Oil Market: First Weekly Correction in Three Weeks
On Friday, oil prices declined for the third consecutive session: Brent fell to $102.5–103.5 per barrel, while WTI dropped to $100, briefly slipping below that mark. By the week's end, Brent was down about 2%, despite having risen to nearly four-month highs of $108 on Monday.
- Wednesday: A drop of nearly 3%, to $105.7 — the sharpest decline in three weeks — followed reports of a partial restart of the Saudi East-West pipeline.
- Thursday: Brent closed at $104.82, WTI at $101.91 per barrel.
- Month-on-month: WTI gained around 18–19%, while Brent rose approximately 13%; oil prices are more than 50% higher compared to a year ago.
Analysts agree that the fundamental picture does not justify a prolonged drop of Brent below $100. The futures curve remains deeply backwardated: the December contract is nearly $5 cheaper than the November contract — indicating that the market is paying a premium for immediate delivery.
Middle East: East-West, Red Sea, and Hormuz
The East-West pipeline, with a capacity of up to 7 million barrels per day, is the main bypass of the Strait of Hormuz, which has been delivering up to 5 million barrels per day in recent months. Following drone attacks, three pumping stations were damaged, and shipments from Yanbu were suspended. Riyadh expects to restore about half of the capacity in a matter of days; full recovery will take five to six weeks.
- Bypass Routes: Saudi Arabia is offering additional batches to Asian refineries through ship-to-ship transfers at the Omani port of Sohar.
- Red Sea: Houthi forces have taken control of Mocha, Perim Island, and Hanish and declared a blockade on Saudi ports; on Thursday, there were renewed exchanges of fire across the border.
- Hormuz: The strait is virtually closed to commercial shipping, with no direct negotiations between the U.S. and Iran, and the maritime blockade of Iranian ports remains in place.
- Production: Saudi Arabia reported a drop in output in August to its lowest level since 1990.
The IEA warns that supply disruptions are already forcing consumers to cut demand for oil.
Oil Products and Refineries: Diesel Remains the Epicenter of Scarcity
- The crack spread for diesel in the U.S. reached a record $117.97 per barrel on Wednesday; European gasoil is at historical peaks.
- Exchange diesel in New York is around $5.05–5.25 per gallon; retail prices in the U.S. are at a record $6.23 per gallon, while gasoline is $4.32.
- Distillate inventories in the U.S. have risen for the third consecutive week: +1.6 million barrels, to 107.9 million barrels — the first sign of cooling.
Diesel in Europe is approximately 70% more expensive than February levels. For refineries outside conflict zones, this is a period of super margins, while fuel companies, aviation, and logistics face a shock in costs.
Gas and LNG: Europe Enters Heating Season with 68% Storage
TTF futures rose by 1.5–2% on Friday, reaching €77–78 per MWh, after €82 on Wednesday; year-on-year, gas prices in Europe have surged by about 140%. EU storage is filled to around 68% — 16 percentage points below the five-year average and near two-decade lows.
- Qatar: Force majeure for LNG supplies has been extended until November; about 17% of Ras Laffan's capacity is out of service, with repairs estimated to take three to five years.
- Asia: Spot LNG is priced at $26–28 per million BTUs — the highest since 2022; LNG demand in the region may decrease by 3–10% by year-end, as some South Asian buyers reject high offers.
- Norway: Scheduled maintenance is temporarily reducing pipeline supplies.
- USA: Henry Hub is around $2.86 per million BTUs; a record spread supports U.S. LNG exporters.
Russia and Ukraine: Energy Ceasefire Not Confirmed, Fuel Exports Restricted
The agreement announced by Washington on September 14 to cease attacks on energy infrastructure is, in practice, not working: in the past week, refineries in Syzran and Yaroslavl were attacked, and strikes on Ukrainian infrastructure continue. Moscow called the idea "good," while Kyiv is ready for de-escalation with partner guarantees.
- The ban on diesel exports for producers is reportedly extended until the end of October; for non-producers, it remains in effect until January 31, 2027.
- A complete ban on gasoline exports lasts until January 31, 2027; the export of jet fuel is restricted until November 30.
- After drone attacks, six major Russian refineries reduced output.
For the global oil product market, the absence of Russian diesel is one of the factors contributing to the exceptional premium in middle distillates.
Asia: India and China Compete for Available Barrels
Russian oil imports to India decreased to approximately 2.1 million barrels per day in August, down from 2.7–2.8 million barrels per day in July: refinery maintenance, lower availability of crude, and aggressive procurement by Chinese processors played a role. The retreat of Brent from peaks provides a respite for India — the rupee hovers around 95.8 against the dollar. Conversely, the yuan has strengthened to a four-year high, reducing energy import costs for China.
Electricity, RES, and Nuclear: Structural Shift Accelerates
- RES: According to the IEA, renewable generation is expected to grow by about 1000 TWh per year until 2030, with over 600 TWh from solar generation; the share of low-carbon sources in global electricity is set to rise from 42% to 50%.
- Nuclear: Uranium is priced around $90 per pound; the U.S. and Saudi Arabia signed a peaceful nuclear agreement, while South Korea has completed the Saeul 3 power block. The summer drought, however, constrained the operation of nuclear plants in Europe.
- Bottleneck: Delivery times for large gas turbines exceed the construction cycle of the power station itself.
High gas prices improve the economics of RES and storage systems, yet rising rates make capital for grids and new projects more expensive.
Coal: The Safety Net for Asia's Energy Systems
Thermal coal in Newcastle holds around $145 per ton. Northeast Asia substitutes expensive LNG with coal and nuclear generation, supporting demand and exporters — Australia, Indonesia, Russia, and South Africa. The long-term trend remains unchanged: according to the IEA, the share of coal in global production will decrease from 34% in 2025 to 27% by 2030, which is why major producers are hesitant to invest in new mines.
Macroeconomics: Rates Rise Alongside Energy Inflation
On September 16, the Fed raised its rate by 25 basis points, to 3.75–4.00% — the first increase since 2023; on Friday, the Bank of Japan also raised rates. The yield on 10-year U.S. bonds stands at about 4.95%. The number of drilling rigs in the U.S. has reportedly increased to 591 (450 oil, 132 gas) compared to 539 last year: shale companies are responding to prices, but cautiously.
What to Monitor for Investors and Energy Sector Participants
- The actual restart of the East-West pipeline and resumption of shipments from Yanbu.
- Shipping through the Hormuz and Bab-el-Mandeb Straits, and new strikes on infrastructure.
- The status of the energy ceasefire between Russia and Ukraine and the condition of Russian refineries.
- The official implementation of the extension of the diesel export ban from Russia.
- The dynamics of TTF, the pace of European underground storage refilling, and competition with Asia for LNG.
- Diesel crack spreads and weekly inventory statistics in the U.S.
The baseline scenario for the upcoming days anticipates Brent in the range of $98–108 per barrel, with high sensitivity to news from the Middle East. Oil products and gas remain the most stressed segments of the global energy market.
