Oil Prices Rise After OPEC+ Modest Output Hike and Sanctions Risk

Oil prices rose on Monday, with Brent up $0.52 to $66.02 and WTI up $0.39 to $62.26, after OPEC+ agreed to a modest production increase. Starting in October, OPEC+ will raise output by 137,000 bpd — far less than the 555,000 bpd hikes in August and September and 411,000 bpd in June and July. Analysts said the impact will be limited, as some members are already over-producing, and six OPEC states must make monthly cuts of 190,000–829,000 bpd to comply with targets. U.S. President Donald Trump hinted at new sanctions on Russian oil buyers, a move Gunvor warned could disrupt global crude flows. Meanwhile, Goldman Sachs projected a slight oil surplus in 2026, forecasting Brent at $56 and WTI at $52 per barrel.

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OPEC Issues Compensation Plan for Overproduction, Kazakhstan Bears Largest Cuts

OPEC has published a compensation schedule requiring six member states to cut a combined 4.8 million bpd between August 2025 and June 2026 to offset past overproduction. Monthly cuts will range from 190,000 to 829,000 bpd, with Saudi Arabia and Algeria exempt. Kazakhstan faces the heaviest burden, with 2.63 million bpd in reductions, followed by Iraq (1.4m bpd), Russia (311,000 bpd), and the UAE (309,000 bpd). The group also agreed to begin unwinding its earlier 1.65m bpd voluntary cuts, raising production by 137,000 bpd in October, after adding 2.5m bpd from April to September. The new plan underscores OPEC’s attempt to balance markets as members struggle to meet targets and global oversupply risks grow.

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OPEC Production Hikes Begin to Boost Tanker Market Rates

OPEC’s latest decision to raise oil production by 137,000 bpd in October marks the sixth consecutive monthly increase, reflecting a shift toward defending market share rather than supporting prices. Analysts note that while the October hike alone is modest, the cumulative effect of recent increases is finally reaching the market, with Middle East exports rising to 18.9 million bpd in August from 17.4 million bpd in July. Global crude exports averaged 47.4 million bpd over the past four weeks, signaling that additional volumes are beginning to flow. This uptick has benefited tanker owners, with the FFA curve for October sitting above $70,000 per day and VLCC time-charter rates increasing to $57,671 per day. Suezmax rates also climbed slightly, while aframax rates dipped, reflecting differing demand dynamics across tanker classes.

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Saudi Arabia Slashes October Oil Prices to Asia Amid OPEC+ Output Hike

Saudi Arabia is cutting prices on all crude grades for Asia in October, including a $1 drop for Arab Light, which will trade at $2.20 above the regional benchmark, larger than the 50-cent reduction expected by refiners. Prices for Europe are also reduced by 80 cents per barrel, while most U.S. barrels are lowered, except for Arab Light to the U.S., which remains at $4.20 a barrel, unchanged from September. The cuts follow OPEC+’s continued production increases as the alliance seeks to regain market share, despite global concerns over oversupply. Analysts see the bigger-than-expected reduction for Asia as a potentially bearish signal, especially with London crude down about 12% this year and forecasts pointing to further declines next year. The price adjustments may provide relief to refiners in Asia worried about shrinking margins as summer demand wanes and additional supply enters the market.

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APPEC : TotalEnergies Expects Brent-Dubai Spread to Stay Negative Amid Strong Demand for Heavy Crude

TotalEnergies expects the Brent-Dubai crude price spread to remain negative due to continued strong demand for heavier Middle Eastern grades, despite OPEC+ increasing production. Senior VP Rahim Azouni noted that this trend makes lighter sweet crude more attractive to Asian refiners, while opening arbitrage opportunities for U.S. crude to enter Asian markets. The Brent-Dubai Exchange of Futures for Swaps (EFS) narrowed to 47 cents per barrel, highlighting this market dynamic. TotalEnergies currently trades over 1 million bpd, including more than 10 monthly U.S. crude cargoes to Asia and Europe. Looking ahead, Latin America, including new production in Suriname reaching 200,000 bpd by 2026, is expected to be a key driver of global oil supply.

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APPEC : India’s Oil Demand Growth to Outpace China, Trafigura Says

Trafigura Group predicts that India’s oil demand growth will surpass China’s underlying gains this year, excluding China’s strategic stockpiling, reflecting urbanization and rising incomes in India. In contrast, China’s crude consumption growth is slowing outside of petrochemicals, though recent stockpiling of around 200,000 bpd has supported demand. Trafigura’s Saad Rahim highlighted that next year’s projected global demand growth of just under 1 million bpd may be insufficient to absorb the additional supply coming online. This raises concerns about potential oversupply in the market despite robust demand growth in India.

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APPEC : China to Keep Oil Stockpiling Momentum Into 2026

China is expected to maintain its oil stockpiling strategy into 2026, continuing to absorb excess global supply, according to Gunvor’s chief strategist Frédéric Lasserre. He noted at the APPEC conference that China’s filling rate stands at roughly 60%, with stockpiling surging from March at nearly 1 million bpd. Data from S&P Global Commodity Insights shows China has been building inventories at 530,000 bpd this year, marking one of the fastest annual paces outside of 2020. China’s onshore crude inventories now total around 1.4 billion barrels, a level described as “very, very large” compared to global demand growth. Analysts said this stockpiling has been critical in soaking up surplus production, particularly in Q2, helping stabilize the oil market.

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Chinese Demand Keeps Russian ESPO Crude Prices Stable Amid Western Sanctions

Russian ESPO Blend crude prices for October-loading cargoes remained steady, supported by strong Chinese demand despite increasing Western sanctions. Cargoes from the Far Eastern port of Kozmino were sold at roughly $2 per barrel above ICE Brent, similar to September levels. Recent Ukrainian drone attacks have disrupted Russian refinery operations, causing more crude to be exported rather than processed domestically. Western measures include lowering the EU price cap to $47.60 per barrel and sanctioning companies involved in bypassing restrictions, while the U.S. considers a second phase of sanctions. Traders noted that Chinese buyers continue to absorb Russian oil, including ESPO, Arctic, and Urals grades, though ESPO premiums could soften if U.S. tariffs reduce Indian purchases.

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China’s August Crude Imports Rise 4.9% from July, Up Slightly Year-on-Year

China’s crude oil imports rose 0.8% year-on-year in August, totaling 49.49 million metric tons (11.65 million bpd), and increased 4.9% from July, according to customs data. Imports from January to August reached 376.05 million tons, up 2.5% compared with the same period last year. State-owned refinery operating rates remained high at 82.55%, while independent refineries increased to 54.59%, up 3.43 percentage points from July. Refined fuel exports also rose 8.4% year-on-year to 5.33 million tons in August. Meanwhile, natural gas imports increased 0.8% year-on-year to 11.85 million tons, marking the highest monthly level in 11 months despite a year-to-date decline of 5.9%.