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India's weak demand for Urals oil leads to a widening of discounts on the oil
Sources say that the differentials between Russian Urals crude and other grades are under pressure due to the weakening value of the grade in India's ports. Three sources in the oil trade reported that discounts for Russian Urals crude have tripled in Indian ports since August compared to Brent dated as U.S. sanction drive key buyers from Moscow-supplied fuel. According to traders, the December Urals cargoes are currently trading at a discount of $5-$6 per barrel compared to Brent. This is about three times greater than the $1-2 seen in August. PLATTS WINDOW There were no bids or offers reported on the Platts Window for Urals CPC Blend, or Azeri BTC on Wednesday. Five sources have confirmed that U.S. sanctions will dismantle what is left of Litasco. Litasco was once Russia's largest oil trader, and a competitor to Swiss oil giants and top Swiss houses. (Reporting from ;)
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CMA CGM, the shipping giant, resumes Russia trade by bringing in food cargo
The company, CMA CGM of France, which is the third largest container shipping line in the world, said that it has resumed limited service to Russia. This includes transporting food. It did so three years after the company had withdrawn from Russia following the invasion of Ukraine. CMA CGM, like other Western companies, ceased its activities in Russia. It stopped its shipping services, and divested its stakes in port terminals. CMA CGM stated in an email that the CNC subsidiary of the group has re-launched shipping foodstuffs to Russia, such as coffee and citrus fruits to meet customer demand. It said that the activity was very limited and strictly conducted in compliance with the sanctions regime. The French newspaper Ouest France reported that CMA CGM did not use its own fleet, but booked space on other vessels to transport its containers. CMA CGM has joined its Swiss rival MSC to ship cargo to Russia. MSC continued to ship humanitarian, medical and food items during the conflict in Ukraine.
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Chinese cruise ships avoid Japan amid diplomatic dispute
Sources and cruise schedules reviewed indicate that Chinese cruise operators are avoiding Japanese ports due to a diplomatic dispute between Beijing and Tokyo. This is expected to boost tourism to South Korea. The tensions sparked by the recent events have been cited by tour and port agents. You can also read our blog posts. Japan's new premier could lead to Chinese tourists being redirected from Japan to South Korea. Sanae Takaichi, Japan's new prime minister, told Japanese legislators earlier this month that a Chinese attack against Taiwan could lead to a military response. Adora Magic City is a Chinese cruise liner that visits the touristy island of Jeju in South Korea as well as Japan. According to an announcement posted on the website of South Korea’s Jeju Province, the ship has altered its December schedule to avoid the Japanese ports Fukuoka Sasebo, and Nagasaki, as originally planned. The notice stated that the cruise ship would spend between 31 and 57 hours at Jeju instead of its usual nine-hour schedule. Unofficially, a Jeju official said that the cruise operator asked for a schedule change without giving any reason. The official declined to identify himself as he wasn't authorised to talk to the media. It seems that they are working on a Plan B." Adora Cruises has not responded to a comment request. Japan is counting the costs of the diplomatic conflict. Tokyo-based East Japan International Travel Service said this week that it had lost 80% its bookings for remainder of year. Lee Yong Gun, CEO of South Korean port agent Eastern Shipping told reporters that other Chinese cruise ships were also in discussions to reroute. Lee stated that "if the China-Japan relations further deteriorate and China excludes Japan’s products, culture, and tourism, then I expect Korea to benefit from this." He said that the operator of the "Dream", which departs the Chinese city Tianjin wanted to avoid Japan by rerouting to a South Korean Port in Incheon, or Busan, over the next two weeks, but there wasn't enough time to do so, citing an earlier discussion with the operator. Tianjin Orient International Cruise Line which operates the ship did not reply to a comment request. Details about cruise ships skipping Japan to stay longer in Korea, or even considering it due to diplomatic disputes, have never been reported. According to Qunar, an online travel agency, South Korea was the most popular destination among Chinese tourists in terms of bookings of international flights over the weekend between November 15-16. Many Chinese airlines are offering refunds for routes to Japan. This is expected to increase air travel in South Korea. Jeju Air's executive said that the South Korean budget airline is expecting an increase in Chinese tourism, even