A Fragile Calm Brings Ships Back to the Red Sea
Politics, Geopolitics & Conflict
This week, Washington has again increased the pressure on Venezuela with the first seizure of a sanctioned tanker off the Venezuelan coast, and preparations for more, in a bid to further disrupt PDVSA’s logistics by scaring the insurers. The effect reverberates by raising the risk premium. At the same time, Chevron is in active discussions with the Trump administration on how it can continue operations in Venezuela in compliance with sanctions, with the Chevron CEO emphasizing the supergiant’s “long view” on remaining engaged despite the intensifying situation.
Kurdistan’s shift to a gas-backed power system has changed the dynamics with Baghdad. Khor Mor and nearby fields now support more than 8 GW of generation, and federal Iraq is drawing heavily on that output. Kirkuk and Nineveh rely on KRG electricity, and Baghdad has committed to taking Khor Mor gas for the 620-MW Kirkuk plant. This creates a level of dependence that Baghdad cannot offset quickly. The recent UAV strike on Khor Mor, likely carried out by an Iran-aligned militia, was aimed at the gas-handling zone and designed to disrupt operations without causing a full shutdown. The intent was political pressure: signal that further gas development or expanded power exports can be contested and remind Baghdad that its reliance on KRG-linked infrastructure carries risk. For Erbil, this comes after losing ground in the fight over unilateral oil exports. Oil leverage has…
Politics, Geopolitics & Conflict
This week, Washington has again increased the pressure on Venezuela with the first seizure of a sanctioned tanker off the Venezuelan coast, and preparations for more, in a bid to further disrupt PDVSA’s logistics by scaring the insurers. The effect reverberates by raising the risk premium. At the same time, Chevron is in active discussions with the Trump administration on how it can continue operations in Venezuela in compliance with sanctions, with the Chevron CEO emphasizing the supergiant’s “long view” on remaining engaged despite the intensifying situation.
Kurdistan’s shift to a gas-backed power system has changed the dynamics with Baghdad. Khor Mor and nearby fields now support more than 8 GW of generation, and federal Iraq is drawing heavily on that output. Kirkuk and Nineveh rely on KRG electricity, and Baghdad has committed to taking Khor Mor gas for the 620-MW Kirkuk plant. This creates a level of dependence that Baghdad cannot offset quickly. The recent UAV strike on Khor Mor, likely carried out by an Iran-aligned militia, was aimed at the gas-handling zone and designed to disrupt operations without causing a full shutdown. The intent was political pressure: signal that further gas development or expanded power exports can be contested and remind Baghdad that its reliance on KRG-linked infrastructure carries risk. For Erbil, this comes after losing ground in the fight over unilateral oil exports. Oil leverage has faded, but power leverage is rising. The federal grid needs KRG electrons, and any prolonged outage in the north lands on Baghdad’s desk. That gives the Kurds room to push back in budget and export negotiations, even as the same dependence magnifies the national stakes of any future disruption.
The Leviathan partners need Israeli approval to lift export caps before finalizing the $35 billion supply agreement with Egypt that would run through 2040 and anchor feedgas for Egypt’s LNG system. The permit remains held up inside Israel’s energy ministry, where industrial buyers are pushing for a domestic price concession tied to any export expansion. The consortium extended its own deadline to 31 December as the file drifted, and the delay has created space for Cairo to signal that it can source incremental gas from Qatar if Israel cannot deliver. Washington is urging Jerusalem to move the deal forward to stabilize Egypt’s finances and preserve East Med LNG flow into Europe, but the government is sensitive to criticism that it is trading long-term energy security for revenue. The calculus is unchanged: upstream economics favor exports, yet reserve life and domestic price politics make every additional export tranche more difficult to justify. The new element is that Egypt is now advertising alternatives, raising the risk that a prolonged stall weakens Israel’s leverage over a transaction it once assumed would close on its terms.
Traffic through the Red Sea is picking up after the Gaza ceasefire and the Houthis’ pause in attacks, but no one is treating this as a return to normal. Tankers are moving back through Suez and Bab el-Mandeb faster than container lines, which are still routing a large share around the Cape while insurers reassess risk. Carriers are working off a 60–90 day horizon to see whether the pause holds and whether war-risk premia actually fall. Recent piracy incidents in Bab el-Mandeb and Iran’s tanker seizure in Hormuz underline how fragile the broader environment remains. Tanker traffic has held up better than container shipping throughout the crisis; if the lull continues, freight and insurance costs for crude and products should ease, but operators will keep alternate routes and contingency plans active.
