Oil Prices Dip on U.S. Demand Concerns Despite Supply Risks

Oil prices fell on Wednesday as rising U.S. diesel stockpiles fueled demand worries, with Brent crude settling 0.76% lower at $68.22 per barrel and WTI down 0.73% at $64.05. While U.S. crude inventories dropped sharply on higher exports and lower imports, the build in distillates weighed on sentiment. The Federal Reserve cut interest rates by 25 basis points as expected, signaling more reductions this year, but markets remained cautious. On the supply side, Kazakhstan resumed oil flows through the Baku-Tbilisi-Ceyhan pipeline after a contamination-related suspension, while Nigeria lifted emergency rule in Rivers state, a key oil hub. Meanwhile, risks from Russia’s oil infrastructure persisted after Ukraine’s drone attacks, with Transneft warning producers of potential output cuts.

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VLCC Earnings Surge Above $100,000 as ‘High-Quality’ Rally Continues

VLCC spot rates are climbing into six-figure territory, with Clarksons’ fleet-weighted average reaching $103,200 per day on Wednesday, up 8.3% from Tuesday, while Jefferies estimates an eco-designed, scrubber-fitted VLCC would earn $100,600 per day. Jefferies analyst Omar Nokta noted the rally is “high quality,” as charterers are not cancelling fixtures when markets cool, indicating the surge is driven by supply-demand fundamentals rather than sentiment. On Tuesday, 11 VLCC fixtures were recorded, including four earning $100,000 per day or more, with Zodiac Maritime’s Azure Nova fixed at $150,014 per day for a North Sea-to-China voyage. Other six-figure deals include Hyundai Merchant Marine’s Universal Leader at $130,667 per day for Middle East-to-Japan, and Minerva Marine’s Zourva and Lykiardopulo-linked Arosa fixed at $127,433 and $199,566 per day for US Gulf-to-Far East voyages. The ongoing trend highlights robust booking activity from the Middle East and continued tightness in the VLCC market.

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U.S. Crude Stocks Drop 9.3M Barrels as Net Imports Hit Record Low

U.S. crude inventories fell by 9.3 million barrels last week to 415.4 million barrels, far exceeding expectations of a 857,000-barrel draw, the EIA reported. Net imports hit a record low after crude exports surged 2.53 million bpd to 5.28 million bpd, the highest since December 2023. Gasoline stocks declined by 2.3 million barrels to 217.6 million barrels, while distillate inventories jumped 4 million barrels to 124.7 million barrels, raising demand concerns. Crude stocks at Cushing dropped 296,000 barrels, while refinery runs fell 394,000 bpd, lowering utilization to 93.3%. Oil futures initially rose on the sharp draw but later dipped, with Brent at $68.29 and WTI at $64.30, pressured by the rise in distillates.

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Kazakhstan Resumes Oil Exports via BTC Pipeline After Contamination Halt

Kazakhstan resumed oil exports through the Baku-Tbilisi-Ceyhan (BTC) pipeline on September 13 after suspending flows last month due to contamination issues. State energy firm Kazmunaygaz said it has already shipped 8,800 metric tons of oil from the Kashagan oilfield, with two additional cargos totaling 18,000 tons expected in September. Plans for the year target 1.7 million tons (about 34,000 bpd) of Kazakh oil exports via BTC, though only 0.9 million tons were shipped in the first eight months. The BTC pipeline, which mainly carries BP-operated Azeri crude to Turkey, offers Kazakhstan an alternative to its heavy reliance on Russia, which handles over 80% of its exports via the Caspian Pipeline Consortium. Azeri BTC crude exports from Ceyhan are scheduled at 15.4 million barrels in October, down from 16.5 million barrels in September.

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Russia Signals Willingness to Reopen U.S. Energy Cooperation on Sakhalin-1

Russian Deputy Foreign Minister Sergei Ryabkov said Moscow is ready to deepen discussions with the U.S. on energy cooperation, citing Sakhalin-1 as a key example. President Vladimir Putin recently signed a decree that could allow foreign investors, including ExxonMobil, to regain stakes in the project. Exxon, which once held a 30% operator share, was the only non-Russian investor and exited after Russia’s invasion of Ukraine in 2022, incurring a $4.6 billion impairment charge. The decree was signed the same day Putin met Donald Trump in Alaska, where energy investment opportunities and Ukraine peace talks were discussed. Russia maintains that dialogue with Washington continues across multiple issues despite geopolitical tensions.

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Poland Pushes EU to End Russian Oil Imports by 2026 Amid Rising Security Risks

Poland’s Energy Minister Milosz Motyka has called on EU nations to completely phase out Russian crude oil imports by end-2026, two years earlier than the EU’s current target of 2028. The move comes after a Russian drone incursion into Poland and ongoing reliance on the Druzhba pipeline by Hungary and Slovakia, which argue alternatives are more expensive due to transit fees. While the EU has sanctioned most Russian oil, gas remains exempt due to resistance from these countries, leaving Slovakia particularly dependent and “at the mercy” of other supply routes. Poland has proposed to support diversification through U.S. LNG imports, with its state energy firm Orlen already shipping U.S. gas to Ukraine this spring. EU Commission President Ursula von der Leyen signaled support for accelerating the phase-out following talks with U.S. President Donald Trump.

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Vitol and Glencore Poised to Bid for Chevron’s $1B Singapore Refinery Stake

Global commodities traders Vitol and Glencore are expected to submit formal bids for Chevron’s 50% stake in Singapore’s second-largest refinery, valued at roughly $1 billion, according to sources. The refinery, located on Jurong Island, has a crude processing capacity of 290,000 bpd, with the other 50% owned by PetroChina, which holds first refusal rights. Chevron has hired Morgan Stanley to manage the sale as part of its plan to cut up to $3 billion in costs by 2026, also offering assets in Australia, the Philippines, and Malaysia. Both Vitol and Glencore are looking to expand refining capacity in the Asia-Pacific region, with Vitol operating a 32,000-bpd Malaysian refinery and Glencore co-owning Singapore’s 237,000-bpd Aster refinery acquired from Shell earlier this year. Singapore remains a key target as Asia’s largest oil trading hub and the world’s biggest bunkering port.

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LNG Shipping Industry Faces Potential Shortfall of 300 Vessels by 2030

Capital Clean Energy Carriers projects that the LNG industry will face a deficit of roughly 300 vessels by the end of the decade due to a surge in new US liquefaction capacity. Executive VP Brian Gallagher highlighted that 300–350 million tonnes of LNG production is expected by 2030, requiring over 500 carriers, while only about 300 newbuildings are currently on order. Scrapping of older steam turbine ships and demand for modern vessels with new technologies is driving the need for replacements. Gallagher noted strong market dynamics, constrained shipyard capacity, and positive trends in LNG demand, accelerated by US energy policies. He also emphasized that natural gas will grow its share in the global energy mix, with $11.1 trillion projected to be invested in gas infrastructure by 2050.