Oil Markets Poised for Sustained Strength Amid Sanctions and Supply Cuts

Jonathan Browning

Jan 166 min read

Updated: Jan 20

DATE: 01/16/2025

Jonathan G. Browning

Chief Strategy Officer | Hornet Corporation, Tennessee

Oil Markets Poised for Sustained Strength Amid Sanctions and Supply Cuts

The oil markets have started the year on a bullish note, and industry analysts believe this momentum is unlikely to wane anytime soon. A combination of geopolitical factors and strategic decisions by major producers is driving a tighter supply environment, setting the stage for a potentially prolonged rally.

One of the most significant developments shaping the market is the latest round of U.S. sanctions targeting Russian oil exports. These measures, announced by the Biden administration, have imposed the harshest restrictions to date on Russia’s energy sector. The sanctions target approximately 180 vessels, key executives, traders, and two major oil companies—Surgutneftgas and Gazprom Neft—which collectively handle about 25% of Russian oil exports. According to Standard Chartered (StanChart), the new restrictions have tripled the number of Russian crude oil tankers under sanction, disrupting roughly 900,000 barrels per day (kb/d) of exports.

Although Russia is expected to employ measures to mitigate the impact—such as expanding its shadow fleet of tankers and conducting ship-to-ship transfers—StanChart predicts these strategies will only partially offset the effects. Analysts estimate that 500 kb/d of Russian oil could be displaced in the next six months, tightening global supply even further.

FOR ACCREDITED INVESTORS: SCHEDULE AN APPOINTMENT TO LEARN MORE ABOUT THE BENEFITS OF OIL & GAS INVESTING

Schedule Appointment

OPEC+ Strategy Bolsters Market Confidence

Beyond sanctions, the strength of the oil market is also underpinned by OPEC+’s continued adherence to its production strategy. Last month, the organization announced a delay in its planned output increases, pushing them back by three months to April 2025. Additionally, the unwinding of production cuts has been extended by a year, now set to conclude at the end of 2026.

This revised plan effectively removes a significant volume of oil from the market. Under the previous schedule, voluntary production increases and other adjustments would have added nearly 500 million barrels to the market in 2025. However, the new timeline reduces this addition to just 191 million barrels, translating to an average supply cut of 836 kb/d for the year.

According to StanChart’s supply-demand model, these measures ensure that global oil markets remain balanced without causing inventory builds. Even factoring in rising demand, estimated at 1.31 million barrels per day (mb/d) in 2025, and modest non-OPEC supply growth of 0.96 mb/d, the market appears poised for stability. The model forecasts a slight global drawdown of 0.1 mb/d throughout 2025.

Gas Markets Show Limited Impact from Sanctions

While the sanctions have significantly influenced the oil markets, their effect on natural gas markets has been less pronounced. The latest restrictions include two LNG terminals, one of which is Portovaya, a smaller facility in the Baltic Sea. However, the main Baltic terminal, Yamal LNG—responsible for over ten times the capacity of Portovaya—was not targeted.

Despite reduced pipeline gas flows to Europe, Russian LNG imports into the EU reached record levels in December, averaging 69 million cubic meters per day (mcm/d), far exceeding pre-war averages. This trend highlights a shifting dynamic in Europe’s energy supply, where LNG is increasingly filling the gap left by declining pipeline flows.

Looking Ahead

As geopolitical tensions continue to reshape energy markets, the interplay of sanctions, supply strategies, and demand dynamics will remain critical. The combination of reduced Russian exports, OPEC+ production constraints, and steady demand growth suggests that oil markets could maintain their current strength well into the year.

For now, all eyes remain on how Russia navigates its export challenges and whether global producers can effectively balance market dynamics in an increasingly volatile environment.

www.hornetcorp.com

DISCLAIMER

This publication is provided for informational and marketing purposes only and does not constitute, nor should it be construed as, tax, legal, investment, or financial advice. Hornet Corporation, including its affiliates and subsidiaries (referred to as Hornet Corp. or H.Corp), expressly disclaims any liability arising from reliance upon the information contained herein. Readers are strongly encouraged to seek independent counsel from qualified tax, legal, and financial professionals to address their specific facts, circumstances, and objectives.~ This document is a Hornet Corporation publication intended to provide general, non-specific information based on historical and current data, statistical references, and/or research. Certain content may include citations or references to third-party sources. While reasonable efforts have been made to ensure the accuracy and completeness of the information, Hornet Corporation makes no representations, warranties, or guarantees, whether express or implied, as to the reliability, timeliness, or accuracy of the information provided. ~Should you believe any information herein needs to be more accurate, complete, or otherwise requires clarification, please contact Hornet Corporation directly at info@hornetcorp.com. ~ All content herein, including but not limited to text, graphics, and design, is copyrighted and constitutes the sole intellectual property of Hornet Corporation. Unauthorized use, reproduction, dissemination, or distribution of this material, in whole or part, without prior written consent is strictly prohibited. Hornet Corporation expressly reserves all rights.

