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Oil & Gas 🛢️

• Opec Adds Fuel to the Fire - (Link)
• Oil flows from Saudi Arabia to China declined sharply (Link)
• Venezuelan crude exports drop in April amid export licence revocation (Link)​

Dry 🚢

• Brazil solidifies dominance in China’s soybean market (Link)
• Agricultural Freight Recap (Link)

Other 🌎

• Global Container Bookings Surge, But YoY Gap Widens (Link)

How Section 301 Tariffs on Chinese-Built or Operated Tankers Could Reshape US Oil Exports - AXSMarine​

AXSMarine's analysis provides an updated breakdown of the global tanker fleet’s exposure to Section 301 tariffs at U.S. ports. However, it is important to note that this exposure profile could evolve further as the tariff discussions progress.

What’s at stake? A new look at fleet exposure

Currently, the analysis indicates the following distribution, though changes are expected based on the final tariff decisions:

• ~80% of tankers calling US Ports are not Chinese-built.
  • ~90% of these are not Chinese-operated (72% of total calls)
  • ~10% are Chinese-operated (Tier 2 exposure, ~8% of total calls)

• ~20% of tankers calling US Ports are Chinese-built.
  • 20% are Chinese-operated (Tier 1 exposure, 4% of total calls)
  • 80% are non-Chinese-operated (Tier 2 exposure, 16% of total calls)

What this means

About 28% of the fleet faces potential tariff exposure, either under Tier 1 or Tier 2 categories. The financial impact is particularly significant for Dirty Tankers and MR2 Clean Tankers, with an increasing deployment of Chinese-operated vessels since early 2023.

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However, under the new regime, vessels linked to international operators and falling under the MR2 category and below are exempt from the tonnage fee. As a result, some of these vessels may lead to the relocation of the operating companies to alternative markets, where the tariff impact can be mitigated, potentially shifting their operations outside China.

Understanding the Tariffs: Framework & Cost Drivers

Current latest Tarrif structure:

• Chinese-operated vessels: $50/Net Ton (NT), applied both laden and in ballast
• Chinese-built & Chinese-operated (Tier 1): $50/NT + $1.5 million flat fee
• International operators using Chinese-built vessels (Tier 2):
  • Laden: $18/MT + $1.5 million flat fee (exemptions apply)
  • Ballast: $1.5 million flat fee only
• Key Exemptions
  • Vessels under 55,000 DWT (below MR2 class)
  • Voyages under 2,000 nautical miles to the continental U.S. are exempt from the $18/MT fee.

The latter exemption primarily excludes Panamax Tankers transiting eastbound via the Panama Canal to ports south of Norfolk. In contrast, all westbound laden transits even starting from the Pacific side - Balboa (e.g., to U.S. West Coast ports) - exceed 2,000 nautical miles and will be subject to the $18/MT fee. However, the effect of the above will be muted.

Americas crude output surge lengthens global balances - Kpler​
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Executive summary

Market & Trading calls

Americas:

• Neutral on US crude supply, which is expected to remain flat in the near term, despite disappointing weekly EIA data and a slight weakening in the US oil rig count.
• Bullish on Canadian crude supply as producers continue to ramp up production amid robust demand from the US and Asia, and tight WCS Hardisty differentials
• Bullish on Brazil's crude supply as recently commissioned (and upcoming) FPSOs ramp up production, keeping seaborne exports near record highs.

Europe and Africa:

• Bullish on West African crude differentials as Dangote relies increasingly on regional grades
• Bearish on Nigeria's imports of European gasoline as Dangote's output increases over H2 2025
• Bullish on South Sudanese Dar Blend exports since at least three 600 kbd cargoes have been tendered for May

Middle East - Asia - Russia:

• Bullish on China’s demand for Middle Eastern crude, driven by attractive OSPs and a wide Brent-Dubai spread
• Bearish on Iraqi crude exports to the Mediterranean, as shipping companies remain cautious about transiting the Suez Canal and robust Asian demand diverts cargoes eastward.
• Neutral on Indian and Pakistani crude flows, despite escalating military tensions that could potentially threaten oil shipments in the Arabian Sea.

Americas: America's crude supply has been rising over H1, keeping regional markets oversupplied

US crude supply came under pressure in the week ending May 2, with the EIA's weekly data showing US supply averaging a mere 13.37 Mbd, the lowest output since mid-January. This marks a decrease of 100 kbd from the average weekly levels observed in April and places production 200 kbd below the figures seen in March, when weekly production figures averaged a record high of 13.6 Mbd. The recent decline in the weekly production diverges from the EIA’s implied data, which has rebounded to the highs observed in March (see chart below). Our analysis aligns more closely with these implied figures, with our base case seeing US crude and condensate production averaging 13.5 Mbd since March, despite recent price declines.

