Oil Market: Geopolitical Premium Keeps Brent Above $105
At the close of trading on October 14, the December futures for Brent were quoted around $106.3–106.5 per barrel, reaching an intraday high of $107.15. American WTI was trading at approximately $95. A year ago, oil was priced at about $62–63, indicating a gain of over 70% in the past twelve months.
Key drivers for prices:
- Strait of Hormuz. Attacks on vessels continue: tankers passing through routes unapproved by Tehran are being blown up by mines, and on October 13, a container ship sank at the mouth of the strait. Iran ties the full opening of the strait to the fulfilment of seven conditions set for Washington.
- Houthi Strikes on Saudi Arabia. The 'Ansar Allah' movement has announced attacks on Saudi Aramco facilities in Dhahran and the Eastern Province, a refinery in Riyadh, and the capital's airport, promising to expand the list of targets.
- Disparity Between Exchange and Physical Markets. Real shipments of crude, according to pricing agencies, are valued at about $129 per barrel—significantly higher than paper Brent.
- Record Freight Rates. Shipping Russian oil from the Baltic and Black Sea ports to India costs $27–32 per barrel, while transport from Ras Tanura to Rotterdam has surged from around $2 in 2025 to more than $35.
Analysts anticipate WTI to fluctuate between $90 and $100 over the coming weeks; further escalation in the Middle East could drive Brent back to spring peaks above $120.
IEA Report: Decline in Oil Demand Comparable to Major Crises
The October IEA report emerged as the key analytical event of the week for the oil and gas sector. Key figures include:
- Global oil demand will decrease by 2.61 million barrels per day in 2026—down to 102.38 million bpd (forecast downgraded by about 110,000 bpd).
- Global oil supply will drop by 5.8 million bpd in 2026—down to 100.7 million bpd.
- A return to growth in consumption is not expected before March 2027; by 2027, demand will be around 104.38 million bpd, still below the 2025 level.
- The largest losses will be in distillates and petrochemical feedstock, particularly in Asia.
The IEA is also accelerating the release of strategic reserves: following a record decision in March to release 400 million barrels, the agency has urged countries to expedite diesel fuel supply to the market from reserves. OPEC, in turn, has lowered its demand forecast for 2026 for the sixth consecutive time but has raised its growth forecast for 2027, indicating a need to replenish depleted stocks.
OPEC+: Quotas Frozen, Actual Output Below Plan
Seven OPEC+ countries have maintained their targeted oil production levels for November unchanged. The quotas are distributed as follows:
- Saudi Arabia—10.478 million bpd;
- Russia—9.949 million bpd;
- Iraq—4.431 million bpd;
- Kuwait—2.676 million bpd;
- Kazakhstan—1.628 million bpd;
- Algeria—1.007 million bpd;
- Oman—841,000 bpd.
In practice, quotas largely remain on paper: due to the war and logistical constraints, the actual output of several participants is significantly below target figures. The structure of the alliance has changed following the exit of the UAE from OPEC and OPEC+ from May 1, 2026. The next meeting of the 'seven' is scheduled for November 1, with a meeting of the monitoring committee on November 29.
Russia-US Diesel Deal: A New Factor for the Oil Products Market
The oil products market continues to adjust to the agreement reached on October 9 during a phone call between the presidents of Russia and the US. The US Department of the Treasury has issued a licence that temporarily eases sanctions on Russian diesel. The deal parameters are as follows:
- Over 300,000 tonnes of diesel to American and global markets in October;
- An additional 500,000 tonnes in November and then about 1 million tonnes;
- Potentially up to 3 million tonnes per month, depending on the condition of Russian refineries.
Moscow is pre-emptively lifting restrictions on diesel exports. For Russian oil companies, this represents additional currency revenue and an incentive to maximise refinery utilisation. For Washington, it serves as a tool to reduce fuel prices ahead of the Congressional elections. European diplomacy has criticised the deal and announced new sanctions. The question of enforceability remains: following strikes on refineries in the summer, some processing capacities are still under repair.