though there has been no immediate impact. The chief executive of the South Korean tour agency that caters to Chinese tourists said on Wednesday he just received a request from a Chinese client who asked if an event originally scheduled for Japan in early next year could be relocated to South Korea. He said that "South Korea is clearly going to benefit from this dispute." He said that for the moment, they were in a waiting-and-seeing mode. South Korea welcomed more than half as many Chinese tourists in 2013 due to the territorial dispute between Beijing, Japan and some islands. The Chinese advisory against traveling to Japan has caused South Korean shares in travel-related companies this week to soar. Travel agency Yellow Balloon Tour has seen a 24% increase, and Shinsegae, a department store operator, has seen a 6% gain on the hope that Chinese tourists will switch to South Korea. Travel industry experts said that it may take some time for Chinese tourists to increase in South Korea. Kim Seol Yeong, a tour operator based in Jeju for Chinese cruise tourists, said that the diplomatic dispute had only occurred a few days earlier. It might take some time before we see an increase of Chinese tourists visiting Korea. Luna Wang, 34, from Hangzhou, China, had considered returning to Japan this year, but she may opt for South Korea now. "Now, it seems that Japan is no longer safe for Chinese to travel." She said, "I guess the only option that is good for me to travel to Korea is to go to Japan." The founder of Moment Travel, a Chinese company in Chengdu, noted a dramatic shift in perceptions regarding travel to Japan. Su Shu, the founder of Moment Travel in Chengdu, said that there is now a feeling that anyone who travels to Japan is a traitor. Reporting by Ju-Min Park in Seoul; Casey Hall in Shanghai; and Sophie Yu, in Beijing. Editing by Anne Marie Roantree, Thomas Derpinghaus, and Anne Marie Roantree.
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Lithuania Railway Company stops Lukoil shipments from Russia's Kaliningrad
Due to U.S. Sanctions, the Lithuanian state-owned railway group LTG announced on Friday that it would stop shipments of oil cargoes from Russia's Lukoil into the Russian exclave Kaliningrad. Kaliningrad, located on the Baltic Sea Coast, receives most of its supplies via rail transit via NATO member Lithuania. It can also receive direct shipments via ocean from its own nation. Last month, the U.S. Treasury’s Office of Foreign Assets Control imposed sanctions on Lukoil over the conflict in Ukraine. The OFAC also warned that foreign companies who do business with this Russian group would face consequences if they continued to do so after the November 21 deadline. LTG Group announced in a Friday statement that "cargoes of Lukoil or related companies, oil or petroleum products, will no longer be shipped by rail from Russia to Kaliningrad". The Kremlin said that Lukoil’s international interests must be respected. (Reporting and editing by Terje Solsvik, Andrius Sytas)
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Since August, the US sanctions have hit India, Russian Urals prices in India have tripled.
Three sources in the oil trade reported that discounts for Russian Urals crude have tripled in Indian ports since August compared to Brent dated as U.S. sanction drive key buyers from Moscow-supplied fuel. Last month, the United States imposed their toughest sanctions to date on Russia's oil sector. They targeted Lukoil & Rosneft. The deadline for companies is Friday to end all business with the two oil producers. Urals crude is a staple feedstock for Indian refiners, since 2023 when Moscow diverted flows to Asia following the European Union's ban on Russian energy. Traders said that supplies to India will fall dramatically as most refiners stop buying. Reliance Industries, India’s largest private refiner and India’s largest refinery, has stopped importing Russian crude to its Jamnagar facility in Gujarat as of November 20, according to a spokesperson for the company. RUSSIA OIL IMPORTS FROM WESTERN POINTS ARE NEAR OPTIMAL LEVELS Despite sanctions, Russia’s oil exports to western ports are still near their peak, thanks to OPEC+ production allowances, and refinery shutdowns caused by drone strikes in Ukraine. According to traders, the December Urals cargoes are currently trading at a discount of $5-$6 per barrel compared to Brent. This is about three times greater than the $1-2 seen in August. Prices for Russian oil delivered into Indian ports are usually set on a "delivered-ex-ship" basis. This means that the price does not include transport costs or other charges paid by the seller. Traders said that the price of Urals crude on board at Russian ports depends on the cargo and supplier. It is estimated to be around $20 per barrel. The majority of shipments are handled on "shadow fleets" linked to Russia, which allows Moscow to keep a portion of the differential in price. The freight rates are stable despite the sanctions against vessels. Aframax tankers carrying 700,000 barrels to Baltic ports cost around $7.5 million per one-way trip, while Suezmax trips are between $8 and $8.5 million, traders reported. They added that Russian oil shipments are still expensive but manageable, as there are enough ships available and Urals is trading below the EU's $60 barrel price limit. Conor Humphries (Reporting and Editing)
