Oil Prices Drop 2% on Oversupply and US Demand Concerns

Oil prices fell about 2% on Thursday, with Brent closing at $66.37 and WTI at $62.37, as oversupply fears outweighed geopolitical risks. The IEA forecast faster-than-expected global supply growth in 2024 due to OPEC+ output hikes, pressuring the market despite Middle East and Ukraine tensions. Saudi Arabia’s exports to China are set to rise to 1.65m bpd in October, raising doubts over how long China can absorb surplus barrels. Russia’s oil revenues fell to near post-war lows in August, while India’s Adani Group banned entry of Western-sanctioned tankers, potentially disrupting Russian flows. Broader market sentiment was shaped by inflation and interest rate signals, with expectations of a US Fed rate cut next week possibly boosting future demand.

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Adani Ports Bans Entry of Sanctioned Vessels, Potentially Affecting Russian Oil Supplies in India

India’s largest private port operator, Adani Group, has prohibited entry of tankers sanctioned by Western countries at all its ports, potentially disrupting Russian crude deliveries to two major Indian refiners, HPCL-Mittal Energy Ltd (HMEL) and Indian Oil Corp (IOC). The move comes despite India’s official stance of adhering only to UN sanctions, not unilateral Western sanctions, as it remains the largest buyer of Russian seaborne oil. IOC and HMEL receive Russian crude at Adani’s Mundra Port, although IOC can still source shipments via other ports that allow sanctioned vessels. Adani has issued formal orders requiring vessel agents to provide written assurances that ships are not sanctioned before nomination. The action reflects growing scrutiny over Russian oil imports and the shadow fleet used to circumvent sanctions.

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Dubai Ship Manager Blacklisted in Largest US Sanctions Against Houthis

The US Treasury Department has blacklisted Dubai-based Tyba Ship Management and its owner, Muhammad Al-Sunaydar, along with four tankers, in its largest sanctions package targeting the Houthi militant group in Yemen. The sanctioned vessels include the crude tanker Star MM (47,200-dwt) and three chemical carriers: Nobel M, Black Rock, and Shria, all linked to Houthi operations. Treasury alleged that Tyba and its affiliates facilitated oil discharges at Ras Isa, a Houthi-controlled port, and are part of a network of front companies and illicit shipping facilitators backed by Iran. Al-Sunaydar’s other companies, MT Level and Star MM In, owning some of the targeted vessels, were also sanctioned. The US emphasized that these measures target networks that threaten American and regional security and included additional sanctions on Chinese shipping and logistics firms moving military-grade weapons for the Houthis.

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Saudi Aramco Pushes Asian Buyers to Lift More October Oil After $1 Price Cut

Saudi Aramco has urged Asian buyers to take more crude in October, following its deeper-than-expected price cut of $1 per barrel for Arab Light, setting it at $2.20 above the Oman/Dubai average. The move comes as Aramco seeks to reclaim market share amid growing supply and after OPEC+ agreed to raise production by 137,000 bpd in October, part of a broader 2.5 million bpd hike since April (about 2.4% of global demand). Aramco’s allocation of October cargoes has been delayed as discussions continue, with analysts noting that OPEC+ is prioritizing market share despite risks of softer prices. Saudi exports to China fell to 43 million barrels in September, down from 51 million in August, highlighting shifting demand trends. Analysts warn that increased OPEC+ output could tip the market into surplus, potentially pushing Brent crude below $60 per barrel from its current $67.38.

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Saudi Crude Exports to China Set to Surge in October

Saudi Arabia’s crude oil exports to China are expected to rise to 1.65 million bpd (51 million barrels total) in October, up from 1.43 million bpd in September. The increase follows a $1 per barrel price cut for Saudi Arabia’s flagship Arab Light crude to Asia, set at $2.20 above the Oman/Dubai average. Key Chinese refiners planning to lift more Saudi crude include Sinopec, Hengli Petrochemical, and Shenghong Petrochemical. The move aligns with Saudi Aramco and OPEC+’s decision to raise production by 137,000 bpd in October as the group seeks to reclaim market share. Since April, OPEC+ has boosted production targets by 2.5 million bpd, equivalent to about 2.4% of global demand.

