The global energy market concludes the week in a state of high volatility. Brent crude oil remains above $100 per barrel. Gas in Europe is trading at its highest levels since the end of 2022. The diesel market continues to be the tightest segment of the oil and gas industry. For investors, oil and fuel companies, traders, and refinery operators, three key themes remain critical:
- attacks on tankers in the Strait of Hormuz;
- the agreement between Russia and the United States regarding diesel fuel supplies;
- the fate of attacks on oil refining infrastructure following the collapse of the "energy truce."
Oil Market: Brent at $104 Amid Expectations of Easing Sanctions on the 'Shadow Fleet'
On Thursday, oil prices declined by approximately 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 around $94–95. Price pressure was caused by reports that the US administration is considering easing sanctions on vessels of the "shadow fleet." Washington's goal is to reduce record charter rates and accelerate oil exports from the Persian Gulf.
Fundamental support for the oil market remains intact:
- US inventories are decreasing. According to the American Petroleum Institute, commercial inventories fell by 11.1 million barrels in the week ending October 9.
- Prices remain high on a year-on-year basis. Brent is approximately 70% higher than a year ago. The annual high of $120.88 was recorded on April 30.
- The Brent-WTI spread has widened. The difference exceeds $9 per barrel, reflecting a premium for risk on maritime routes.
Strait of Hormuz: The Most Dangerous Phase for Shipping Since the War Began
October has become one of the most tense months for the tanker fleet since the start of the conflict surrounding Iran 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 reported in the strait. Tankers carrying oil, LNG, and liquefied petroleum gas are under attack.
- In September, crude oil exports from the Middle East recovered nearly to pre-war levels, thanks to night passages of tankers under US Navy escort with transponders turned off.
- Iran is increasing pressure to regain control over the flows. On some days, crossings through the strait are reduced by half or more.
- For insurers and charter companies, this means maintaining record rates and military surcharges.
OPEC+: Quotas Frozen, Actual Production Below Targets
At the meeting on October 4, seven key OPEC+ members kept the quotas for November unchanged. The group includes Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. Target levels are around 10.5 million barrels per day for Saudi Arabia, 9.9 million for Russia, and 4.4 million for Iraq.
- The actual production from the core of the alliance in August was approximately 25 million barrels per day, about 5 million barrels per day below pre-war levels.
- About 2 million barrels per day of cuts remain 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 Will Last Until 2027
The October report from the International Energy Agency confirms that the global oil market balance remains in deficit.
- Global oil demand in 2026 is expected to decrease by 2.6 million barrels per day to 102.4 million.
- Supply is projected to decline by 5.8 million barrels per day over the year.
- The forecast for demand recovery in 2027 has been downgraded from 2.6 to 2 million barrels per day.
- Refinery utilization in October will drop 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 refining and fuel companies pertains to middle distillates. According to the agency's estimates, global diesel exports have decreased by approximately 700,000 barrels per day. The tension in the gasoil market is expected to last until 2027.
Russia-US Diesel Deal: New Flows of Oil Products
The main topic in the oil products market is the agreement between the presidents of the US and Russia 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, 1 million tons in December. In the future, it is possible to reach up to 3 million tons per month.
- Regulation in Russia: restrictions on diesel exports are being lifted prematurely. The ban on gasoline exports remains until January 31, 2027. The government is also discussing restrictions on the export of LPG.
- Supply Mechanism: According to Alexander Novak, the energy ministries of both countries are coordinating the contract and delivery mechanism, taking into account sanctions against major Russian oil companies.
- Market Reaction: Diesel futures in the US have dropped by approximately 5%. In Europe, the effect was short-lived, as the volumes are disproportionate to the deficit caused by the crisis in the Persian Gulf.
Refineries and 'Energy Truce': The Pause Has Ended
The "energy truce" announced on October 11 between Russia and Ukraine has effectively been broken. Kyiv suspended strikes on Russian refineries for three days. Subsequently, Ukraine accused Moscow of a massive attack on its energy system and announced a resumption of strikes. In September alone, 12 major Russian refineries were hit. Facilities that are halted or operating at reduced capacity account for nearly a quarter of Russian refining. For oil product exporters, this presents a key risk: the volumes of the diesel deal are directly dependent on the state of the refineries.
Gas and LNG: Europe Entering Winter with Low Stock Levels
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 higher than a year ago.
- EU underground storage levels are approximately 73–74% full, compared to a 5-year average of around 89%.
- Brussels has relaxed the storage fill target from 90% to 80%.
- Qatari LNG supplies to Europe are virtually non-existent. The Asian index JKM exceeds $25 per MMBtu, and Europe is competing with Asia for every shipment.
- Some analysts are still expecting a correction. Citi's baseline forecast for Q4 is €56 per MWh.
Coal, Electricity, and Renewables: Two Pillars of Energy Security
Expensive LNG is bringing coal back into the energy mix in Asia. The price of Newcastle thermal coal remains around $150 per ton. At the beginning of October, it reached $152.20, its highest level since October 2024, and has increased by approximately 45% year-on-year.
Simultaneously, the growth of renewable energy is accelerating:
- In Australia, rooftop solar systems 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 approved investment decisions in 2026 has already surpassed 5 GW, setting an annual record;
- In Europe, energy companies are combining solar generation with storage solutions to reduce dependence on gas during peak hours;
- The IEA will present the Renewables 2026 report with updated capacity forecasts on October 29.
What Matters to Energy Sector Investors on October 16
- Strait of Hormuz. New incidents could quickly push Brent back to $107–110 per barrel.
- Sanctions on the 'shadow fleet.' An official US decision could lower freight rates and put pressure on oil prices.
- First Supplies of Russian Diesel. These will serve as indicators 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 easing sanctions.
- Political Calendar. Until the US Congressional midterm elections on November 3, Washington will be seeking to lower fuel prices.
The conclusion of the week: the global market for oil, gas, and oil products remains a seller's market. The geopolitical premium, diesel deficits, and low gas stocks in Europe support prices. Easing sanctions and new logistical schemes only partially alleviate the tension. For energy market participants, flexible risk management remains a key tool.
