Oil Prices Jump 3% to Seven-Week High on U.S. Stock Draw and Global Supply Disruptions

Brent crude rose $1.68 (2.5%) to $69.31 per barrel and WTI gained $1.58 (2.5%) to $64.99 per barrel, the highest closes since early August and September, after U.S. crude inventories unexpectedly fell 607,000 barrels versus expectations of a 235,000-barrel build. The draw, combined with declines in distillate and gasoline stocks, heightened concerns over tightening supply amid export issues in Iraq, Venezuela, and Russia. Ukraine’s strikes on Russian oil infrastructure, including pumping stations in Volgograd and disruptions at Novorossiisk port, further supported prices, while Russia faces fuel shortages as drone attacks cut refinery runs. Geopolitical risks intensified with Russia’s proposal to raise VAT to 22% in 2026 to fund war spending, U.S. support for phasing out Russian energy faster, and looming U.N. sanctions on Iran.

___________________________________

Drone Alerts Force Temporary Halt at Russia’s Key Black Sea Oil Ports

Two major Russian Black Sea ports, the Caspian Pipeline Consortium terminal and Sheskharis facility near Novorossiysk, temporarily halted tanker loadings following overnight drone attack warnings. Sirens in Novorossiysk and minor damage to CPC’s office underscored the security threat, while local authorities indicated the stoppages were precautionary. Together, the ports handle over 2 million bpd of Russian and Kazakh oil, critical to global crude supply. The halt reflects Ukraine’s intensified targeting of Russian energy infrastructure since August, prompting Russia to restrict gasoline exports and consider diesel curbs. Kazakhstan confirmed that oil continues entering the CPC system, signaling the disruption is likely temporary.

___________________________________

Kremlin Says Multiple Western Firms Eye Return as ExxonMobil

The Kremlin stated that Exxon Mobil is not the only Western company interested in returning to Russia, with spokesman Dmitry Peskov noting several corporations are considering re-entering despite sanctions. Exxon and Rosneft have reportedly signed a non-binding initial agreement aimed at recouping Exxon's $4.6 billion writedown from its Russian assets in 2022. The move marks a tentative step toward repairing U.S.–Russia commercial ties but remains contingent on progress in Ukraine peace efforts and potential easing of sanctions by the U.S. and EU. President Putin has said Russia welcomes back companies that exited under “political pressure” and recently signed a decree allowing foreign investors, including Exxon, to regain shares in the Sakhalin-1 oil and gas project. Meanwhile, U.S. President Trump’s recent rhetoric on Russia has hardened, casting uncertainty on future energy cooperation.

___________________________________

Pakistan’s Cnergyico Orders Second U.S. Crude Cargo After Successful Debut

Pakistan’s largest refiner Cnergyico has ordered a second 1 million-barrel cargo of West Texas Light (WTL) crude from the U.S., delivered by Vitol in November, after its first purchase proved commercially viable. The company evaluated multiple crude options and found WTL’s gross refining margin slightly better than Gulf crude, signaling potential for more imports if market conditions remain favorable. This follows Pakistan’s landmark trade deal with the U.S. in August, allowing energy imports in exchange for lower tariffs on Pakistani exports. Cnergyico, which operates the country’s only single-point mooring terminal, is also planning a second offshore terminal and long-term upgrades to meet rising domestic fuel demand. Shipping costs and higher WTI spot premiums could affect the economics of U.S. crude imports for Asia, including Pakistan, for November-loading cargoes.

___________________________________

Guyana’s Oil Production Rises to 685,000 bpd in August on New FPSO Start-up

Guyana’s oil output rose to 685,000 bpd in August from 664,000 bpd in July, driven by the start-up of its fourth floating production facility (FPSO One Guyana). The new FPSO, which began operations on August 7, produced an average of 75,000 bpd and shipped its first 1-million-barrel crude cargo for export later that month. U.S. energy major Exxon Mobil, which leads all oil and gas operations in Guyana, now controls output exceeding 900,000 bpd with this expansion. Oil production averaged 648,000 bpd in the first eight months of 2025, up from 597,000 bpd in the same period last year, contributing $212.88 million to the government’s oil fund in August. Exxon also approved its seventh project, Hammerhead, moving toward a target of 1.7 million barrels of oil equivalent per day by 2030.

