You’ve probably never heard of the Ceres I.
Don’t worry, most people haven’t. But the Ceres I will play an interesting role in what’s about to happen over the next few months.
Measuring more than a 1,000 feet from bow to stern and holding a deadweight tonnage of nearly 300,000 tonnes, the Ceres I is a VLCC, very large crude carrier, that was built for one purpose — to ship up to 2 million barrels of crude oil to the highest bidder.
There’s nothing too out of the ordinary for the Ceres I at first glance. For most observers, it’s just one of the 810 active VLCCs transporting their precious crude cargoes all over the world.
The tanker suddenly popped into headlines last July, when it collided and caught fire with another oil tanker near Singapore. As you may know, Singapore is one of the largest oil-trading hubs in the world.
But the Ceres I isn’t your typical oil tanker, and the incident brought a lot of unwanted attention to a dark, shady part of the global oil trade. You see, the Ceres I has had a nasty little habit of “going dark” quite often over the last few years.
There’s a reason for that, dear reader.
What you may not know is that the Ceres I is also a part of a “dark fleet” of oil tankers that are used to sidestep sanctions and sell crude. When it crashed into the other tanker last July, the Ceres I was most likely carrying Iranian crude to China.
So why is this event last year relevant today? Well, it turns out that the Trump administration imposed its first round of sanctions on Iran’s oil industry a week ago. Given Trump’s fiery rhetoric and actions of the past, you can bet he’s set his sights on bringing Iran to its heel…
That fight will ignite the great Trump Vs. OPEC showdown of 2025.
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Although the first few weeks of his administration seemed razor-focused on aggressively attacking Canada and Mexico, the winds are starting to shift overseas.
Can you feel it?
But we’re not talking about the threat of tariffs to gain leverage in negotiations (which I’ll note seemed to have worked like a charm for the President after both Canada and Mexico gave concessions to their immigration enforcement).
Trump’s goal is clear: Bring Iran’s oil exports crashing down to zero.
For its own part, Iran did exactly what you’d expect it to after President Trump targeted the companies and ships connected to the country’s oil exports — it called for some backup.
The cry for help was sent last week to its OPEC allies and this has set up one helluva of a showdown in the coming months.
And here is where things will get interesting. First, it’s important to understand that the OPEC+ alliance is essentially led by the Saudis, who hold most of the spare capacity in the group and are bearing the brunt of the current production cut deal.
Keep in mind that the Saudis hold no love for its OPEC brother, and the less Iranian oil in the world offers the Saudis an opportunity to seize more market share.
Now throw in the fact that Trump appears to be directing his attention to the Middle East, we’re looking at another perfect storm for oil prices during the first half of 2025; his latest statements on Gaza are fuel for geopolitical tensions in the region.
If all hell does indeed break loose in the Middle East as President Trump insinuated recently, the real question is whether or not it’ll affect OPEC’s plan to unwind its production cuts starting in March.
Every supply/demand forecast out there is expecting more OPEC crude to hit the market this year, and any disruption to that schedule — as well as the fact that global demand is at record highs while global inventories are low — is going to throw the entire market off balance.
I can’t help but ask, “Are you not bullish yet?”
Until next time,
Keith Kohl
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