This week, U.S. sanctions on Venezuela have boosted bullish sentiment in oil markets. The sanctions, which target countries purchasing oil from Venezuela, except for U.S. refiners, coincided with a one-month extension of Chevron’s operations in the country. These moves raised concerns about a potential shortage of heavy oil, pushing ICE Brent futures above $73 per barrel once again.
Shell’s Shift Back to Fossil Energy
London-based energy giant Shell issued its 2024 annual report, signaling a shift back to fossil energy. The company raised its shareholder returns target to 40-50% of operational cash flow, up from the previous 30-40%. Additionally, Shell reduced its investment budget by $2-3 billion, now forecasting $20-22 billion in investments through 2028. Despite this, Shell is committed to maintaining significant oil production beyond 2030, with a focus on maximizing gas production and aiming for annual increases of 4-5% in LNG sales between 2026 and 2030.
The new low-carbon investment benchmark for oil majors is set at 10% of capital employed, far below Shell’s 2022 peak, when a third of its capital expenditure was allocated to renewables.
Market Movers
BP, the UK oil major, agreed to sell its 25% stake in the Trans-Anatolian Pipeline, which carries Azerbaijani gas through Turkey, to U.S. asset management firm Apollo for $1 billion.
Africa-focused exploration company Tullow Oil sold its entire working interest in Gabon to the Gabon Oil Company for $300 million, as it continues to deal with debt.
Mexico’s Pemex is reportedly negotiating with billionaire Carlos Slim to jointly operate the Zama offshore field and the Ixachi gas field, marking a rare move for the state oil company.
Trump’s Tariffs Impact Oil Markets
U.S. sanctions on Venezuela, combined with Trump’s introduction of a 25% tariff on any country buying Venezuelan oil, have driven oil prices higher. China, which accounts for 55% of Venezuela’s exports, is notably impacted by the tariffs. As market participants worry about the availability of heavy oil, Brent futures have surged again.
Other Global Developments
U.S. Energy Secretary Chris Wright suggested that American companies could operate Ukraine’s nuclear power plants with minimal difficulty, positioning such an arrangement as a key way to safeguard Ukraine’s energy infrastructure.
A potential ceasefire in Ukraine, discussed between U.S. and Russian officials in Saudi Arabia, may also revive the Black Sea grain deal, which ended in 2023. This would bring more Ukrainian agricultural exports to the market.
Iraq’s oil minister Hayan Abdul Ghani accused Iran of using forged Iraqi shipping documents for its oil tankers, as Iraq faces pressure from the U.S. to sever ties with Tehran.
LNG Prices and Other Market Trends
Asian demand weakness continues to affect LNG prices, with May delivery prices for Northeast Asia falling to a three-month low of $13.5 per mmBtu. At the same time, global trading giants Vitol and Gunvor have ramped up their positions in physically deliverable LME aluminum contracts, showing increased interest in commodities.
OPEC+ and Glencore Commitments
OPEC+ countries are expected to continue increasing oil output, with a forecasted boost of 135,000 b/d after April, as the group unwinds its production cuts. Meanwhile, Glencore has committed to cutting coal production by 5-10 million tonnes in 2025 due to a significant drop in coal prices.
Copper and Other Commodities
Copper prices hit an all-time high of $5.20 per pound, driven by a mix of tariffs and mining issues in Chile. China’s export restrictions on antimony have also pushed prices for the metal up by 70% since early February.
Indian Refiners and Tesla Sales
Indian refiners are turning to Russian crude after offers of Russian oil have rebounded to pre-January levels. Meanwhile, Tesla’s sales in Europe have dropped 43% in 2025, with the company losing market share to cheaper Chinese electric vehicles.
East Africa and the Energy Sector
Kenya is set to auction at least 10 exploration licenses in its first oil licensing round in September 2025. This move comes alongside similar auctions in Uganda and Tanzania.
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