"Energy Truce": A Fragile Pause for Infrastructure
On October 11, Donald Trump announced the commencement of an "energy truce" between Russia and Ukraine—an agreement to refrain from attacks on energy infrastructure. The Kremlin described the idea as positive, but no official conditions have been published. On October 12, strikes on Ukrainian energy facilities continued, and it was only on October 13 that the first day without such attacks was recorded. For market participants, the stability of this pause is critical: it is precisely attacks on refineries that have become one of the factors contributing to the global diesel shortage in 2026.
Gas and LNG: Europe Enters Winter with Supply Deficiencies
The European gas market remains the most strained segment of the global energy sector. Futures on the TTF hub rose to €86–87 per MWh, the highest since December 2022; the year-on-year increase is about 170%. Reasons for this include:
- The drop in Qatari LNG exports following damage to the Ras Laffan facilities;
- EU underground storage facilities are approximately 73% full, against a seasonal norm of around 90%;
- Intense competition with Asia for available liquefied natural gas shipments.
Some analysts maintain a moderate forecast—around €56 per MWh in the fourth quarter—thanks to accelerated injection. However, physical constraints in the gas market cannot be alleviated by diplomatic statements. Notably, shipments of Russian Arctic LNG to European ports have increased by approximately 9.5% over the past nine months.
Coal: The Return of Asia's Main Fuel
The LNG deficit has made coal the primary beneficiary of the crisis. Newcastle thermal coal is trading at around $149–150 per tonne, near three-year highs, with an increase of more than 40% year-on-year. At LNG prices of around $25 per MMBtu in Asia, high-quality coal costs generating companies approximately 80% less. The IEA expects record global demand for coal in 2026: China, India, Japan, South Korea, and parts of Europe are increasing coal generation. The fourth quarter is traditionally peak season for imports, so coal exports may significantly rise by the end of the year. In India, the number of power stations with fuel stocks below 25% of the norm reached 85 by October 1.
Renewables and Electricity: Record Generation and Grid Issues
The energy transition continues even amidst the oil and gas shock. In 2025, renewable energy sources are expected to surpass coal in global electricity generation for the first time in a century. Recent records include:
- Australia: On October 11, generation from rooftop solar panels in the country's main power system reached 17.5 GW, with solar's share in consumption at 72%;
- India: Daily solar generation set a new record on September 30;
- USA: In May, solar generation first exceeded coal generation.
The flip side is record restrictions on renewable generation and negative electricity prices during peak sunlight hours. This underscores that investments in energy storage systems and electrical grid infrastructure are becoming a key topic for energy companies.
Russian Fuel Market: Stabilisation Under Regulatory Oversight
The domestic oil products market in Russia remains in a phase of unstable stabilisation:
- The average retail price of gasoline is 78.73 roubles per litre and diesel fuel is 86.72 roubles;
- Since the beginning of the year, gasoline prices have increased by 21%, significantly outpacing overall inflation;
- On the exchange, AI-92 fell in price to 69,400 roubles per tonne over the week, while AI-95 rose to 70,900 roubles;
- The Federal Antimonopoly Service signed pricing agreements on fuel with 35 regions.
The main risk lies in unplanned refinery repairs: the expansion of diesel exports requires a balance between external commitments and ensuring full coverage of the domestic market.
What Matters to Investors and Energy Market Participants
- Oil: The geopolitical premium remains intact; the base range for Brent is $100–110 with risks of spikes due to attacks on Gulf infrastructure.
- Oil Products: Diesel remains the most scarce product; Russian supplies and IEA strategic reserves may help reduce the premium.
- Gas: European prices are sensitive to weather and injection rates; a cold winter could push TTF above €100.
- Coal: Price support is expected to continue until the end of the year amidst a seasonal peak in demand in Asia.
- Key Dates: The OPEC+ meeting on November 1 and data on oil and gas inventories in the US and Europe.
The global energy sector in autumn 2026 is characterised by simultaneous supply shocks and demand compression. For oil and gas companies, this is a time of high revenue and increased risks, for consumers—it is a period of expensive energy, and for the renewables and storage sector—it represents a window for accelerated growth.
