BP: Profits Hit a Four-Year Low Amid Refining Struggles

BP’s fourth-quarter performance showcased significant challenges, with profits plunging 61% year-on-year to \$1.17 billion. This marked the company’s lowest earnings since Q4 2020, underscoring the impact of weak margins in its refining business. The drop from last year’s \$2.99 billion in underlying replacement cost profit has amplified investor concerns, particularly as activist investor Elliott Investment Management reportedly builds a stake in the company. This development has fueled hopes for strategic shifts and board changes to enhance shareholder returns.

Under CEO Murray Auchincloss, BP faces mounting pressure to address its energy transition strategy, which has drawn criticism from stakeholders. The company is navigating a complex landscape as it seeks to balance profitability with long-term goals in the energy sector.

Saudi Aramco: Price Hikes and Reduced Crude Supply to China

Saudi Aramco’s allocation of crude oil to China is set to decline for the second consecutive month, with March shipments expected to drop to 41 million barrels from February’s 43.5 million barrels. This reduction follows the kingdom’s decision to hike crude prices to the highest levels in over two years. The official selling price for Arab Light crude was raised by \$2.40 to \$3.90 per barrel above the Oman/Dubai benchmark average, marking the most significant increase since December 2022.

The price adjustments come amid disruptions in Russian energy trade and heightened shipping costs following new U.S. sanctions. Additionally, Aramco is shifting its supply strategy, reducing allocations to Sinopec and the Fujian refinery while increasing deliveries to PetroChina and Shenghong Petrochemical.

OPEC+ members, which produce nearly half of the world’s oil, are expected to maintain production cuts in Q1 2025, followed by a gradual output increase starting in April.

Brazil: Delayed Soybean Harvest and Corn Crop Concerns

Brazil’s 2024/25 soybean harvest has reached 15% of the planted area, up six percentage points from the previous week. However, this progress remains significantly behind last year’s 23% at the same time. The delay could impact the sowing of Brazil’s second corn crop, which accounts for 75% of the country’s annual production. Parana state leads the harvest progress, while Mato Grosso has shown improvement despite unfavorable weather conditions.

Farmers are closely monitoring rainfall patterns, as insufficient precipitation could narrow the planting window for the second corn crop, increasing exposure to climate risks. As of last week, 20% of the second-corn area had been planted, well below the 38% achieved last year.

European Union: Simplifying Farm Subsidies Amid Criticism

The European Union is drafting plans to simplify its Common Agricultural Policy (CAP), which distributes €387 billion in subsidies for farmers and rural development. The proposed “simplification package,” expected in Q2 2025, aims to reduce the regulatory burden on farmers while bolstering green initiatives.

Last year’s farmer protests against stringent regulations led the EU to dilute some green conditions tied to subsidies. However, the move drew criticism from environmental groups, who accused Brussels of neglecting climate assessments. Danish Minister Jeppe Bruus emphasized the need to balance deregulation with climate action.

Trump’s Tariffs: Steel and Aluminum Industries in Focus

U.S. President Donald Trump has raised tariffs on steel and aluminum imports to a flat 25%, eliminating prior exceptions and quotas. This move aims to boost domestic industries but risks escalating trade tensions globally. The new tariffs, effective March 4, apply to all countries, including major suppliers like Canada, Brazil, and Mexico.

Trump’s administration has also introduced regional standards for steel and aluminum processing to curb imports of minimally processed materials. The measures are expected to secure the U.S. steel and aluminum sectors as critical industries for economic and national security. However, backlash from trading partners like Canada could lead to retaliatory actions.

Gold: A Safe-Haven Asset Amid Trade Uncertainty

Gold prices have surged to record highs, driven by global trade tensions and escalating tariffs under Trump’s administration. Spot gold reached \$2,942.70 an ounce, marking an impressive 63% rally over the past 16 months. Investment flows into gold exchange-traded funds (ETFs) have increased, with holdings in the SPDR Gold Trust rising to 27.92 million ounces as of February 7.

Other factors, such as central bank buying and consumer demand in China and India, continue to support gold prices. However, the metal’s volatility may persist due to unpredictable policy shifts and geopolitical uncertainties.

Liquefied Natural Gas (LNG): Shifting Supply Dynamics

European LNG imports have surged amid reduced Russian gas supplies and elevated prices. Vessels from Oman and Australia are now heading west, with shipments diverted to Europe due to higher demand. For instance, the Elisa Ardea is making a rare journey from Australia to France, marking the first such delivery since 2022.

However, geopolitical risks, such as potential Houthi attacks in the Red Sea, continue to pose challenges for LNG shipments. European gas storage targets could exacerbate market tightness, with high prices expected to persist throughout 2025.

Port Hedland: Weather Disruptions in Iron Ore Exports

Australia’s Port Hedland, the world’s largest bulk export hub, has begun clearing vessels due to an approaching tropical low-pressure system. The port is critical for iron ore shipments from major players like BHP Group, Fortescue, and Hancock Prospecting. Previous weather disruptions in the region have already impacted Rio Tinto’s operations this season.

Ivory Coast: Cocoa Shortage Fears Amid Dry Weather

Ivory Coast’s cocoa farmers are grappling with a prolonged dry season, raising concerns about the upcoming mid-crop harvest. Insufficient rainfall has weakened plantations, with some regions recording rainfall significantly below the five-year average. Farmers warn that without adequate precipitation by the end of February, the mid-crop could face delays and reduced yields.

Despite these challenges, some regions remain optimistic, citing better-than-average rainfall and resilient crop development. The situation underscores the vulnerability of cocoa production to climate variability.