Oil Market: Weekly Growth with Risk Premium
On Friday, oil prices experienced a moderate decline; however, the week concludes positively for the oil market. December futures for Brent traded in the range of $105–105.5 per barrel, while WTI was around $97.
- Weekly Dynamics: Brent increased by less than 1%, while WTI rose by about 6%.
- US Stocks: Commercial crude oil stocks fell by 8.5 million barrels during the week ending October 9, contrary to expectations of a slight increase. This is the largest drop since the beginning of the war.
- Hurricane Factor: Part of the output in the Gulf of Mexico was temporarily halted, supporting the American grade.
- Brent-WTI Spread narrowed to approximately $8 per barrel after exceeding $9 at the beginning of the week.
Brent remains about 70% more expensive than a year ago. Analysts note that the market retains a significant geopolitical risk premium, and its complete removal necessitates an agreement between the USA and Iran.
Strait of Hormuz: Oil Flows Recovering, but Unsteadily
The situation in the Strait of Hormuz remains the main factor influencing oil, LNG, and petroleum products pricing.
- Crude Flows. In the week leading up to October 13, an average of about 11.6 million barrels per day passed through the strait—approximately 68% of the pre-war level of 17.15 million.
- Shipping. The number of transits decreased to 131 for the week. Many container lines have rerouted to avoid the strait.
- Incidents. Following the sinking of the container ship GFS Pride, new reports have emerged of a fire on a tanker in the Gulf of Oman.
- Conflicting Signals. Tehran announces the closure of the strait, while the US military command reports the passage of more than 19 million barrels of oil per day under convoy.
High prices make routes commercially viable even amid military risks; demand from Asian buyers encourages shipowners to continue transporting.
IEA and G7: Second Major Reserve Release This Year
The IEA has decided to release the remaining 100 million barrels onto the market as part of the March agreement, including more than 20 million barrels of diesel fuel. This continues the G7 countries’ agreement from October 2 to release reserves over four months, with priority supply for diesel in the first 20 days.
- The diesel refining margin in Europe dropped nearly 2% following the announcement.
- Some analysts believe that reserves only partially ease tensions in the middle distillates market.
- The USA is considering easing sanctions on vessels of the "shadow fleet" to reduce record freight rates.
Fuel Oil - A New Narrow Segment
In addition to diesel, a shortage of bunker fuel is intensifying. According to Vitol, the conflict in the Middle East has reduced fuel oil supplies from the Persian Gulf by approximately 800,000 barrels per month, while strikes on Russian refineries have cut another 1 million tons per month. For bunkering companies and shipping, this means high fuel prices will persist.
OPEC+: Quotas on Hold, Production Below Targets
Seven key OPEC+ participants—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have maintained unchanged quotas for November.
- Target levels: approximately 10.5 million barrels per day for Saudi Arabia, 9.9 million for Russia, and 4.4 million for Iraq.
- Actual core alliance production in August stood at about 25 million barrels per day—approximately 5 million below the pre-war level.
- About 2 million barrels per day in cuts remain in place.
- An audit of production capacities will determine baseline production levels for 2027.
The next meeting of the alliance is scheduled for November 1. OPEC+'s influence on the physical oil market remains limited for now: logistics in the Persian Gulf play a decisive role.
Gas and LNG: Europe Enters Winter with Stock Shortages
The European gas market remains one of the most strained segments of the global energy sector.
- Prices: TTF futures are trading around €86 per MWh, approximately 2.6 times higher than the level a year ago.
- Storage: EU gas inventories are about 74% full, with a five-year average norm of around 89%. Brussels has lowered its target from 90% to 80%.
- Asia: The JKM indicator hovers around $26 per MMBtu, with Europe and Asia competing for each LNG shipment.
During the Russian Energy Week, the notion of a "golden age" of gas was put forward: it is no longer viewed merely as a transitional fuel. Notably, SOCAR announced its intention to purchase gas from Gazprom—a signal of a restructuring of regional gas flows.
Coal: Expensive LNG Spurs Demand in Asia
Newcastle energy coal trades around $150 per ton. The October peak of $152.20 represents the highest level since October 2024, with an annual increase exceeding 40%.
- High-quality energy coal is about $20 per MMBtu cheaper than LNG in key Asian markets.
- Total coal imports by China, Japan, and South Korea in Q4 may increase by approximately 20 million tons.
- In Russia, industry estimates suggest that losses for coal producers may shrink by approximately 200 billion rubles by 2027.
Power Generation and Renewables: A Bet on Reliability
The energy crisis accelerates investment in both renewable energy and backup generation.
- In Europe, energy companies are combining solar plants with storage solutions, reducing reliance on gas during peak hours.
- In Russia, Gazprom Energy Holding plans new plants in Moscow with a capacity of up to 480 MW, while distributed generation is being discussed as a necessary measure.
- On October 29, the IEA will release the Renewables 2026 report with updated forecasts for renewable capacity additions.
Russia: Fuel Market, Refineries, and Production
The domestic fuel market in Russia demonstrates short-term stabilization against the backdrop of limitations and a diesel deal with the USA.
- Retail: The average price for gasoline is 78.68 rubles per liter, while diesel fuel is 86.67 rubles. Since the beginning of the year, gasoline prices have risen by 21.4%, and diesel by 13.5%.
- Exports: The gasoline export ban remains in effect until January 31, 2027, while restrictions on diesel exports have been lifted early.
- Diesel Deal: Shipments to the USA and the global market will reach 300,000 tons in October, 500,000 tons in November, and 1 million tons in December.
- Production: The Laya Vozhskoye field in the NAO has been launched into pilot industrial operation. The Ministry of Energy and the Ministry of Finance are reworking tax incentives for hard-to-recover reserves.
A key risk for the refining sector is the state of refineries following the breakdown of the energy truce: refinery loads directly affect petroleum product export volumes.
What Matters to Energy Sector Investors Next Week
- Strait of Hormuz: Increasing oil flows could reduce the risk premium; new attacks may push Brent back to $110.
- IEA Reserves: The pace of diesel availability in the market will influence crack spreads and refinery margins.
- Sanctions Against the "Shadow Fleet": An official US decision could lower freight rates.
- EIA Data on US oil inventories due October 21.
- Bank of Russia Meeting on October 23: inflation accelerated to 7.2%, important for assessing the shares of oil and gas companies.
- Political Calendar: OPEC+ meeting on November 1 and US midterm elections on November 3.
Week's conclusion: the global market for oil, gas, coal, and petroleum products remains structurally deficient. The release of strategic reserves and new logistics schemes mitigate price spikes but do not eliminate the primary cause of tension—the instability of supplies from the Persian Gulf. For energy market participants, priorities continue to be hedging price risks, diversifying supply chains, and controlling refining margins.