___________________________________

India’s Fuel Exports Hit Multi-Year Highs on Refinery Boost, Ethanol Blending

India’s gasoline and diesel exports have surged to multi-year highs as refiners expand crude processing capacity and rising ethanol blending frees more fuel for overseas markets. Gasoline exports are expected to reach about 400,000 bpd this year, while gasoil exports may rise to a four-year high of 610,000–630,000 bpd, with Europe a key destination for winter demand. India’s crude processing is set to grow by up to 160,000 bpd in 2025 to 5.51 million bpd, supported by increased use of discounted Russian crude. Reliance Industries and MRPL are ramping up exports to take advantage of strong Asian gasoline margins, which have jumped 51% this year. The rise in Indian exports coincides with falling diesel shipments from Saudi Arabia during refinery maintenance, positioning India as a key supplier to Europe ahead of new EU sanctions on Russian-derived fuels.

___________________________________

Indian Refining Growth Emerges as Counterbalance to China’s Flat Oil Shipments

BRS Shipbrokers said China’s crude imports have plateaued at around 11.3 million bpd as refinery growth surpasses demand, while Beijing caps refining at 20 million bpd and shuts older plants. India, now the fourth-largest crude processor at ~5.5 million bpd, is set to add 580,000 bpd of new capacity in 2026 and another 1.4 million bpd by 2030, ensuring continued strong crude inflows by sea. Positioned strategically, India is competing with the Middle East as the world’s key refined product swing exporter, sending cargoes either to Asia or the Atlantic depending on pricing. While India’s growth cannot fully offset lost tonne-miles from weaker Chinese shipments, expanding refining and exports should sustain clean tanker demand. Freight markets remain mixed, with VLCC rates above $100,000/day and suezmaxes at $47,700/day, while product tankers lag with LR2s at $22,500/day and MRs at $19,700/day, both below 2025 averages.

___________________________________

China’s Indonesian Crude Imports Hint at Sanctioned Iranian Oil Flows

China’s crude imports from Indonesia surged to about 630,000 bpd in August, surpassing Indonesia’s domestic output and raising suspicions about Iranian oil being rerouted. Ship-to-ship transfers near Malaysia and Kabil port on Batam Island appear to disguise the origin of the crude before it reaches Chinese ports like Qingdao, Rizhao, and Dalian. Volumes from Malaysia fell over 30% as these transfers increasingly use Indonesian staging points. Tankers including the Aquaris, Yuhan, Pola, and Pix have been repeatedly involved in such operations, moving Iranian cargoes from sanctioned vessels. This pattern highlights a sophisticated workaround for Iran’s oil exports amid U.S. sanctions, while enabling China to secure cheaper supplies.

___________________________________

Chinese Lease Financing Scrutinized as US Port Fees Reshape Shipping

US port fees starting October 14 are prompting Chinese-controlled VLGCs to redeploy to Asia, raising questions about the broader impact of Chinese lease financing on global shipping. Vessels financed via Chinese sale-and-leaseback arrangements may be classified as “Chinese-controlled” under US rules, subjecting them to substantial fees, while ballast-only Chinese-built VLGCs are exempt. Brokers and financiers are exploring ways to restructure leases or divert ships, but uncertainty remains over who ultimately bears the cost. About 10% of the VLGC fleet and 19% of tankers above 25,000 dwt could be affected if definitions of Chinese control are applied broadly. The situation has already led to charter adjustments, discounts for Chinese-linked ships, and potential volatility in freight rates as operators navigate the new rules.

___________________________________

U.S. to Cancel $13 Billion in Green Energy Subsidies

The U.S. Department of Energy announced plans to cancel over $13 billion in subsidies pledged for wind, solar, batteries, and electric vehicles, framing it as a move to return money to taxpayers and prioritize “affordable, reliable, and secure American energy.” The decision, aligned with President Trump’s push to maximize oil and gas output while cutting renewable support, drew sharp criticism from California Governor Gavin Newsom, who warned that the U.S. was ceding clean energy leadership to China. The announcement came just after Trump dismissed climate change as “the greatest con job” during a UN speech, reinforcing his administration’s skepticism toward global climate initiatives. Environmental group E2 reported that clean energy jobs grew three times faster than the U.S. workforce in 2024, raising fears of widespread job losses under the rollback. Energy Secretary Chris Wright confirmed the cancellation at a New York press conference and said he does not plan to attend UN climate talks in Brazil this November.