Oil Prices Fall as Oversupply and Weak Demand Undercut Fed Rate Cut Boost

Oil prices slipped on Friday, with Brent down $0.76 to $66.68 and WTI down $0.89 to $62.68, as robust supplies and weakening demand outweighed the Federal Reserve’s first interest-rate cut of the year. Analysts noted that OPEC is reducing production cuts and Russian exports remain unaffected by sanctions, keeping supply strong. The Fed lowered rates by 25 basis points, but experts like John Kilduff argued that such small cuts won’t spur oil demand, suggesting a 50-point cut would be needed to make an impact. Demand concerns are mounting, with refinery turnarounds reducing consumption, distillate stockpiles rising 4 million barrels, and economic indicators showing a softening U.S. jobs market alongside weak housing activity. Energy agencies, including the EIA, remain cautious about near-term demand recovery, further tempering bullish sentiment.

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US Senators Push SHADOW Fleets Act to Sanction Russia’s Oil Tanker Network and LNG Projects

Bipartisan U.S. senators introduced the SHADOW Fleets Act to tighten sanctions on Russia’s energy sector by targeting its so-called "shadow fleet" of aging tankers used to evade restrictions. The bill, led by Senator Jim Risch (R-Idaho) and Senator Jeanne Shaheen (D-NH), would allow Washington to identify vessels supporting Russia, impose strict liability on ships conducting transfers with sanctioned vessels, and sanction new Russian Arctic LNG projects, including ending Nord Stream II. It aligns U.S. sanctions more closely with the European Union’s 19th sanctions package, which plans to ban Russian LNG imports a year earlier than expected. The legislation’s outlook remains uncertain, as Republican leaders await guidance from President Trump, despite broad Senate support for tougher measures. The proposal comes amid heightened tensions after Russia’s incursion into Estonian airspace and parallel U.S. bills seeking to boost Eastern European security and fund Ukraine with frozen Russian assets.

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EU Plans to Blacklist 118 Russia-Linked Ships, Accelerate LNG Ban in 19th Sanctions Package

The European Union is set to add 118 ships involved in Russian energy trades to its blacklist under the 19th round of sanctions, bringing the total number of sanctioned vessels to 562. The targeted vessels, labeled as part of the “shadow fleet and enablers,” will face a ban on re-insurance, while full details on the ships’ identities were not disclosed. The EU also intends to accelerate the phase-out of Russian LNG imports to January 1, 2027, one year earlier than previously planned. Financial measures include a full transaction ban on Russian banks, institutions, cryptocurrency platforms, and the MIR payment system to prevent sanctions evasion. Additionally, the sanctions aim at key third-country actors, including in China, supporting Russia’s military-industrial complex, though a full import ban from Russia and tariffs on China were not included.

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EU to Target Third-Country Oil Traders, Refineries in Russia Sanctions

The European Union’s next sanctions package against Russia will focus on third-country entities, including refineries, oil traders, and petrochemical companies in China, India, and other nations, as part of efforts to restrict Kremlin access to petrodollars. European Commission President Ursula von der Leyen said the measures aim at those “fueling Russia’s war by purchasing oil in breach of sanctions.” Russian energy giants Rosneft and Gazprom Neft will face a full transaction ban, and 118 additional vessels from Russia’s shadow tanker fleet will be sanctioned, bringing the total to over 560. The EU also proposed bringing forward a ban on Russian LNG imports to January 2027, accelerating previous plans. Full details on which third-country assets or entities will be targeted are still pending, and prior sanctions have had limited impact on Russia’s supply so far.

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Nayara Energy Sources Only Russian Oil in August Amid EU Sanctions

India’s Nayara Energy imported exclusively Russian crude oil in August, after Iraq’s SOMO and Saudi Aramco halted shipments due to payment issues following EU sanctions on the refiner in July. The private company imported 240,400 bpd, a 26% decline from July, operating its 400,000 bpd Vadinar refinery in Gujarat. The import drop reflects a complete halt of Middle Eastern supplies, with Iraq, Kuwait, and Saudi Arabia all at zero volumes. Russia accounted for all crude and condensate imports, rising slightly from July’s 212,000 bpd to 240,400 bpd. Year-to-date imports show a slight decrease compared with 2024, indicating Nayara’s growing reliance on Russian crude under sanctions constraints.