While the US oil rig count reached a multi-week low of 479 for the week ending May 2, representing a decrease of 10 rigs from levels seen before "Donald Trump's liberation day," we expect US shale producers to increasingly focus on efficiency gains, limiting the downside to production in the near term. Exceptionally strong growth in New Mexico continues to offset declines in other basins such as the Bakken and Eagle Ford. Furthermore, non-shale supply from the Gulf of Mexico is poised to provide additional upside in the near term. Chevron’s "Ballmore" project, which commenced operations on April 20, is anticipated to support an upward trend in Gulf of Mexico supplies over the coming months, keeping US crude supply robust over the remainder of Q2.

US implied and reported crude and condensate supply, Mbd

Alberta's oil production showed a strong performance in March, reaching 4.19 Mbd, according to the AER's latest official monthly figures. This output set a new record for the month of March and represented a significant month-on-month increase of 150 kbd (see chart below), though it remained below the peak levels observed in late 2024. While Alberta's conventional supply also attained a notable high of 570 kbd—a 20 kbd rise from February, fueled by an uptick in light crude supply—the primary driver of growth remains the province's oil sands. Oil sands production averaged 3.5 Mbd in March. This not only establishes a new record for the month but also surpasses year-ago figures by 100 kbd.

Despite a dip in crude prices that has tested the breakeven points for new developments, the outlook for Alberta's production remains positive. Regional producers are incentivized to continue ramping up supply, supported by exceptionally strong WCS crude differentials. These robust differentials are underpinned by tighter inventories in Western Canada, strong demand from US refiners in early 2025 (particularly noted ahead of "Donald Trump’s Liberal day"), and substantial flows to Asian markets via the newly expanded TMX pipeline. Illustrating TMX's impact, exports from Canada’s Westridge terminal, despite a marginal dip in early May, have averaged 500 kbd over the past two months—an increase of 100 kbd compared to prior months, with the vast majority of these flows going to Asian refiners.

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Carbon Pricing - Gibsons​

Undoubtedly, the most significant development at MEPC 83 was the establishment of the IMO Net Zero Framework, which introduced a GHG Fuel Intensity (GFI) standard and economic measures, such as a two-tier carbon trading system requiring higher emitters to offset their CO₂ emissions while rewarding ships that operate with low or zero emissions.

The progress on the Net Zero Framework sparked significant controversy. The US delegation withdrew from the negotiations, warning that it may impose retaliatory measures if international rules impose fees on American vessels based on their GHG emissions or fuel types. Nonetheless, an agreement was eventually reached, though not through the usual process. With several member states rejecting the proposal, a formal vote was called, which is highly unusual. The proposal was ultimately approved with 63 nations in favor, including the EU, the UK, China, and India; 16 member states opposed, including several Middle Eastern countries, Russia, and Venezuela; and 24 abstentions.

In detail, a tiered levy structure will apply: one rate for emissions exceeding a ‘direct compliance target’, and a higher rate for those surpassing a ‘base target’. These targets are defined in terms of carbon intensity, measured as grams of CO₂ emitted per megajoule of energy consumed (gCO₂/MJ) and calculated on a well-to-wake approach. Emissions up to 77.44 gCO₂/MJ (the direct compliance target) will be exempt. Emissions above 77.44 and up to 89.57 gCO₂/MJ (the base target) will incur a levy of $100 per metric tonne of CO₂ equivalent (mtCO₂e). Emissions above 89.57 gCO₂/MJ will be charged at $380/mtCO₂e. Ships that exceed these thresholds will have several options to offset their excess emissions. They may use surplus units from other vessels, draw on previously banked units, or purchase Remedial Units (RUs) through contributions to the IMO Net-Zero Fund.

Both the direct compliance target and base target will be progressively tightened each year starting from 2028. The levies of $100/mtCO₂e and $380/mtCO₂e will remain in place through 2030, after which they will be subject to review. Ships that emit below the base target will earn surplus units (with prices determined by market forces), which can be banked for up to two years or traded. Revenues collected from penalties will be allocated to support vessels that use zero or near-zero carbon fuels.

Whilst the key principles have been established, there is still a lot more work that needs to be done. Default carbon intensity values for various fuel grades have not yet been established, and fuel verification schemes must still be developed. The IMO Net-Zero Fund, which will collect payments for non-compliance, has yet to be established. The use of shore power, wind and solar energy, or propulsion systems equipped with carbon capture will contribute to emission reductions, although the mechanisms for accounting these technologies have not been finalized. Similarly, it remains unclear what additional financial rewards the use of zero or near-zero carbon fuels will have.

While the levies of $100/mtCO₂e and $380/mtCO₂e are set through 2030, it is unclear what will happen beyond that date. Preliminary calculations show that in 2028 compliance costs for eco vessels operating on conventional VLSFO could range from $50,000 to $175,000 per round voyage, depending on tanker size and routing. These costs are set to increase sixfold by 2035, if levies remain unchanged and will be higher if the set penalties rise.

The Net Zero Framework is scheduled to be formally adopted during the MEPC meeting in October 2025 and then enter into force on March 1, 2027. Yet, it is possible that another formal vote will be called. For adoption, it must be approved by two-thirds of the parties to MARPOL Annex VI, representing at least 50 percent of the gross tonnage of the global merchant fleet. Considering challenges faced during MEPC 83, it may not be a done deal.
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