Oil Prices Fall Despite Fed Rate Cut as U.S. Economic Weakness Weighs on Demand

Brent crude futures fell 51 cents (0.8%) to $67.44 per barrel, while U.S. WTI crude declined 48 cents (0.8%) to $63.57, as economic concerns overshadowed the Federal Reserve’s quarter-point rate cut. The Fed’s move — its first cut this year— was aimed at countering slowing growth, weak job market signals, and a housing slump that saw single-family home building hit a 2.5-year low. U.S. crude stockpiles dropped sharply last week as net imports hit a record low and exports surged, but distillate inventories rose by 4 million barrels versus expectations of just 1 million, stoking demand worries. Meanwhile, Ukraine intensified drone attacks on Russian oil facilities, while Qatar raised al-Shaheen crude prices to an eight-month high, and Kuwait forecast higher demand from Asia after the Fed cut. Despite geopolitical risks and supply disruptions, persistent oversupply and weak U.S. fuel demand kept prices under pressure.

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Russia Boosts Ust-Luga and Novorossiisk Exports Amid Primorsk Delays from Drone Strikes

Russia has revised its September oil export plans, raising loadings from Ust-Luga to at least 500,000 bpd (2 million tonnes), up from 1.5 million tonnes, and from Novorossiisk to about 750,000 bpd (3.1 million tonnes), an increase of 350,000 tonnes. The adjustments follow delays at Primorsk, where expected exports of 900,000 bpd have been disrupted by Ukrainian drone attacks, leaving repairs ongoing and two Aframax tankers still anchored. The diversion helps Moscow keep overall exports relatively stable despite infrastructure damage, as oil sales remain a crucial revenue source. Drone strikes on refineries have left more crude available for export, further driving higher seaborne shipments. However, shifting volumes between ports remains difficult due to limited tanker availability and logistical challenges.

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Putin Weighs Tax Hikes and Oil Revenue Rule to Shore Up Russia’s Budget

President Vladimir Putin signaled openness to raising taxes on the wealthy, such as luxury taxes or higher dividend levies, to help close Russia’s growing budget deficit amid the fourth year of war in Ukraine. Finance Minister Anton Siluanov announced a new fiscal rule that will lower the oil price cut-off for diverting revenues into the reserve fund, aiming to reduce reliance on volatile energy income and sanctions pressure. Russia’s oil and gas sales in September are projected to fall 23% year-on-year due to lower prices and a stronger rouble. The fiscal reserve fund currently holds about 4 trillion roubles ($48.25 billion), with 447 billion roubles ($5.39 billion) planned for deficit coverage this year; the deficit is expected to exceed 1.7% of GDP. The cut-off oil price will be reduced annually by $1 to reach $55 per barrel by 2030, down from the current $60, while energy revenues’ share of the budget is targeted to fall to 22% from 25%.

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Japan Urged to Diversify Oil Imports, but Canadian Supply Faces Challenges

Japan relies heavily on the Middle East for crude, with 95% of its imports coming from the region, prompting calls for diversification by the head of the Petroleum Association of Japan (PAJ). Alberta, Canada’s main oil-producing province, is exploring investments in Japan’s refining sector, including funding a coker unit to help process Canada’s heavy oil. PAJ president Shunichi Kito noted that importing Canadian crude would be difficult due to its heavy quality, and domestic oil demand is declining by about 2% annually, making new investments challenging. Individual refiners would ultimately decide on such projects, despite the potential benefits of diversifying supply sources. Meanwhile, Japan recently expanded sanctions on Russia, which prompted a warning from Moscow that countermeasures, including asymmetric responses, could follow.

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VLCC Freight Rates Surge to 2-Year High on Rising Middle East Exports and Asia Demand

Freight rates for VLCCs hit their highest since November 2022, with the Middle East–China TD3C route climbing to W108 on the Worldscale measure, equal to at least $6.6 million per voyage. Rates have risen nearly 150% since the start of 2025, driven by surging Middle East exports, which exceeded 18 million bpd in September—the highest since April 2023. Strong Asian demand has opened arbitrage flows from the U.S., Brazil, and West Africa, requiring longer-haul voyages and tightening tanker availability. Analysts note Saudi Arabia has boosted exports as seasonal crude burn for power generation ends, while high Dubai crude prices make long-haul shipments more attractive. The momentum is expected to continue into early 2026, though geopolitical risks such as potential new U.S. sanctions on Russian oil could further disrupt supply and amplify price dynamics.

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Major Shipowners Voice Concerns Over IMO Net-Zero Carbon Rules

Prominent shipowners, including Frontline, Bahri, and Capital Group, expressed “grave concerns” about the International Maritime Organization’s (IMO) upcoming vote on the Net-Zero Framework (NZF) for decarbonizing shipping. The framework, which includes a greenhouse gas fuel standard, a carbon price, and incentives for over-compliance, is scheduled for an October vote but faces pushback from some industry leaders. The companies argued that the draft rules, in their current form, would not effectively support decarbonization or ensure a level playing field, calling for “critical amendments” and more realistic implementation trajectories. Signatories included leading Greek shipowners, Oslo-listed Stolt Tankers, Dubai’s Emarat Maritime, and Hanwha Shipping of South Korea. While some industry groups, like the World Shipping Council, support the framework as a structured path to reduce emissions, shipowners remain concerned about its immediate feasibility and fairness.

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Nippon Yusen to Boost LNG Fleet by 50% to Meet Surging Global Demand

Japan’s largest shipping company, Nippon Yusen KK, plans to expand its LNG fleet by around 50% by early 2029 to accommodate growing global demand. CEO Takaya Soga emphasized LNG’s role in the energy transition as a lower-emission alternative to coal and a backup for intermittent renewables. LNG production is expected to surge worldwide, with consumption projected to rise by about 60% by 2040, driving the need for more transport vessels. Nippon Yusen aims to operate over 130 LNG carriers by 2029, up from 89, while rivals like Mitsui OSK Lines are also expanding their fleets. Most of the company’s LNG vessels are built in South Korea, with a small portion constructed in China, which could be affected by U.S. tariffs on Chinese-built ships starting October 14.

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Hackers Target Ship Masters in Novel Ship-to-Shore Malware Campaign

Anonymous hackers launched a first-of-its-kind cyberattack targeting ship masters and first officers on oil tankers and gas carriers via fake emails offering shipping deals. Unlike typical phishing attacks, the malware activated when the email was forwarded to shore-based managers, aiming to spy on company systems without causing major disruptions. The campaign appears linked to prior attacks on Iranian tanker communications by another group, LabDookhtegan, and sought to expose companies allegedly involved in sanctions-busting. CyberOwl, now part of DNV, analyzed the emails under controlled conditions and confirmed the operation’s sophisticated planning and reconnaissance. The attack underscores growing cyber vulnerabilities in shipping, where aging systems and increasing connectivity leave companies exposed to targeted threats.