Oil Market: First Weekly Correction in Three Weeks
On Friday, oil prices declined for the third consecutive session: Brent fell to $102.5–103.5 per barrel, WTI to $100, briefly dipping below that mark. For the week, Brent is down about 2%, despite reaching $108 on Monday — nearly a four-month high.
- Wednesday: A nearly 3% drop to $105.7 — the sharpest decline in three weeks — followed reports of an imminent partial restart of the Saudi East-West pipeline.
- Thursday: Brent closed at $104.82, WTI at $101.91 per barrel.
- Over the month: WTI has gained approximately 18–19%, Brent around 13%; oil is over 50% more expensive than a year ago.
Analysts agree that the fundamental picture does not justify a prolonged decline of Brent below $100. The futures curve remains in deep backwardation: the December contract is nearly $5 cheaper than the November one — 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 of the Strait of Hormuz, which has seen up to 5 million barrels per day flow in recent months. Following drone attacks, three pump stations were damaged, halting shipments from Yanbu. Riyadh expects to restore about half of the capacity in a matter of days; full restoration will take five to six weeks.
- Bypass Routes: Saudi Arabia is offering additional batches to Asian refineries through transshipment "ship-to-ship" at the Omani port of Sohar.
- Red Sea: Houthis have seized Mocha, Perim, and Hanish islands and declared a blockade of Saudi ports; on Thursday, the parties exchanged strikes across the border once again.
- Hormuz: The strait is virtually closed to commercial shipping, with no direct negotiations between the U.S. and Iran, and the maritime blockade of Iranian ports remains in place.
- Production: Saudi Arabia reported a production drop in August to its lowest level since 1990.
The IEA warns: supply disruptions are already forcing consumers to cut back on oil demand.
Oil Products and Refineries: Diesel Remains the Epicenter of Shortage
- The crack spread for diesel in the U.S. 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 U.S. is a record $6.23 per gallon, and gasoline is at $4.32.
- Distillate stocks in the U.S. have increased for the third consecutive week: up by 1.6 million to 107.9 million barrels — the first signal of cooling.
Diesel in Europe is about 70% more expensive than levels in February. For refineries outside the conflict zone, this is a period of super margins; for fuel companies, aviation, and logistics, it is a shock to costs.
Gas and LNG: Europe Enters Heating Season with 68% Storage
TTF futures rose by 1.5–2% on Friday, reaching €77–78 per MWh, after €82 on Wednesday; year-on-year, gas in Europe has increased by approximately 140%. EU storage is about 68% full — 16 percentage points below the five-year average and near two-decade lows.
- Qatar: Force majeure on LNG supplies has been extended to November; about 17% of Ras Laffan's capacity is offline, with repairs expected to take three to five years.
- Asia: Spot LNG prices have hit $26–28 per million BTU — the highest since 2022; LNG demand in the region may decline by 3–10% by year-end, as some South Asian buyers reject high offers.
- Norway: Scheduled maintenance is temporarily reducing pipeline supplies.
- U.S.: Henry Hub is around $2.86 per million BTU; the record spread supports American LNG exporters.
Russia and Ukraine: Ceasefire on Energy Facilities Not Confirmed, Fuel Exports Restricted
The agreement announced by Washington on September 14 to cease attacks on energy infrastructure is not being effectively implemented: in the past week, refineries in Syzran and Yaroslavl have been attacked, and strikes on Ukrainian infrastructure continue. Moscow has called the idea "good," while Kyiv is prepared for de-escalation with partner guarantees.
- The ban on diesel exports for producers has reportedly been extended to the end of October; it applies to non-producers until January 31, 2027.
- A complete ban on gasoline exports remains in effect until January 31, 2027; exports of aviation kerosene are restricted until November 30.
- Following drone strikes, six major Russian refineries have cut production.
For the global oil products market, the absence of Russian diesel is one of the factors driving record premiums in middle distillates.
Asia: India and China Divide Available Barrels
Russian oil imports to India decreased to approximately 2.1 million barrels per day in August, down from 2.7–2.8 million barrels per day in July: refinery repairs, reduced availability of raw materials, and aggressive purchases by Chinese processors played a role. The retreat of Brent from peaks gives India a breather — the rupee hovers around 95.8 against the dollar. In contrast, 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 energy generation will grow by approximately 1000 TWh annually until 2030, with over 600 TWh from solar generation; the share of low-carbon sources in global electricity is projected to increase from 42% to 50%.
- Nuclear: uranium is around $90 per pound; the U.S. and Saudi Arabia have signed a civilian nuclear agreement, and the Saeul 3 power block has been completed in South Korea. Summer drought has also 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 is improving the economics of renewables and storage, but rising rates are making capital for grids and new projects more costly.
Coal: Insurance for Asia's Energy Systems
Energy coal in Newcastle is holding around $145 per ton. 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, the share of coal in global generation will decline from 34% in 2025 to 27% by 2030, so major producers are reluctant to invest in new mines.
Macroeconomics: Rates Rise in Response to Energy Inflation
On September 16, the Federal Reserve raised the rate by 25 basis points to 3.75–4.00% — the first increase since 2023; the Bank of Japan also raised rates on Friday. The yield on 10-year U.S. Treasuries is around 4.95%. The number of drilling rigs in the U.S. has increased to 591 (450 oil, 132 gas) from 539 a year ago: shale companies are responding to prices, but cautiously.
What to Watch for Investors and Energy Market Participants
- The actual restart of the East-West pipeline and the resumption of shipments from Yanbu.
- Shipping through the Strait of Hormuz and Bab-el-Mandeb, and new strikes on infrastructure.
- The status of the energy ceasefire between Russia and Ukraine and the state of Russian refineries.
- The official extension of the diesel export ban from Russia.
- The dynamics of TTF, the pace of injection into European underground storage, and competition with Asia for LNG.
- The crack spreads for diesel and weekly inventory statistics in the U.S.
The baseline scenario for the coming days sees Brent in the range of $98–108 per barrel, with high sensitivity to news from the Middle East. Oil products and gas remain the most strained segments of the global energy market.
