Looming tariffs and sanctions to support heavy sour diffs in the Americas

Americas:

• Bearish on WTI, the bullish trend will reverse as temperatures normalise and refinery maintenance peaks.
• Bearish on light sweet - medium sour spreads in the US due to looming US tariffs on Canadian crude and a potential revocation of Chevron's sanctions waiver in Venezuela.
• Bearish on Venezuelan oil production due to the new US administration taking a harsher stance against Caracas. This would boost differentials for heavy sours across the Americas.

Atlantic Basin:

• Bullish on Iraqi grades, with European buyers potentially competing with Asian refineries for Basrah Medium crude amid the impacts of the most recent US sanctions on Russia.
• Bullish on Nigerian crude prices as Dangote refinery continues to ramp up over H1 2025.
• Bearish on European gasoline in Q1 2025 amid lengthening in WAF gasoline balance and low demand season in the Atlantic Basin.

Middle East and Asia

• Bullish Russian freight: ESPO freight costs tripled since US sanctions were imposed, Urals will be seeing creeping upwards moves towards $8-9/bbl for Aframaxes.
• Bearish Middle Eastern spot differentials: The current frenzied panic buying of spot cargoes will subside once the market realizes the limits of Russian trade disruptions.
• Bullish on WTI flows into Asia: Landed WTI prices into China are now $1/bbl lower than Murban despite ballooning freight costs, light sweet arbitrage from WoS wide open.