Oil Rises on U.S. Stock Draw, India Tariff Shock, and Rising Geopolitical Tensions

Oil prices rose on Wednesday as U.S. crude inventories fell by 2.4 million barrels, surpassing expectations of a 1.9-million-barrel draw, while Brent settled at $68.05 and WTI at $64.15. Gasoline stocks dropped 1.2 million barrels and distillates fell 1.8 million, supporting demand ahead of the Labor Day travel season. Investors also weighed the impact of President Trump’s decision to double tariffs on Indian imports to as much as 50% in response to its Russian oil purchases, raising uncertainty in energy markets. Geopolitical risks added to supply concerns as Russia and Ukraine escalated attacks on energy infrastructure, with Russia revising its August export plan upward by 200,000 bpd despite refinery damage. Additionally, dovish signals from the Federal Reserve suggested potential interest rate cuts, which could bolster economic growth and oil demand.

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Trans Mountain Eyes Extra Capacity, Potential Expansion to 1.2M bpd by 2029

Canada’s Trans Mountain Corp. plans to expand capacity on its newly enlarged pipeline by about 70,000 bpd using drag-reducing agents by late 2026 or early 2027. The line, which now carries up to 890,000 bpd after last year’s costly expansion, has been running at about 90% capacity since May 2024. CEO Mark Maki said an upcoming open season later this year will offer shippers an additional 5–10% of current capacity, while long-term plans could lift throughput to 1.2 million barrels per day by 2029. The government-owned system, bought from Kinder Morgan in 2018, is still slated for eventual sale, though Maki advised Ottawa not to rush as its value will rise once expansions and tolls are settled. Meanwhile, discussions continue over building a new pipeline to Northern British Columbia’s coast, which Trans Mountain may join if private capital is secured.

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Russia Prolongs Gasoline Export Ban Amid Refinery Strikes and Fuel Shortages

Russia has extended its gasoline export ban until September 30 to stabilize the domestic fuel market amid shortages. Starting October 1, fuel producers will be allowed to resume exports, but restrictions for non-manufacturers will remain in place until October 31. The initial ban was introduced in February and took effect from March through August. Domestic supply pressures have worsened due to Ukrainian strikes on Russian refineries combined with seasonal demand from farmers and motorists.

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Vitol to Ship First Syrian Crude to Italy After Sanctions Lifted

Vitol Group is preparing to ship the first cargo of Syrian crude oil since Western sanctions on Damascus were lifted, Bloomberg reported. The cargo, scheduled to load Wednesday, will be sent to a refinery in Italy as Syria seeks to revive its energy sector after more than a decade of conflict. The move follows the U.S. decision in late June, when President Donald Trump signed an executive order ending a sanctions program on Syria. This effectively reopens Syria’s access to international financial systems and global energy markets. The shipment marks a symbolic step in Syria’s post-war economic reintegration.

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Dynacom Suezmax Stranded After UAE Bans Sudan Crude Cargoes

Dynacom Tankers’ 156,000-dwt Pola, carrying 80,000 tons of Dar Blend crude under charter to Vitol, has been unable to discharge in the UAE after the country banned cargoes from Port Sudan following political tensions. The tanker, built in 2011, had been waiting near Fujairah for a week and later anchored off Sohar in Oman, highlighting disruptions to Sudanese crude flows. The UAE ban stems from Sudan accusing it of arming the Rapid Support Forces (RSF), which the UAE denies. Traders expect the cargo may now be redirected toward the Straits of Singapore. Data shows that in recent months, Dar crude has mainly been delivered to Fujairah, Singapore, and Malaysia.

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Hafnia Warns Against Cannibalizing Markets While Swapping Product and Crude Tankers

Hafnia, a major BW Group shipowner, emphasized caution when switching product tankers into crude trades, warning that overdoing it can cannibalize its own markets. LR1s may be able to take Panamax cargoes, but the Panamax segment is small (90–100 ships), requiring careful management. LR2s have more flexibility to switch between Aframax dirty and clean trades, while MR dirty trades in Asia are limited to 40–50 ships. Hafnia noted that market cannibalization has been mostly driven by newbuildings, and elevated earnings for large crude tankers reduce the incentive for further clean-to-dirty conversions. Overall, minimal net supply growth and strategic allocation of newbuild LR2s to aframax trades are expected to support clean product tanker rates.

