Oil Market: Brent and WTI Decline but Stay Above $100
By Thursday evening, Brent was trading at around $104 per barrel, while WTI was in the $101–102 range. Earlier in the week, Brent peaked at $109; over the month, the benchmark rose approximately 14%, and relative to a year ago, it increased by more than 50%. The main drivers include:
- Saudi Arabia: The kingdom expects to restore about half of the East-West pipeline capacity damaged by drone attacks last week within days, aiming for full capacity in about six weeks. This route, with a capacity of up to 7 million b/d, serves as a major bypass of the Strait of Hormuz.
- Hormuz: According to the U.S. Department of Energy, around 18 million barrels of oil and petroleum products passed through the strait at the beginning of the week; Riyadh is ramping up shipments with support from U.S. military forces.
- U.S. Inventories: Commercial oil stocks decreased by 0.64 million barrels to 423.4 million — lower than market expectations, although industry estimates the previous day indicated an increase of 7.1 million.
- Supply Risks: Houthi advances towards the Bab-el-Mandeb Strait, shutdowns at several oilfields in Libya with a force majeure threat, and Tehran's refusal to negotiate with Washington until its conditions are met.
Supply and Demand: OPEC and IEA Estimates
- Saudi Arabia reported to OPEC a decline in production in August to 6.24 million b/d — the lowest since 1990; secondary sources estimate the level closer to 7.3 million b/d.
- The IEA, in its September report, lowered its forecast for global oil supply in 2026 to 100.7 million b/d (–5.7 million b/d year-on-year).
- According to the agency, global oil demand is expected to decrease by 2.5 million b/d in 2026, recovering by 2.6 million b/d in 2027.
- Observed global stocks in August fell by an additional 95 million barrels; the accumulated reduction since February amounts to 507 million barrels.
Refined Products and Refineries: Diesel — the Market’s Main Shortage
The crisis is increasingly shifting from crude oil to refined products. Wholesale diesel prices in the U.S. exceeded $200 per barrel in early September — nearly double pre-war levels, while retail prices reached a record $5.90 per gallon. In the EU, diesel costs around €2.04 per liter, close to the April peak.
- Net diesel exports from Gulf countries in August were about 390,000 b/d — a quarter of pre-war volumes; combined supplies from the Gulf and Russia are 1.6 million b/d lower than in February.
- Global refining peaked in summer at 81.4 million b/d, but a decrease of 2.6 million b/d is expected by the end of the year.
- Refinery margins in the Atlantic Basin are at record levels; Singapore's profitability is restrained by high freight costs.
For refineries outside the conflict zone, this is a period of windfall profits; for fuel companies and consumers, it represents a cost shock.
Gas and LNG: Europe Enters Winter with Low Stocks
TTF futures dropped to €76-77 per MWh on Thursday after attempting to stay above €80; earlier in the week, prices approached €82 — a peak not seen since late 2022. Year-on-year, gas in Europe has risen by more than 130%. EU storage is only about 68% full — one of the lowest levels for this date in two decades. Pressure stems from limited Qatari LNG supplies, scheduled maintenances in Norway, and competition with Asia for cargoes. Henry Hub in the U.S. maintains around $2.90 per million BTU — a record spread supports U.S. LNG exporters.
Geopolitics: Energy Truce Between Russia and Ukraine in Question
The U.S. President announced on September 14 that Moscow and Kyiv agreed to halt strikes on energy facilities, linking diesel price increases primarily to this conflict. Kyiv stated that the agreement isn't finalized and could only occur with partner guarantees, with Turkey acting as a mediator. Previous attempts at similar truces have proven short-lived. If the regime is established, the recovery of Russian oil refining could reduce the premium on distillates. The sanction regime remains unchanged.
Russia: Fuel Export Restrictions Persist
- A blanket ban on gasoline exports is in effect for all market participants until January 31, 2027.
- The ban on exporting diesel, marine fuel, and gas oils for producers has been extended until September 30; the market awaits a decision for October.
- According to the IEA, over the past eight months, Russian refineries have faced effective strikes on average every three days; since July, the country has begun importing refined products.
- The Urals discount to Brent has nearly disappeared amid reduced shipments and high demand in Asia.
Asia: China Undercuts India in the Fight for Russian Oil
Russian oil imports to India fell by about 26% in August, down to approximately 2.1 million b/d from a record 2.8 million b/d in July; total crude imports dropped to 4.6 million b/d. Chinese processors aggressively purchase cargoes, replacing Middle Eastern volumes, while India partly offsets losses with Venezuelan oil. The raw material deficit at Indian refineries threatens to reduce diesel and gasoline exports — an additional factor adding tension to the Asian refined product market.
Electricity, Renewables, and Coal: Insurance and Structural Shift
- Coal: Thermal coal in Newcastle stands at around $145 per ton (+12% over the month, +40% year-on-year). The LNG shortage adds approximately 70 million tons of demand in Asia for 2026; coal generation in Japan rose by 11%. Major producers are not sanctioning new mines, considering the spike cyclical.
- Renewables: By the end of 2025, renewable sources for the first time surpassed coal in global generation (33.8% vs. 33.0%); in April 2026, wind and solar provided more electricity than gas for the first time (22% vs. 20%). The installation of solar capacity reached a record 647 GW in 2025.
Expensive imported gas strengthens the economics of renewables and storage; however, in the short term, coal and nuclear ensure the balancing of energy systems.
Macroeconomics: The Fed Responds to Oil Inflation
On September 16, the Fed unanimously raised rates by 25 basis points to 3.75–4.00% — the first increase since 2023 — signaling the possibility of another move before the end of the year. The regulator acknowledged it cannot influence oil prices but aims to prevent inflation from spreading. The yield on 10-year U.S. bonds is around 5%. For the energy sector, this implies an increase in the cost of capital: capital-intensive projects in renewables, grids, and LNG are pressured, while oil companies with strong cash flow appear more resilient.
What to Watch for Investors and Energy Market Participants on Friday
- The pace of recovery of the East-West pipeline and shipments from Yanbu.
- Tanker traffic through the Strait of Hormuz and the Bab-el-Mandeb Strait.
- Confirmation of the energy truce between Moscow and Kyiv.
- Russia's decision on diesel exports after September 30.
- The dynamics of TTF, injection rates into European storage facilities, and the schedule of Norwegian repairs.
- Weekly drilling activity statistics in the U.S. and diesel crack spreads.
The baseline scenario for the upcoming days envisions oil in the $100–110 per barrel range with heightened sensitivity to news from the Middle East. Oil products and gas remain the most strained segments of the global energy market.
