Main Updates for Wednesday Morning
- Oil: Brent is around $105–106 per barrel, WTI is approximately $93; the quotes rose above $107 the previous day.
- Petroleum Products: Russia has partially lifted the ban on diesel exports and is releasing 500,000 tonnes to the global market.
- Gas: TTF is trading around €83 per MWh — a maximum since the beginning of 2023; EU storage is filled to approximately 73%.
- OPEC+: quotas for November remain unchanged, with the next meeting scheduled for 1 November.
- Geopolitics: Attacks on tankers near the Strait of Hormuz and strikes by Houthi forces on Saudi Arabia maintain supply risks.
Oil Market: Risk Premium Keeps Brent Above $100
On Tuesday, oil prices corrected by about 1% after a nearly $2 increase on Monday, when Brent closed at its highest since mid-September. The conflict between the United States and Iran has now entered its eighth month, and the market continues to primarily assess the physical availability of barrels rather than supply and demand balance.
Support Factors
- A drone strike on a tanker near the Omani port of Sohar 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 heightened concerns regarding Saudi infrastructure.
- High freight and insurance rates are widening the spread between Brent and WTI.
Restraining Factors
- Anticipation of additional volumes of Russian diesel.
- 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 compared to 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 production increases 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 vary:
- Goldman Sachs has raised its December Brent forecast to $90 from $85, assessing the risk premium at just over $20 per barrel.
- The U.S. Energy Information Administration expects an average of $105 in the fourth quarter and $84 in 2027.
- The consensus forecast from analysts gives an average Brent price of about $89 for 2026.
Petroleum Products and Refineries: Diesel Crisis Receives a Reprieve
The middle distillates market remains the tightest segment of the fuel and energy sector. The gasoil premium to Brent approached $98 per barrel last week: the deficit is concentrated not in crude oil, but in refining. U.S. refineries are operating at about 96% capacity, with almost no free capacity available.
- Russia: Export of 500,000 tonnes of diesel fuel has been allowed since 10 October; Washington is discussing the possibility of additional shipments of up to 3 million tonnes. The U.S. has temporarily lifted sanctions on Russian fuel.
- China: After a week-long pause, Beijing has approved the export of gasoline, diesel, and aviation kerosene for October amounting to approximately 3.7 million tonnes.
- IEA: The agency has urged member countries to accelerate the release of reserves, prioritising diesel.
Gasoil futures on ICE responded with a decline of 2.3%, down to $1,449 per tonne. The effect may be limited: Russian refining has been significantly impacted by drone attacks, and the allowed volume is comparable to one day's consumption in the U.S. Gasoline prices in the U.S. average $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 the energy sector and industry. Without Qatari LNG, TTF futures are holding steady around €83 per MWh — approximately 2.5 times higher than a year ago.
- EU storage is filled to 73% against a seasonal norm of about 90% — the worst level since records began in 2011.
- The target filling level has been eased 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.
- The full ban on the import of Russian LNG will come into effect on 1 January 2027.
Forecasts for winter are polarised: from €56 in Citi's baseline scenario, where demand has already been reduced due to industrial shutdowns, to €85–100 and beyond at Morgan Stanley, in the event of frosts and new supply disruptions.
Electricity and Renewables: Renewable Generation Mitigates 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 record, wind generation increased, and wholesale electricity prices in several countries are increasingly lagging behind gas prices. The downside is a rise in the number of hours with negative prices and evening price peaks, which enhances the investment appeal of energy storage systems.
In the U.S., a record installation of approximately 86 GW of new capacity is planned for 2026, with around 93% attributed to solar, wind, and battery systems. For investors, the renewable energy and grid infrastructure sector remains a defensive story amid hydrocarbon volatility.
Coal: Demand Supported by Expensive Gas
The coal market is benefitting from the gas deficit. Rising gas prices following the onset of the Middle Eastern conflict have increased coal's competitiveness in electricity generation, and thermal coal prices in 2026 have recovered from the lows of late 2025. Major demand is coming from China, India, and Southeast Asian countries, while in Europe, coal-fired plants serve as a reserve in case of a cold winter. In the long term, the volumes of seaborne trade in thermal coal are expected to decline, according to industry analysts.
Geopolitics and Sanctions: Energy Truce in Question
The U.S. President announced an energy truce between Russia and Ukraine; however, Kiev accused Moscow of breaking it as early as Monday. For the market, this means that risks remain for Russian refineries and export infrastructure. Meanwhile, the temporary easing of sanctions on Russian fuel has been the first practical step by Washington towards increasing the supply of petroleum products.
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 part of the premium.
- Diesel and Refinery Margins: Actual shipments from Russia and China will indicate whether the petroleum products market has reached its peak.
- Gas: Weather forecasts for November and the rate of withdrawal from EU storage will determine TTF dynamics.
- Statistics: Weekly data on oil and petroleum product inventories in the U.S. and fresh monthly oil market reviews will be in focus.
- OPEC+: The meeting on 1 November will show 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 hostages to news from the Middle East, while electricity and renewables receive an additional boost from expensive hydrocarbons.