The Southern Transitional Council (STC), the UAE-backed faction pushing for an independent South Yemen, has taken control of the PetroMasila complex and surrounding fields after its advance into inland Hadhramaut. This shifts a major portion of Yemen’s onshore reserves into the hands of a group whose objective is separation, not preservation of a unified state under the Saudi-backed Presidential Leadership Council. It also deepens the UAE-Saudi split over the south and alters the balance with the Houthis, who now face a stronger southern actor instead of a weak, cash-strapped government in Aden. With the STC now holding the territory, it becomes the gatekeeper for crude liftings, security at Masila, and any future attempt to restart LNG or pipeline plans on the Gulf of Aden coast. If the group beds in, oil revenue will feed emerging southern institutions rather than flow through Sana’a or Riyadh, complicating any durable settlement.
Deals, Mergers & Acquisitions
TotalEnergies (TTEF.PA) tightened its grip on Namibia’s offshore play by cutting an asset swap with Galp (GALP.LS) that hands Total a 40% stake and operatorship of the Mopane block. Galp gets smaller slices of Total’s Venus-area licences, plus the bill for more capex down the line, since it’ll have to repay Total for covering half of Mopane’s appraisal spend once cash flow starts. The move puts Total in the driver’s seat on both Mopane and Venus, the basin’s two headline discoveries, and lines up a unified path toward a hub development. Galp’s stock ate the news, while Total’s edged higher — a pretty good tell on who got the cleaner end of the deal.
Serica Energy (SQZ.L) closed its purchase of Prax Upstream for about £14.5 million, adding the Lancaster field and a cash balance of roughly $34 million to its UK portfolio. Lancaster is still doing around 5,900 boepd, but it winds down by mid-2026 when the Aoka Mizu FPSO quits the area, so this is a short-life bolt-on rather than a long runway asset. The deal also keeps Serica on track to wrap the previously agreed TotalEnergies and ONE-Dyas acquisitions in the first half of 2026, plus a farm-in that gives it 40 percent of the P2530 licence containing the Wagtail discovery and a couple of low-risk prospects. Serica already supplies about 5 percent of the UK’s gas, and this move folds more non-operated barrels into a strategy built around the Bruce-Keith-Rhum and Triton hubs.
Cybele Energy signed its PSC for Guyana’s S4 block, making it the first U.S. operator to land acreage there outside the Exxon-Hess-CNOOC group. S4 is a shallow-water block with lower entry costs and sits close enough to the main play fairway to be worth a real look. Cybele plans to start with 3D seismic before deciding whether to drill. For Guyana, it’s another step in opening the door to smaller operators instead of keeping the basin locked up by the same three players.
Israel is preparing to sign off on a $35 billion gas export deal with Egypt, locking in 130 bcm of Leviathan output through partners Chevron (CVX), NewMed Energy (DKDRF, NWMD.TA) and Ratio Petroleum (RTPT.TA). The agreement extends supply through 2040 and gives Israel a fixed-price buffer for its own market, a point Washington has been pushing as regional politics have tightened. Egypt has every reason to keep the gas flowing: domestic production has fallen below 5 bcf/d after years of decline at Zohr and other fields, turning the country back into a net importer. The deal effectively buys Cairo time while it waits for new investment and exploration activity to catch up to its shrinking base.
Discovery & Development
Eni (ENI.MI) pulled up about 600 bcf of gas at Konta-1 in Indonesia’s Kutei Basin, and people on the ground think the structure probably breaks the 1-tcf line once they finish poking at it. The well sits right in Eni’s wheelhouse, close enough to the Jangkrik/Merakes setup that they don’t have to reinvent anything to bring it online. Indonesia, meanwhile, isn’t going to complain about fresh gas that can support both its LNG program and its chronic domestic shortfalls.
Chevron (CVX) and its partners signed off on roughly $2 billion to push Gorgon Stage 3 forward in Western Australia, tying new offshore fields into the existing LNG and domestic gas network. The move extends the life of one of the region’s anchor projects and keeps feedgas steady as older reservoirs taper off. It also signals that the joint venture is still willing to spend real money in Australia despite the regulatory grind and carbon-handling obligations that have been dogging the project for years.
Equinor (EQNR) signed off on a NOK 4 billion (~$396 m) plan to bring the Isflak oil find into the Johan Castberg system in the Barents Sea. The 46 mbbl discovery will move through a subsea tieback to the Castberg FPSO, with first oil penciled in for late 2028. It’s a textbook example of Equinor’s shift toward lower-cost subsea add-ons as the Barents runs out of discoveries big enough to justify new standalone platforms. Partners Vår Energi (VAR.OL) and Petoro stay on board, but Equinor’s the one steering a portfolio that’s now built around dozens of smaller tiebacks rather than big-iron megaprojects.
Dana Gas (DANA.AD) logged a new onshore gas find at its North El-Basant-1 well in Egypt’s Nile Delta, estimating roughly 15–25 bcf in place. Early output is expected to land near 8 mmscfd once the well is hooked into the national grid, making it the fourth hit in the company’s current drilling campaign. The discovery folds into Dana’s roughly $100 million plan to drill 11 wells aimed at shoring up reserves and domestic supply. The next well in the sequence, Daffodil, is due to spud in early January.