Oil Prices Rise on Russian Energy Attacks and Trump’s NATO Sanctions Push

Oil prices rose Monday, with Brent up $0.45 to $67.44 and WTI up $0.61 to $63.30, as markets weighed Ukrainian drone strikes on Russian energy facilities and U.S. President Trump’s pressure on NATO allies to stop buying Russian oil. Ukraine’s attacks forced the suspension of operations at Russia’s Primorsk export terminal (1 million bpd capacity) and shut a major processing unit at the Kirishi refinery (355,000 bpd, 6.4% of national capacity). Analysts noted tight diesel supplies and heavy oil shortages were keeping the market supported despite global economic concerns. Additional support came from strong Chinese refinery demand and a draw in U.S. crude inventories, though weaker Chinese economic data capped gains. Investors are also watching the U.S. Federal Reserve’s Sept. 16–17 meeting, where an expected rate cut and weaker U.S. dollar could further boost oil demand.

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Ukrainian Drone Strike Halts Key Unit at Russia’s Kirishi Refinery

A Ukrainian drone attack over the weekend forced Russia’s Kirishi oil refinery to halt a key processing unit, which accounts for nearly 40% of the plant’s 400,000 bpd capacity, according to industry sources. The damaged furnace and equipment are expected to take about a month for maintenance, though the plant will ramp up operations in other sections to maintain roughly 75% of normal capacity. The attack is part of Ukraine’s intensified strikes on Russian energy infrastructure aimed at limiting funding for Moscow’s war effort. Meanwhile, the Primorsk port, a major export hub capable of loading 1 million bpd, partially resumed operations but at reduced capacity, with some vessels like Kusto and Cai Yun remaining at anchor. Authorities and operators, including Surgutneftegaz and Transneft, have not provided detailed public updates on the impact.

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Sanctioned Russian Crude Tanker Approaches Adani’s Mundra Port

The Suezmax tanker Spartan, carrying about 1 million barrels of Russian Urals crude, neared India’s Mundra port operated by Adani Group, likely making it one of the last sanctioned vessels to unload before a new ban takes effect. The ship was sanctioned by the EU and UK last year for facilitating Russian oil exports. Adani recently banned vessels sanctioned by the EU, UK, or US from calling at Mundra, though the ban does not apply to ships already en route. India’s imports of Russian crude through Mundra averaged 180,000 bpd over the first eight months of 2025, part of total Russian crude flows of 1.6 million barrels per day to India. The move comes amid US pressure and proposed tariffs on India and China over Russian oil purchases, while Adani itself faces scrutiny from US authorities on separate sanctions-related matters.

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China Rejects U.S. Tariff Push Over Russian Oil as ‘Unilateral Bullying’

China criticized the United States’ push for G7 and NATO allies to impose secondary tariffs on Beijing for purchasing Russian oil, calling it “unilateral bullying and economic coercion.” The dispute comes as Chinese and U.S. officials hold talks in Madrid on tariffs, technology, and other trade frictions, including Washington’s demand for Bytedance to divest TikTok. Tensions escalated further after China’s market regulator announced a preliminary probe into U.S. chipmaker Nvidia for anti-monopoly violations. Despite a fragile tariff truce reached in May and extended in August, both sides remain divided over tech export controls, China’s ties with Russia, and fentanyl precursor flows. Beijing urged Washington to act “prudently” and resolve issues through equal dialogue.

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California Approves Bill to Add 2,000 Oil Well Permits Annually

California lawmakers passed SB 237, a bill allowing up to 2,000 new oil well permits per year starting in 2026, mainly in Kern County. The move aims to boost in-state supply so local producers can cover about 25% of refinery crude demand, compared with the current 23% from 119,000 bpd of production. The legislation comes as two refineries, representing 17% of gasoline output, are set to close within a year, raising concerns over rising fuel imports and higher pump prices. Analysts note that fuel prices are a politically sensitive issue, especially as Governor Gavin Newsom eyes a 2028 presidential run. The policy marks a significant shift toward streamlining well approvals and bolstering California’s oil output to protect consumers from volatile fuel costs.

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Dangote Refinery Sends First Gasoline Cargoes to U.S. via Vitol and Sunoco

Nigeria’s 650,000 bpd Dangote refinery delivered its first U.S.-bound gasoline cargo, carried by the Gemini Pearl tanker, marking a milestone in meeting strict American fuel standards. The shipment of about 320,000 barrels was purchased by Vitol from Mocoh Oil and mostly resold to Sunoco, which discharged the cargo at its Linden facility in New York Harbor. Additional deliveries are scheduled: Glencore sold a second cargo to Shell arriving September 19 on the MH Daisen, and Vitol purchased a third cargo on the Seaexplorer due around September 22. While these exports highlight Dangote’s growing influence on global energy flows, the refinery’s gasoline unit may face a 2–3 month shutdown for repairs, limiting near-term shipments. The refinery is expected to reduce Nigeria’s import dependence and export surpluses mainly to Europe and the U.S.

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Singapore Marine Fuel Sales Hold Strong at Highest Level Since December 2023

Singapore’s marine bunker fuel sales remained robust in August, totaling 4.97 million metric tons, the highest since December 2023, up 1% month-on-month and 8.9% year-on-year. 0.5% low-sulphur fuel oil (VLSFO) sales rose 5.4% from July, while high-sulphur fuel oil (MFO) sales dipped 3.7% month-on-month but remained strong year-on-year. Premiums for both VLSFO and MFO stayed largely unchanged, reflecting an oversupplied market. Alternative fuels gained momentum, with biofuel-blended bunker sales up 12.6% to over 135,000 tons and LNG bunker sales hitting a record 67,000 tons. Container throughput held steady at 3.86 million TEUs, while vessel calls for bunkering fell slightly by 1.2% to 3,608.

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Rising Inventories Could Boost Floating Storage and Tanker Rates

Floating storage could significantly impact the tanker market this year as rising crude inventories push buyers to seek ships for storage, potentially boosting earnings beyond forecasts. The US EIA expects inventory builds to average 2.3 million bpd over the next two quarters, which could fill onshore storage and raise demand for floating storage. Analysts note that even a modest increase in floating storage can meaningfully affect tanker rates, as every 100 million barrels absorbs 2% of the tanker fleet. Historical context from 2020 shows that at the peak of floating storage, 11% of the global fleet was used, pushing VLCC rates above $200,000 per day. Current VLCC spot rates have already surged from $45,155 per day on 1 September to $76,750 per day, with the Baltic Dirty Tanker Index reaching 1,114 points. Additional factors supporting floating storage include weaker refinery demand, seasonal maintenance, and potential oil price contango. Global inventories stand at just under 3.5 billion barrels, approaching multi-year highs but below the 3.9 billion barrels in June 2020. Overall, tight tanker capacity, high inventory builds, and bullish market sentiment suggest floating storage could once again drive freight rates and profits.