Energy and Oil Sector
Oil prices rose following escalating tensions near the Strait of Hormuz, where Iranian diplomacy faltered and ship traffic plummeted. Supply concerns were compounded by drone strikes forcing output cuts in Russia and China absorbing surplus crude into its national reserves. Meanwhile, energy majors pushed forward with strategic long-term acquisitions and alternative pipeline planning.
Crude oil futures rose on Monday as Iran ruled out extending a diplomatic memorandum of understanding with the United States. U.S. crude gained 0.76% to $83.03 per barrel, while Brent crude climbed 0.92% to $89.33 per barrel following the expiration of a 60-day deadline tied to the Strait of Hormuz. Iranian Foreign Ministry spokesman Esmaeil Baqaei dismissed the possibility of an extension, citing alleged early violations by the U.S. Meanwhile, ship-tracking data from Kpler showed just five commodity vessels transiting the strait on Saturday and none on Sunday, down sharply from 31 during the prior weekend after recent attacks on tankers. ADNOC and Saudi Aramco responded by offering alternative spot crude to Asian refiners, though analysts warn that ongoing shipping restrictions through the corridor and a diplomatic stalemate will limit immediate downside for prices.
BP has agreed to acquire Woodside Energy's 70 percent interest in the Calypso natural gas project offshore Trinidad and Tobago, securing full ownership and operatorship of Block TTDAA 14. BP previously held a 30 percent participating interest in the deepwater development, which features estimated reserves of 3.5 Tcf and lies about 220 km off the coast in water depths of 2,100 m. The transaction, which includes cash consideration and contingent payments, allows Woodside to fully exit the Caribbean and streamline its portfolio. For BP, full control lets the supermajor leverage its existing domestic infrastructure, including its position as the country's largest natural gas supplier and its 45 percent stake in the Atlantic LNG facility. The deal is expected to close by the end of 2026, pending approval from the government of Trinidad and Tobago and relevant regulatory authorities.
Oilprice.com reports that a project to ship Iraqi crude to the Syrian Mediterranean coast in order to bypass the Strait of Hormuz is at least four years and $15 billion away from completion. A consortium that includes U.S. supermajor Chevron is currently reviewing the feasibility of the pipeline plan, which is supported by the U.S. Administration as a means to reduce reliance on Hormuz. The existing oil pipeline has been non-operational for more than two decades and cannot be reused, forcing the construction of entirely new infrastructure that complicates the project and extends costs. The Hormuz crisis has cut off most of Iraqi crude exports, accelerating negotiations between Iraq and Syria to finalize a contract for the route from Kirkuk to Baniyas. Youssef Qablawi, CEO of the state-owned Syrian Petroleum Company, stated that the renovation from Haditha to Baniyas would take three years at most, with the completed project expected to feature two pipelines with a capacity between 1.5 million and 2 million barrels per day. The United States anticipates that U.S. companies will participate in the reconstruction, which aims to secure Iraqi exports, support Syria's post-war economy, and curb Iranian leverage in the strait.