First Look - Chinese ports handling majority of Iranian oil urge sanctions compliance

• Oil is trading higher, reversing losses from yesterday
  • The US dollar is lower again today after falling sharply yesterday
  • Russian data showed the country’s crude production was below its OPEC+ output target last month
• Chinese ports handling the majority of Iranian oil urge sanctions compliance (BBG)
  • Ports in China’s eastern province of Shandong, where the world's largest buyers of Iranian oil are located, have been urged by their parent company to forbid sanctioned oil tankers from docking
  • According to the instruction, ships on the US sanctions list should not be accepted or handled at ports in Shandong in a move to enhance compliance and avoid legal issues
  • The majority of Iranian oil flows to China, although almost all of it is first shipped to Malaysia for re-export to China, with tighter restrictions likely to make this type of move more appealing
  • While China does not recognize unilateral sanctions, individual companies have been wary of directly importing sanctioned oil

Looking for interest rate charts? We moved them here Interest Rate Charts and Tables

• Natural gas for February was lower by 12c to $3.54 Tuesday morning (7:54 CT) after rising over 30c on Monday
  • The American and European weather models are starting to show material demand differences over the next 15-days
    • Both models continue to forecast colder than 30-year normals, but the American and European models show a spread of 23 HDDs, with the more reliable Euro being warmer
• Cold weather in the US has sent cash prices above $4.00 and caused some production freeze-offs
  • Henry Hub next-day cash prices are $4.10 this morning, down 40c from yesterday, as much of the US is bathed in frigid temperatures
  • US production is down to just over 100 Bcf/d as freeze-offs reduce available supply
    • Pre-cold event, Lower 48 production was between 103.5 and 105.5 Bcf/d

For hedgers: AEGIS notes that there is a lot of bullish momentum regarding how January has looked weather-wise and how inventory draws are expected to take place this month. However, it typically takes continued cold or more bullish catalysts to extend beyond the rally we have seen so far. The price pressure can quickly turn the other way if the current weather pattern doesn’t materialize, or after the next few weeks and into February, the forecast turns warm. The Cal 2025 strip has reached near its highest level since June at $3.51 and is up 51c from the bottom back in November. The Winter ’25-’26 strip is similar; at $4.17, it's one of the highest hedgable levels all year. Collars look really attractive for this strip.