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Asia spot prices slightly rise amid high inventories and muted demand
The Asian spot price of liquefied gas rose slightly last week but remained in the $11 range due to well-stocked inventories. Average LNG price for delivery to North-East Asia in January Industry sources estimate that the price per million British thermal unit was $11.66 this week, up from $11.10/mmBtu in the previous week. Toby Copson is chairman of Davenport Energy Partners. He said, "The APAC Market remains largely flat or bearish. This is due to (a) a later start to the winter and unseasonably warm temperatures, which are muting seasonal heating demand." He added that "Geopolitical risks premiums have been mostly priced in. So, unless there are any new supply bottlenecks it will trade within this range until we see an extreme and prolonged drop in temperature." The premium of Asian spot gas to European prices at the TTF hub has been increasing for months. This is mainly due to an increase in charter rates, which meant that bringing cargos from Europe to Asia would be more expensive. Alex Froley said, Senior LNG analyst at ICIS. The wholesale gas prices in Europe fell on Friday morning, as the demand for gas was curtailed by warmer temperatures and expectations of a stronger wind output. Prices increased earlier this week due to a cold snap that drove up heating demand. Froley stated that the spot gas prices at TTF hub have remained fairly stable, and the first cold snap of winter has not caused them to significantly increase. Aly Blakeway is the manager of Atlantic LNG for S&P Global Energy. She said that while Europe's storage inventories have decreased, they are still lower than in previous years. On the back of a strong demand for gas to generate electricity, LNG demand is continuing to grow in the East Mediterranean, including Turkey, Greece and Cyprus. Blakeway explained that this, combined with Egypt's rapid procurement of some cargoes, forced sellers to hold back their offers in order to compete for these premium markets. S&P Global Energy's daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in January, on an ex ship (DES) basis, was $9.994/mmBtu as of November 20. This represents a $0.49/mmBtu reduction from the price at TTF hub. Spark Commodities set the price for December at $10.60/mmBtu. Seb Kennedy, an independent gas analyst, noted that the number of hedge funds trading TTF derivatives reached a record high of over 450 in the past week. This shows the popularity of the EU market for commodity investments. He added that funds bought more TTF-short positions during the week ended November 14, bringing their net position to near zero. According to Spark Commodities analyst Qasim Afghan, the U.S. arbitrage for the front-month to North-East Asia via Cape of Good Hope points to Europe while the Panama Canal arbitrage is open strongly to Asia. The Atlantic LNG rates have risen to their highest level since December 20, 23 at $130,750/day. Pacific rates reached their highest level since August 20,24 at $78,750/day. Marwa Rashad is the reporter. Mark Potter (Editing)
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Sources: US threatens to cut off intel and weapons to force Ukraine into peace agreement
Two people with knowledge of the situation said that the United States had threatened to reduce intelligence sharing and arms supplies to Ukraine in order to pressure it to agree to the framework for a U.S. mediated peace deal. Sources, who spoke on condition of anonymity said that Washington was exerting greater pressure than in previous peace talks, and that it wanted Ukraine to sign the framework of the agreement by next Thursday. One source said, "They want the war to end and they want Ukraine to pay for the price." Washington presented Ukraine with a plan of 28 points, which endorsed some of Russia's main demands during the war. These included that Kyiv cede more territory, reduce the size of its army, and be banned from joining NATO. A senior U.S. delegation met with President Volodymyr Zelenskiy on Thursday in Kyiv to discuss the path to peace. The U.S. ambassador to Ukraine and the Army Public Affairs chief traveling with the delegation described it as a successful meeting and said Washington was seeking an "aggressive deadline" for signing a document between U.S.A. and Ukraine. (Reporting and writing by Tom Balmforth; editing by Philippa Fetcher and Peter Graff).
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Freeport LNG Texas's export plant will take in more natural gases on Friday, according to data.