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UK Sanctions Two Tankers Over Russian Oil Trade via Georgia

The UK has imposed sanctions on two product tankers, Bavly (6,613-dwt) and Karakuz (6,640-dwt), for transporting Russian oil to the Georgian port of Batumi. Both vessels are owned by Russia-based Nafta-Invest, which supplies petroleum products and works with Russian energy companies Rosneft and Gazprom. The sanctions also target business interests linked to Georgia’s ruling party, Georgian Dream, which the UK says has enforced Kremlin-inspired laws and imprisoned opposition politicians. These measures bring the total of shadow fleet tankers sanctioned by the UK, EU, and US to nearly 550, coinciding with the EU’s recent plan to blacklist 118 more Russian-energy vessels. A UK Foreign Office minister stated the sanctions aim to cut off support for Putin’s war in Ukraine and deter pro-Kremlin actors in Georgia.

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US WTI MEH Hits 7-Month High on Export Demand as Brent-WTI Spread Widens

WTI at East Houston, known as MEH, strengthened to a seven-month high, trading at about a $1.55 premium to U.S. crude futures, driven by strong export demand. WTI Midland also gained 5 cents to a $1.10 premium, while Mars Sour remained unchanged at a 20-cent premium. The Brent-WTI spread widened to as much as minus $4.32 per barrel, boosting export competitiveness for U.S. grades. On supply, Baker Hughes reported U.S. oil rigs rose by 2 to 418, the highest since July. Meanwhile, ICE Brent November futures fell 76 cents to $66.68, and WTI October futures dropped 89 cents to $62.68.

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Iraq Boosts Oil Exports, Sees Extra Revenue Under OPEC+ Production Increase

Iraq has raised oil exports following OPEC+ members’ agreement to unwind voluntary production cuts, adding 137,000 bpd from October. The country’s state oil marketer SOMO expects September exports to average 3.4–3.45 million bpd, up from 3.38 million bpd in August. Director General Ali Nizar Al-Shatari said the increase could generate hundreds of millions of dollars in additional revenues, with 200,000 extra barrels per day contributing significantly to government coffers. Iraqi Prime Minister Mohammed Shia al-Sudani has called on OPEC+ to reconsider Iraq’s quota to better reflect its production capacity. Despite the increase, Iraq faces pressure from OPEC+ to offset output above agreed quotas to maintain market balance.

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Iraq Moves Closer to Deal on Restarting Kurdistan Oil Exports via Turkey

Iraq has given preliminary approval to a plan to restart pipeline oil exports from the Kurdistan region through Turkey, potentially adding at least 230,000 bpd to global supply. The Kirkuk-Ceyhan pipeline has been shut since March 2023 after an arbitration ruling against Turkey, with legal and political disputes delaying flows. Under the draft plan, the Kurdistan Regional Government (KRG) would supply 230,000 bpd to Iraq’s state marketer SOMO while keeping 50,000 bpd for local use, with an independent trader handling sales at SOMO’s prices. For each barrel sold, $16 would go into an escrow account for proportional distribution to producers, while remaining revenue goes to SOMO, though $1 billion in unpaid arrears remains unresolved. Talks between Baghdad, the KRG, and international oil companies have intensified, with executives citing unprecedented flexibility and progress, though final agreement is still pending.

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Angelicoussis-Led Coalition Expands to 1,200 Ships in Opposition to IMO Net-Zero Framework

Maria Angelicoussis has spearheaded a coalition of over 1,200 ships opposing the IMO’s proposed Net-Zero Framework, expanding from an initial group of six Greek shipowners. Members include major LNG, tanker, and bulker operators such as Frontline, Hanwha Shipping, Bahri, GasLog, and Stolt Tankers, many of whom have heavily invested in LNG vessels and other transition fuels. The coalition argues that the proposed fuel-intensity trajectories are a decade ahead of EU regulations and that the framework favors emerging technologies that are not yet fully developed or assessed for safety. They claim the draft rules could disadvantage existing LNG investments and incentivize paying carbon penalties over adopting available transition fuels, potentially harming smaller operators. The group urges the IMO to adopt fit-for-purpose measures with realistic timelines, incentives for transition fuels, and transparency in fund governance before final adoption, contrasting with other industry voices supporting the current framework.