Main Updates for Wednesday Morning
- Oil: Brent is around $105–106 per barrel, WTI is approximately $93; the previous day, prices climbed above $107.
- Petroleum Products: Russia has partially lifted the ban on diesel exports, releasing 500,000 tons into the global market.
- Gas: TTF is trading around €83 per MWh — a peak since early 2023; EU storage is approximately 73% full.
- OPEC+: quotas for November remain unchanged, with the next meeting scheduled for November 1.
- Geopolitics: attacks on tankers near the Strait of Hormuz and strikes by Houthis on Saudi Arabia continue to pose risks to supplies.
Oil Market: Risk Premium Keeps Brent Above $100
On Tuesday, oil corrected about 1% after a rise of nearly $2 on Monday, when Brent closed at its highest since mid-September. The US-Iran conflict is in its eighth month, and the market is still evaluating the physical availability of barrels rather than the balance of supply and demand.
Support Factors
- A drone strike on a tanker near Oman’s Sohar port and damage to another vessel in the Strait of Hormuz; at least nine attacks have been recorded since the beginning of October.
- Houthi attacks on Riyadh airport have raised concerns about Saudi infrastructure.
- High freight and insurance rates are widening the spread between Brent and WTI.
Deterrent Factors
- Expectation of additional Russian diesel volumes.
- Recovery of production in the Gulf of Mexico following Hurricane Isaias.
- Weak demand: OPEC has lowered its forecast for oil consumption growth in 2026 to 0.4 million barrels per day from 1.4 million at the beginning of the year.
OPEC+ and Oil Price Forecasts
Seven OPEC+ countries — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — have maintained a pause in increasing production for the second consecutive month: the total quota for November stands at 31.01 million barrels per day. The actual production of the alliance remains below target levels due to export restrictions through the Strait of Hormuz.
Analysts' estimates are divided:
- Goldman Sachs has raised its Brent forecast for December to $90 from $85, assessing the risk premium at just over $20 per barrel.
- The US Energy Information Administration expects an average of $105 in the fourth quarter and $84 in 2027.
- The consensus analyst survey provides an average Brent price for 2026 of around $89.
Petroleum Products and Refineries: Diesel Crisis Receives Reprieve
The middle distillates market remains the most strained segment of the energy sector. The gas oil premium over Brent approached $98 per barrel last week: the deficit is concentrated not in crude oil but in refining. US refineries are operating at about 96% capacity, with almost no spare capacity available.
- Russia: Since October 10, the export of 500,000 tons of diesel fuel has been allowed; Washington speaks of the possibility of additional shipments up to 3 million tons. The US has temporarily lifted sanctions on Russian fuel.
- China: After a week-long pause, Beijing has approved October exports of gasoline, diesel, and aviation fuel amounting to about 3.7 million tons.
- IEA: The agency has urged member countries to accelerate the release of reserves with a priority for diesel.
Gas oil futures on ICE reacted with a decrease of 2.3% to $1449 per ton. The impact may be limited: Russian refining has been significantly affected by drone attacks, and the allowed volume is comparable to one day’s consumption in the US. Gasoline in the US averages $4.36 per gallon.
Gas and LNG: Europe Enters Winter with Record Low Reserves
The European gas market remains the main source of concern for energy and industry. Without Qatari LNG, TTF futures are holding around €83 per MWh — approximately 2.5 times higher than a year ago.
- EU storage is 73% full against a seasonal norm of around 90% — the worst level since tracking began in 2011.
- The target filling level has been softened from 90% to 80%.
- In the event of a cold winter, the bloc may need to reduce demand by 7%, or 14 billion cubic meters.
- Starting January 1, 2027, a complete ban on imports of Russian LNG will come into effect.
Winter forecasts vary widely: from €56 in Citi’s base scenario, where demand has already been reduced due to industrial stoppages, to €85–100 or more from Morgan Stanley in the event of cold weather and new supply disruptions.
Electricity and Renewables: Renewable Generation Softens Gas Shock
High gas prices are accelerating structural shifts in the electricity sector. In the first half of 2026, solar generation in the EU set a new record, wind power output increased, and wholesale electricity prices in several countries are increasingly less following gas prices. The flip side is a rise in the number of hours with negative prices and evening price peaks, which enhances the investment attractiveness of energy storage systems.
In the US, a record approximately 86 GW of new capacity is planned for 2026, with around 93% coming from solar, wind, and battery systems. For investors, the renewable energy sector and grid infrastructure remain a defensive story amid hydrocarbon volatility.
Coal: Demand Supported by Expensive Gas
The coal market benefits from the gas deficit. Rising gas prices following the onset of the Middle Eastern conflict have increased coal's competitiveness in generation, and coal prices in 2026 have recovered from the lows of late 2025. Main demand is being driven by China, India, and Southeast Asian countries, while in Europe, coal plants serve as a backup in case of a cold winter. In the long term, volumes of seaborne thermal coal trade are expected to decline, according to industry analysts.
Geopolitics and Sanctions: Energy Truce in Question
The US President announced an energy truce between Russia and Ukraine, but Kyiv accused Moscow of violating it just on Monday. For the market, this signals persistent risks for Russian refineries and export infrastructure. At the same time, the temporary easing of sanctions on Russian fuel has become Washington's first practical step towards expanding petroleum product supply.
What Matters for Investors and Energy Market Participants
- Strait of Hormuz: each new attack on tankers adds several dollars to oil prices; de-escalation could quickly reduce a significant portion of the premium.
- Diesel and Refinery Margins: actual shipments from Russia and China will show whether the petroleum products market has peaked.
- Gas: weather forecasts for November and the rate of withdrawal from EU storage will determine TTF dynamics.
- Statistics: focus on weekly data on US oil and petroleum product inventories and fresh monthly oil market reports.
- OPEC+: the meeting on November 1 will indicate whether the alliance is ready to return to production growth.
The baseline scenario for the coming days is high volatility: oil, gas, and petroleum products remain hostage to news from the Middle East, while electricity and renewables are receiving additional momentum from expensive hydrocarbons.
