The global energy market concludes the week in a state of high volatility. Brent crude oil remains above $100 per barrel. Gas prices in Europe are trading at their highest since the end of 2022. The diesel market continues to be the most tense segment of the oil and gas industry. For investors, oil and fuel companies, traders, and refinery operators, three key themes persist:
- attacks on tankers in the Strait of Hormuz;
- the deal between Russia and the US regarding diesel fuel supplies;
- the fate of strikes on refining infrastructure following the collapse of the "energy ceasefire".
Oil Market: Brent at $104 Amid Expectations of Sanctions Relief on the "Shadow Fleet"
On Thursday, oil prices fell by about 2%. The December futures for Brent dropped to around $103.5–104 per barrel after closing at $106.06 on Wednesday. November WTI is trading at about $94–95. Price pressures arose from reports that the US administration is considering easing sanctions against the "shadow fleet" vessels. Washington aims to reduce record freight rates and expedite oil exports from the Persian Gulf.
Fundamental support for the oil market remains:
- US inventories are decreasing. According to the American Petroleum Institute, commercial stocks fell by 11.1 million barrels for the week ending October 9.
- Prices remain high year-on-year. Brent is approximately 70% higher than a year ago, with a yearly high of $120.88 recorded on April 30.
- Brent-WTI spread has widened. The difference exceeds $9 per barrel, reflecting a risk premium on maritime routes.
Strait of Hormuz: The Most Dangerous Phase for Shipping Since the Start of the War
October has become one of the most tense months for the tanker fleet since the conflict surrounding Iran began in late February. This week, two vessels sank, including the Singaporean container ship GFS Pride. Since the beginning of the week, at least nine attacks have been recorded near the Strait, targeting tankers carrying oil, LNG, and LPG.
- In September, crude oil exports from the Middle East nearly recovered to pre-war levels, facilitated by nighttime tanker transits under US Navy convoy with transponders turned off.
- Iran is increasing pressure to regain control over flow routes; on certain days, passage through the Strait is reduced by half or more.
- For insurers and charter companies, this means maintaining record freight rates and military surcharges.
OPEC+: Quotas Frozen, Actual Production Below Targets
At the meeting on October 4, seven key OPEC+ members kept November quotas unchanged. The group includes Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. Target levels are approximately 10.5 million barrels per day for Saudi Arabia, 9.9 million for Russia, and 4.4 million for Iraq.
- The actual production of the alliance's core members in August was around 25 million barrels per day, which is about 5 million barrels per day below pre-war levels.
- There are still about 2 million barrels per day of cuts in effect.
- The secretariat is completing an audit of maximum capacities, which will be used to calculate baseline levels for 2027.
- The next meeting is scheduled for November 1.
IEA Report: Oil and Diesel Deficit to Persist Until 2027
The October report from the International Energy Agency confirms that the global oil market balance remains in deficit.
- Global oil demand will drop by 2.6 million barrels per day to 102.4 million by 2026.
- Supply is expected to decrease by 5.8 million barrels per day this year.
- The forecast for demand recovery in 2027 has been downgraded from 2.6 to 2 million barrels per day.
- Refinery throughput in October will fall to a seasonal low of 81.3 million barrels per day, with an expected rise to 84.6 million by the end of the year.
The main risk for refiners and fuel companies is middle distillates. According to the agency, global diesel exports fell by about 700,000 barrels per day. Tightness in the gas oil market will persist until 2027.
Russia and US Diesel Deal: New Flows of Oil Products
The main topic in the oil products market is the agreement between the US and Russian presidents on October 9 regarding the supply of Russian diesel fuel to the American and global markets. The US Treasury has issued a temporary license for transactions involving Russian diesel until April 7, 2027.
- Volumes: 300,000 tons in October, 500,000 tons in November, and 1 million tons in December. In the future, volumes could reach up to 3 million tons per month.
- Regulation in Russia: restrictions on diesel exports are being lifted early. The ban on gasoline exports remains in place until January 31, 2027. The government is also discussing restrictions on LPG exports.
- Supply Mechanism: According to Alexander Novak, the energy ministries of both countries are coordinating a contract and supply mechanism that considers sanctions against the largest Russian oil companies.
- Market Reaction: Diesel futures in the US dropped by about 5%. In Europe, the effect was short-lived, as volumes are inadequate to offset the shortage caused by the crisis in the Persian Gulf.
Refineries and the "Energy Ceasefire": The Pause is Over
The "energy ceasefire" declared on October 11 between Russia and Ukraine has effectively been disrupted. Kyiv paused strikes on Russian refineries for three days. Afterward, Ukraine accused Moscow of a massive attack on its energy system and announced the resumption of strikes. In September alone, 12 major Russian refineries were targeted. Capacities that are halted or operating at reduced throughput account for nearly a quarter of Russian refining. For oil product exporters, this is a key risk: volumes from the diesel agreement are directly dependent on the state of refineries.
Gas and LNG: Europe Enters Winter with Supply Deficits
The European gas market remains under pressure. TTF futures are trading around €85–87 per MWh, the highest since December 2022 and nearly three times the level a year ago.
- EU underground storage is filled to about 73–74%, against a five-year norm of around 89%.
- Brussels has eased the storage filling target from 90% to 80%.
- Qatari LNG supplies to Europe are virtually nonexistent. The Asian JKM indicator exceeds $25 per MMBtu, and Europe is competing with Asia for every cargo.
- Some analysts still expect a correction. Citi’s baseline forecast for Q4 is €56 per MWh.
Coal, Power Generation, and Renewables: Two Extremes of Energy Security
Expensive LNG is bringing coal back into Asia’s energy balance. The price of Newcastle thermal coal is holding around $150 per ton. At the beginning of October, it reached $152.20, the highest since October 2024, and has increased by approximately 45% year-on-year.
Meanwhile, the growth of renewable energy is accelerating:
- In Australia, rooftop solar plants set a generation record of 17.5 GW on October 11, with solar accounting for 72% of consumption;
- The volume of Australian renewable energy projects with accepted investment decisions by 2026 has already exceeded 5 GW, marking an annual record;
- In Europe, energy companies are combining solar generation with storage solutions to reduce dependence on gas during peak hours;
- On October 29, the IEA will present the Renewables 2026 report with updated capacity forecasts.
What’s Important for Energy Sector Investors on October 16
- Strait of Hormuz. New incidents could quickly drive Brent back to $107–110 per barrel.
- Sanctions on the "Shadow Fleet." An official US decision may reduce freight and put pressure on oil prices.
- First Supplies of Russian Diesel. These will serve as an indicator for crack spreads and refining margins.
- Corporate Agenda. Gazprom Neft is issuing yuan-denominated bonds at a rate of 8.3% on October 16. Shares of Sovcomflot are reacting to signals of sanctions easing.
- Political Calendar. Ahead of the US midterm elections on November 3, Washington will be seeking to lower fuel prices.
The week’s conclusion: the global market for oil, gas, and oil products remains a seller's market. Geopolitical premiums, diesel shortages, and low gas inventories in Europe support prices. Easing of sanctions and new logistical schemes only partially alleviate tensions. For market players in the energy sector, flexible risk management remains a key tool.