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Newbuild MR Tankers Locked on Long-Term Deals Amid Strong Spot and Charter Market

Two new 50,000-dwt MR tankers, the CC Ningbo and CC Qingdao, are being fixed straight from the yard on long-term deals, with Ampol taking one for 18–30 months at $20,300–$21,300/day and Vitol securing the other for up to four years at $19,500/day. These methanol-ready vessels, part of a four-ship series for CC Shipping in China, are due for delivery in Q4 2025, with the remaining two ships scheduled for March and June 2026. Spot MR rates in the Atlantic remain strong, averaging $38,400/day, while term charter interest for eco-friendly vessels is paying near spot levels. Demand is robust across larger clean and dirty trades, with LR2s and aframaxes seeing high rates and VLCC one-year eco scrubber deals slightly lower at $49,000/day. Brokers report optimism among tanker owners, driven by tight tonnage.

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Adnoc Signs 15-Year LNG Deal With Indian Oil, Set to Double Capacity by 2028

Adnoc signed a 15-year deal to supply 1 million tons of LNG annually to Indian Oil Corp. from its upcoming Ruwais project, supplementing an earlier agreement for 1.2 million tons per year from Das Island. These contracts will make Indian Oil Adnoc’s largest LNG customer by 2029, as the UAE firm secures long-term buyers worldwide. The Ruwais LNG project, slated to begin operations in 2028, will boost Adnoc’s LNG capacity to 15 million tons per year, more than doubling its current output. Of Ruwais’s planned 9.6 million tons/year capacity, Adnoc has already committed over 8 million tons/year through long-term contracts. The deal also supports India’s strategy to expand natural gas in its energy mix despite infrastructure challenges.

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Russia’s Sanctioned Arctic LNG 2 Plant Hits Record Gas Output Amid Export Challenges

Russia’s Arctic LNG 2 plant, led by Novatek PJSC, boosted natural gas production to record levels in August, averaging nearly 15 million cubic meters per day, and peaking above 25 million cubic meters on August 25–26. The facility continues to load LNG cargoes, despite struggling to secure buyers abroad due to international sanctions. Five tankers have loaded LNG since June, mostly heading to Asia, though it remains unclear if the cargoes have found buyers. Arctic LNG 2 is central to Russia’s plan to triple LNG production by 2030 and offset declining pipeline exports to Europe. The plant’s operations suggest Russia may be finding ways around sanctions to maintain LNG exports.

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South Korea Signs 3.3 mtpa US LNG Deal Following Presidential Summit

South Korea’s state gas buyer Kogas agreed to purchase 3.3 million tons per annum (mtpa) of US LNG over 10 years starting in 2028, in a deal signed with suppliers including trader Trafigura. The agreement was concluded during a bilateral summit between Presidents Lee Jae Myung and Donald Trump, following broader US-South Korea energy cooperation and tariff negotiations. The LNG will primarily come from Cheniere Energy and other US producers, with pricing indexed to Henry Hub. This deal helps Kogas replace expiring contracts with Qatar and diversify its LNG supply, while also supporting fleet upgrades. Trafigura confirmed it will meet the commitment via its offtakes and global LNG portfolio.

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South Korea Plans Petrochemical Overhaul with 25% Capacity Cuts as Oversupply Deepens

South Korea’s petrochemical sector is set for major restructuring, with small and stand-alone naphtha crackers likely to shut and some plants possibly merging, cutting naphtha demand in the world’s largest importer. Ten petrochemical companies agreed to reduce cracking capacity by 2.7–3.7 million tons per year, about 25% of national capacity, as part of a government-backed effort to improve profitability. YNCC, the country’s third-largest ethylene producer, is seen as the weakest player with a debt-to-equity ratio of 249%, and may shut one or two of its three crackers, including its No. 3 unit already idled in August. Potential mergers include HD Hyundai with Lotte Chemical, while SK Innovation is weighing closure of its Ulsan cracker. The restructuring, expected to take 12–18 months, comes ahead of S-Oil and Saudi Aramco’s 1.8 million tpy Shaheen project next year, which may worsen oversupply despite the planned cuts.