Oil Market: First Weekly Correction in Three Weeks
On Friday, oil prices fell for the third consecutive session: Brent dropped to $102.5–103.5 per barrel, and WTI fell to $100, briefly dipping below this level. For the week, Brent is down around 2%, although prices rose to $108 on Monday — nearly a four-month high.
- Wednesday: A decline of almost 3% to $105.7 — the sharpest drop in three weeks — following reports of a forthcoming partial restart of the Saudi East-West pipeline.
- Thursday: Brent closed at $104.82, WTI — at $101.91 per barrel.
- For the month: WTI has increased by approximately 18-19%, Brent by about 13%; oil prices are more than 50% higher than levels a year ago.
Analysts agree that the fundamental picture does not justify a prolonged drop in Brent below $100. The futures curve remains in deep backwardation: 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 Pipeline, Red Sea, and Hormuz
The East-West pipeline, with a capacity of up to 7 million barrels per day, is the main bypass for the Strait of Hormuz, through which up to 5 million barrels per day have been flowing in recent months. After drone attacks, three pump stations were damaged, and shipments from Yanbu were halted. Riyadh expects to restore about half of its capacity within days; complete restoration will take five to six weeks.
- Bypass Routes: Saudi Arabia is offering additional batches to Asian refineries through ship-to-ship transfer at the Omani port of Sohar.
- Red Sea: Houthis have captured Mocha, Perim and Hanish islands and declared a blockade on Saudi ports; on Thursday, both sides resumed strikes across the border.
- Hormuz: The strait is virtually closed to commercial shipping, there are no direct negotiations between the US and Iran, and the maritime blockade of Iranian ports remains in place.
- Production: Saudi Arabia reported a drop in production in August to the lowest level since 1990.
The IEA warns that supply disruptions are already forcing consumers to reduce their demand for oil.
Petroleum Products and Refineries: Diesel Remains the Epicentre of Shortages
- The diesel crack spread in the US 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; the retail price in the US has hit a record $6.23 per gallon, while gasoline is priced at $4.32.
- Distillate inventories in the US have increased for the third consecutive week: +1.6 million to 107.9 million barrels — the first sign of cooling.
Diesel in Europe is approximately 70% more expensive than February levels. For refineries outside of conflict zones, this is a period of super-margin, while for fuel companies, aviation, and logistics, it represents a cost shock.
Gas and LNG: Europe Enters Heating Season with Inventories at 68%
TTF futures rose by 1.5–2% on Friday, reaching €77–78 per MWh, following €82 on Wednesday; year on year, gas prices in Europe have increased by approximately 140%. EU storage facilities are about 68% full — 16 percentage points below the five-year average and near two-decade lows.
- Qatar: Force majeure on LNG supplies extended to November; approximately 17% of Ras Laffan's capacity is offline, with repairs expected to take three to five years.
- Asia: Spot LNG prices are $26–28 per MMBtu — the highest since 2022; LNG demand in the region may decrease by 3–10% by year-end, with some buyers in South Asia rejecting expensive offers.
- Norway: Planned maintenance is temporarily reducing pipeline supplies.
- USA: Henry Hub is around $2.86 per MMBtu; a record spread supports American LNG exporters.
Russia and Ukraine: Truce on Energy Facilities Unconfirmed, Fuel Exports Restricted
The agreement announced by Washington on 14 September to cease attacks on energy infrastructure is not being implemented in practice: in the past week, refineries in Syzran and Yaroslavl were attacked, and strikes on Ukrainian infrastructure continue. Moscow described the idea as "good," while Kyiv is prepared for de-escalation if guaranteed by partners.
- The export ban on diesel for producers, according to industry sources, is being extended until the end of October; for non-producers, it remains in effect until 31 January 2027.
- A complete ban on gasoline exports lasts until 31 January 2027; the export of aviation fuel is restricted until 30 November.
- Following drone attacks, six large Russian refineries have cut production.
For the global petroleum products market, the absence of Russian diesel is a factor contributing to the record premium in middle distillates.
Asia: India and China Share Available Barrels
Russian oil imports to India fell to approximately 2.1 million bpd in August compared to 2.7–2.8 million bpd in July: the decline was influenced by refinery maintenance, reduced raw material availability, and aggressive procurement by Chinese refiners. The retreat of Brent from its peaks provides India with some respite — the rupee hovers around 95.8 to the dollar. Conversely, the yuan has strengthened to a four-year high, making energy imports cheaper for China.
Electricity, Renewables, and Nuclear: Structural Shift Accelerates
- Renewables: According to the IEA, renewable generation is expected to grow by approximately 1000 TWh per year until 2030, with more than 600 TWh coming from solar generation; the share of low-carbon sources in global electricity is set to increase from 42% to 50%.
- Nuclear: Uranium is around $90 per pound; the US and Saudi Arabia have signed a peaceful nuclear agreement, and Saeul 3’s power block in South Korea has been completed. Summer drought has limited the operation of nuclear power plants in Europe.
- Bottleneck: Delivery times for large gas turbines exceed the construction cycle of the power plant itself.
Expensive gas improves the economics of renewables and storage, but rising rates increase capital costs for networks and new projects.
Coal: Insurance for Asia’s Energy Systems
Energetic coal in Newcastle remains around $145 per tonne. Northeast Asia is replacing expensive LNG with coal and nuclear generation, supporting demand for exporters — Australia, Indonesia, Russia, and South Africa. The long-term trend remains unchanged: according to the IEA, coal’s share in global power generation is expected to decrease from 34% in 2025 to 27% by 2030; thus, major producers are hesitant to invest in new mines.
Macroeconomics: Rates Rise in Response to Energy Inflation
On 16 September, the Fed raised rates by 25 basis points to 3.75–4.00% — the first increase since 2023; on Friday, the Bank of Japan also raised its rate. The yield on 10-year US Treasuries is approximately 4.95%. The number of drilling rigs in the US has reportedly increased to 591 (450 oil, 132 gas) from 539 a year ago: shale companies are responding to prices but cautiously.
What to Monitor for Investors and Energy Market Participants
- The actual restart of the East-West pipeline and the resumption of shipments from Yanbu.
- Shipping through the Hormuz and Bab-el-Mandeb straits, new strikes on infrastructure.
- The status of the energy truce between Russia and Ukraine and the condition of Russian refineries.
- The official extension of the diesel export ban from Russia.
- The dynamics of TTF, the pace of injection into EU gas storage, and competition with Asia for LNG.
- Diesel crack spreads and weekly inventory statistics in the US.
The baseline scenario for the coming days is Brent trading in the range of $98–108 per barrel with high sensitivity to news from the Middle East. Petroleum products and gas remain the most strained segments of the global energy market.