LSEG data, as well as regulatory filings, show that the U.S. liquefied gas company Freeport LNG was on schedule to receive more natural gas in Texas on Friday. This is a sign of one of three liquefaction train's return to service following its Thursday shutdown. Freeport has been one of the most closely monitored U.S. LNG plants in the world because its changes in operations have caused price fluctuations in global gas markets. Gas prices in the U.S. typically fall when flows to Freeport decrease due to a reduced demand for fuels from the export facility. Prices in Europe usually rise due to the drop in LNG supply available on global markets. The Freeport outage contributed to a 2% decline in futures prices on Thursday in the U.S. Freeport is not responsible for the drop in prices that occurred in Europe. Freeport informed Texas environmental regulators on Friday that Train 1 was shut down Thursday because of a problem with the compressor system. Freeport officials had no comment to make on the incident, but did note that the plant has loaded its 1,000th shipment this week. LSEG reported that gas flow to Freeport was on track to increase to 1.9 billion cubic foot per day (bcfd), up from 1.3 bcfd Thursday. This compares to an average of 1.9 billion cubic feet per day over the previous seven days. Three liquefaction plants at Freeport can convert about 2.4 billion cubic feet per day of gas to LNG. A billion cubic feet of natural gas can supply five million U.S. households for one day. Reporting by Scott DiSavino. (Editing by David Goodman, Mark Potter and Mark Potter.)
U.S. aims to target China's grip over global ports with sweeping maritime missions
According to three sources who are familiar with the plan, U.S. president Donald Trump's government is on a quest to weaken China’s global network ports and bring in more strategic terminals to Western control.
This is part of an ambitious effort by the United States to increase its maritime influence. It is also designed to alleviate growing concerns in Washington about being at a disadvantage in the event of conflict with China.
The people said that Trump administration officials believed the U.S. Commercial Shipping Fleet was ill-equipped to support the military during wartime and Washington's dependency on foreign ports and ships is excessive.
Three people have said that the White House may consider supporting Western or American firms to purchase Chinese stakes at ports. The three people did not name any firms, but cited BlackRock's proposal to buy CK Hutchison's port assets in 23 countries including Panama Canal as a good case study.
They asked to remain anonymous because they were not authorized to speak publicly about the issue.
Requests for comments from the White House or U.S. Treasury were not answered.
Sources say that, in addition to Panama, U.S. officials are also concerned by Chinese holdings of maritime infrastructure, including in Greece, Spain, the Caribbean and U.S. West Coast Ports.
A spokesperson for the diplomatic mission of China in Washington stated that China has a normal level of co-operation with foreign countries within international law.
The spokesperson stated that "China has been against unilateral sanctions, which are illegal and unjustified. This includes so-called long arm jurisdictions and actions that violate and undermine the legitimate rights and interest of other countries through economic coercion and hegemony.
Beijing officials did not reply to our request for comment.
The U.S. Government views Chinese investments in ports around the world as a threat to national security, said Stuart Poole Robb, founder and chief intelligence officer of KCS Group.
He said that he was concerned about China using its assets to espionage or gain a military advantage, or disrupt supply chains in times of geopolitical crisis.
GREEK PORT IN CENTRAL FOCUS
Three sources confirmed that the U.S. will examine Chinese interests in the Greek Port of Piraeus. Piraeus, located in Athens in the eastern Mediterranean region, is an important hub for trade routes linking Europe, Africa, and Asia.
COSCO, one China's largest port and shipping group, owns 67% of the Piraeus Authority.
Sources close to Chinese shipping investors in Greece have expressed concern that Washington could target COSCO operations in Greece.
COSCO and Greek government have not responded to comments. Greek officials previously stated that they were not informed of any plans to take control of Piraeus.
Washington has already set COSCO as a target.
In January, the Department of Defense included state-owned COSCO on its blacklist of Chinese military-linked companies. The designation does not entail immediate bans for U.S. businesses doing business with the listed companies, but it can be interpreted as a sign that further actions are being considered.
The Development Research Center of the State Council (an official think-tank of China’s governing cabinet) said in a recent paper that the United States intended to attack China’s international influence through exaggerating the ‘China threat theory’ and use this excuse to force allied countries to choose sides in supply chain agreements.
The U.S. Administration has announced measures to increase America’s small commercial maritime presence in the world. This includes encouraging domestic shipbuilding. It also wants to expand access U.S. controlled shipping registries and review global maritime chokepoints to assess shipping risks.
China has a vast network of ports that it owns or leases through its state-controlled companies, such as China Merchants in Shanghai and SIPG.
A report by the Council of Foreign Relations (a U.S. think tank) published last year stated that China, through its various companies, had invested in 129 ports projects around the world as of August 2024.
According to U.S. Navy estimations, China's shipbuilding capacity is 230 times greater than that of U.S. shipyards, so it may take decades for the U.S. to catch up.
