential broader market effects.

U.S. crude exports may decline in 2025 owing to Chinese tariffs on imports, affecting international demand. Chinese refiners are expected to reduce U.S. crude purchases, which comprised a significant portion of China's imports. The tariffs could accelerate a slowdown in American crude exports, already showing signs of peaking.