About the Author

Jonathan Browning, Chief Strategy Officer at Hornet Corporation, brings extensive experience in strategic planning, operations management, and stakeholder relations. With a focus on innovation and emerging technologies like AI and blockchain, Jonathan drives growth and operational excellence while championing American energy independence.

Hornet Corp | Mines and Money | Forbes | World Money Show

For a quarter of a century in the oil industry, our team at Hornet Corp has navigated the inherent fluctuations of a commodity-based market with unwavering stability. Our operational approach and robust structure have fortified our resilience, allowing us to withstand significant downturns such as the COVID-19 pandemic and the 2008-2009 financial crisis. While many companies retracted or shuttered during these challenging times, we, alongside our partners, remained steadfast, continuously investing in our shared objectives.

Our partners deeply value our commitment and trust in our dedication to every aspect of our business—from effectively producing wells and ensuring the prompt delivery of tax documents to the timely distribution of revenue checks and maintaining seamless communication throughout the entire process.

Our Executives Have Mud on Their Boots: Vertically Integrated

Beyond our comprehensive involvement in each phase of oil well development, we've strategically invested in adeptly navigating the complexities of a commodity-based business. Hornet Corp owns leasing and operating companies, demonstrating our commitment to integrated asset management. We've established a robust infrastructure that supports our operations by owning our headquarters, field office, research and development office, and supply yard. These strategic assets, combined with our unique business model, empower us to efficiently raise capital, drill, and complete wells swiftly and cost-effectively, setting us apart in the industry.

Alan Murrell | Hornet Corp — Alan Murrell - CEO

No Middlemen! Hornet Corp & You: Owner Operator

Our involvement spans the entire oil well development spectrum, offering our partners a seamless experience. This comprehensive approach eliminates the need for middlemen and reliance on multiple companies. We oversee everything from leasing, investment, drilling, and completion to the operation of the wells, ensuring efficiency and cohesion at every step. By centralizing these phases under one roof, we streamline the process, making it more accessible and effective for our partners and enhancing the overall potential success of each project.

Strategically Designed, Optimized Structure

We design our programs to offer accredited partners significant ownership across multiple wells without requiring a hefty investment. By advocating for diversifying investments across several wells, we maximize potential returns for our partners. Additionally, our strategically chosen locations provide the unique opportunity to drill wells that can tap into multiple pay zones within various formations, significantly enhancing the chances of success. Our approach goes beyond targeting a single pay zone, aiming for multiple layers of potential within each well to ensure sustained profitability.

A Proud Member of the Hendersonville Chamber of Commerce: Promoting Community Strength.

Building Relationships: Seamless Partnership

By blending today’s cutting-edge technology with traditional old-school, open-door communication, we manage and nurture our partnerships securely and effectively. This balance ensures that our partners enjoy a high level of trust in a stable and transparent environment, fostering long-term relationships. As a result, our partners often engage in multiple projects and ventures with us rather than just a single investment, solidifying sustainable and enduring partnerships.

ABOUT OUR TEAM:

ALAN MURRELL -CEO

Alan Murrell, CEO of Hornet Corporation, is a leader in the energy sector with a focus on ethical resource development. Born in Metcalfe County, Kentucky, he runs the family-owned business with his wife, Kimberly, and their three children, highlighting the importance of family, community, and innovation. Alan navigated the company through tough times, including the financial crisis and the COVID-19 pandemic, showing resilience and a commitment to growth. The Boom Maker award recognizes his efforts in domestic oil development and environmental stewardship. Alan’s leadership at Hornet Corporation reflects his dedication to his family, community, and sustainable energy.

About the Hornet Corporation Leadership Team

Hornet Corporation’s leadership team combines expertise in finance, operations, strategy, and field management to drive the company’s success in domestic oil and gas ventures.

Kimberly Murrell, CFO,

Optimizes financial strategy and sustainability, focusing on growth, accountability, and transparency.

Ronald C. Filer, COO,

Leverages over two decades of experience in oil development and acquisitions, ensuring operational excellence and strong partner relationships.

Jonathan G. Browning, CSO,

Implements strategic initiatives and growth opportunities with a focus on efficiency and innovation.

Greg Parnell, Director of Field Operations,

Manages drilling and production activities, ensuring projects meet timelines and high operational standards.

This seasoned team’s combined leadership and expertise position Hornet Corporation as a trusted oil and gas development force.

HEY...........

DID YOU KNOW?

You can diversify with an opportunity that carries up to a 100% tax write-off. Join Hornet Corp in leveraging your tax dollars to invest in a stable and profitable oil industry venture.