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China’s Teapot Refiners Hit by Crackdown on Tax Evasion

China’s independent “teapot” refiners face shrinking margins as new rules crack down on widespread fuel tax evasion, requiring all purchases, sales, and inventories to be reported online monthly instead of on paper. Analysts estimate that 30–40% of gasoline and diesel in China is sold tax-free, boosting small refiners’ profits by up to 1,900–2,000 yuan per ton on gasoline and about 600 yuan per ton on diesel. The new system, unlike past one-off inspections, is expected to be more effective and could push many smaller refiners into loss-making territory. With fuel demand weakening due to a sluggish economy and EV adoption, teapots already ran at less than half capacity in early 2025, making them especially vulnerable. Analysts say the crackdown will accelerate industry consolidation, aligning with Beijing’s push to curb overcapacity and end destructive price competition.

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China Cosco Shipping Mulls Multibillion-Dollar Orders for 100 Vessels

China Cosco Shipping is planning a major fleet expansion with potential orders for more than 100 new vessels, adding to its existing orderbook valued at over $18 billion. The orders are expected to include multipurpose ships, MR tankers, aframax product carriers, newcastlemax bulk carriers, container ships, and semi-submersible vessels, with around 50 MPP ships and up to 24 large container ships. The expansion is part of a fleet renewal program encouraged by the Chinese government, aiming to modernize both domestic and international fleets amid US policies targeting China’s maritime dominance. Cosco’s newbuildings are likely to be placed at state-owned yards under China State Shipbuilding Corp and Cosco Heavy Industry, occupying slots through mid-2029. Despite potential US port fees exceeding $2.1 billion in 2026, the company’s scale and government backing give it a strong position to proceed with its shipbuilding plans.

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CMA CGM Will Not Pass On US Fees Despite Expanding Chinese-Built Fleet

CMA CGM has decided against charging customers a surcharge to offset upcoming US fees on Chinese-built and linked ships. The fees, set to take effect on 14 October, target vessels built, owned, or operated by Chinese companies, but CMA CGM has implemented contingency plans to mitigate their impact. The French shipping giant continues to expand its Chinese-built fleet, including a $2.1 billion order at Dalian Shipbuilding, while maintaining flexibility across its global operations. CEO Rodolphe Saade has also engaged with the US administration, pledging to support US jobs and expand the US-flagged fleet. CMA CGM emphasized that the fees will be phased in over three years, allowing the company to protect customer interests without immediate surcharges.

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Hafnia CEO Highlights Synergies Ahead of Potential Torm Takeover

Hafnia CEO Mikael Skov praised the similarities between Hafnia and Torm, noting alignment in culture, fleet composition, and trading exposure, as speculation mounts about a potential takeover. Hafnia recently acquired a 15% stake in Torm from Oaktree Capital for $311 million, signaling possible consolidation in the product tanker sector. Torm’s CFO declined to comment on acquisition speculation, emphasizing that Oaktree will independently decide how to deploy its capital. Both companies expressed optimism about the product tanker market, downplaying concerns over a high orderbook, noting that many newbuilds are likely to trade crude rather than clean petroleum products. If completed, a Hafnia-Torm merger would create a product tanker giant with 300 ships and a $5 billion market cap, reflecting ongoing consolidation trends in shipping.

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Bakken Oil Output Shows Signs of Slowing as Pipeline Flows Slip

Oil production from the Bakken shale in North Dakota is showing signs of slowing, with flows on the Dakota Access Pipeline falling to about 542,000 bpd in August from 566,000 in July. The pipeline’s capacity is 750,000 bpd, and preliminary September volumes indicate further declines. Analysts attribute the slowdown to weaker oil prices, rising competition from Canadian crude, and a drop in the region’s rig count from 35 in January to 30 by mid-year. North Dakota’s total oil output fell to 1.15 million bpd in June, down 1.6% from January, and the pipeline is underutilized, with “a lot of spare capacity,” according to East Daley Analytics. Rising Canadian crude production and the end of US refinery maintenance could further crowd pipeline capacity, potentially keeping Bakken output under pressure into 2026.