The U.S.'s maritime push has contributed towards tensions between the U.S. and China, who see port and shipping assets integral to their Belt and Road initiative. This is at a moment when both superpowers have already been at odds over trade and tariffs.
MEDITERRANEAN GATEWAY UNDER REVIEW
The U.S. Federal Maritime Commission began a review in March of seven chokepoints on the maritime route. It stated that it wanted to identify "regulations, policies or practices" that create unfavourable conditions for shipping.
This review examines the Strait of Gibraltar which separates Spain and Africa at the entrance of the Mediterranean Sea.
Two sources claim that the Spanish Prime Minister Pedro Sanchez's desire to strengthen trade relations with China has caused Washington to be concerned about Beijing's access its ports.
When asked to comment on Chinese port investments, a spokesperson for the Spanish Foreign Ministry said: "We do not know of any concerns or approaches from third parties in this regard and it is therefore not appropriate for us comment."
A spokesperson for the Spanish Port Authority confirmed that COSCO holds concessions to operate container ports in Valencia and Bilbao.
Since returning to the White House, Trump has taken a number of steps to increase U.S. power over the oceans.
In April, he signed an executive directive to revitalize shipbuilding capacities to expand the U.S. controlled vessel fleet.
His administration is looking at a proposal for a new shipping registry to be established in the U.S. Virgin Islands. This registry would allow vessels to fly a U.S. flag without meeting the more stringent standards of the U.S. domestic registry.
The U.S. will soon start charging Chinese-built or Chinese flagged vessels fees when they call at U.S. port.
Trump also wants to seize the semi-autonomous Danish Greenland territory, which is close to the Arctic and has important shipping routes.
Sources familiar with the plans say that this is the most ambitious attempt by the U.S. since Richard Nixon tried to boost domestic shipbuilding, commercial ship registry and U.S. maritime power.
Poole-Robb, a KCS analyst, said that the U.S. will likely continue to build alliances and partnerships in order to counter Chinese economic growth and power in the near to medium term.
CARIBBEAN SHIPMENT CONCERNS
According to three sources, the United States is also concerned about Chinese investments in Jamaica's Kingston Terminal, which is a major maritime transhipment hub for the Caribbean because of its location and deep water port facilities.
China Merchants owns a share in the company that operates Kingston's container port, along with France's CMA CGM. JISCO, a Chinese metals company, bought the Alpart refinery west of the capital and Port Kaiser in 2016.
According to a June study by the Center for Strategic & International Studies, China's presence at Kingston posed the biggest security threat for the United States of all Beijing port projects in Latin America & the Caribbean.
On a visit to Kingston in March, U.S. Secretary of State Marco Rubio, described China's strategy as being characterised by "predatory practices", using government-subsidised companies to "underbid everybody" and acquire assets.
A State Department spokesperson responded to Rubio's remarks by saying that the presence of untrusted equipment in critical infrastructure around the world, such as ports, increased the risk for U.S. security.
Jamaica's Ministry of Foreign Affairs and Foreign Trade spokesperson said that it was unaware of any U.S. communication about the reduction in China's influence on the Caribbean nation's maritime trade.
During the first Trump administration, there was some resistance to Chinese investment in the area.
Bruce Golding, former Jamaican prime minister who brought Chinese investment to the Caribbean nation, said: "I expect that the U.S. will increase pressure on us to reduce our engagement with China."
COSCO, on the other hand, has invested with local partners at the ports in Los Angeles and Long Beach, the United States. The White House has not responded to a question about COSCO's U.S. investment.
A senior executive at the Chinese operator of Darwin Port said that the U.S. firm Cerberus in Australia, founded by U.S. deputy secretary of defense Stephen Feinberg has expressed interest in purchasing the lease.
Anthony Albanese, the Australian Prime Minister, has promised to return the strategic port in the north to Australian ownership. He also reiterated this position during his July visit to China.
Albanese's Office referred to Albanese’s previous comments.
A U.S. official of defense, when asked to comment on the matter, said that Feinberg had not participated in any discussions or made any decisions about any acquisitions in which his former company might be interested.
Since the end of the term of President Joe Biden, Democratic and Republican legislators have scrutinized China's ownership of its ports. A U.S. Port official who is familiar with the issue confirmed this.
Carlos Gimenez said in February that the United States cannot and will not stand by as Communist China undermines our interests at ports.
(source: Reuters)