Oil Falls to 16-Week Low on U.S. Shutdown and OPEC+ Supply Concerns

Oil prices fell for the third consecutive day, with Brent crude closing at $65.35 and WTI at $61.78, their lowest levels since June and May, respectively, amid U.S. government shutdown fears and expectations of increased OPEC+ output. Traders anticipate OPEC+ could raise production by up to 500,000 bpd in November, though OPEC denied such plans, instead emphasizing compliance with existing agreements. U.S. crude inventories rose by 1.8 million barrels last week, compared to analysts’ forecasts of 1 million, further pressuring prices. Demand concerns were fueled by weak manufacturing data in Asia and subdued U.S. factory activity, coupled with the suspension of key government reports due to the shutdown. Meanwhile, Russia boosted oil loadings from its western ports by 25% in September, and Venezuela’s exports hit 1.09 million bpd, their highest since February 2020.

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G7 Pledges Action Against Buyers of Russian Oil

G7 finance ministers said they will take joint steps to pressure Russia by targeting countries and entities that increase purchases of Russian oil or help circumvent sanctions. The ministers also highlighted the importance of trade measures such as tariffs, import, and export bans to cut off Moscow’s revenues from energy sales. While the statement did not name India or China, Washington has pushed for tariffs on both nations over their continued oil trade with Russia, with the Trump administration already imposing extra tariffs on Indian imports. The G7 also pledged to phase out remaining Russian hydrocarbon imports. These moves come as Western nations intensify efforts to restrict financing for Russia’s war in Ukraine, which began with the 2022 invasion.

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Saudi Oil Exports Hit 18-Month High as OPEC+ Supply Increases

Saudi Arabia’s crude exports surged to 6.42 million bpd in September, the highest level in 18 months, reflecting its share of OPEC+ output increases reaching global markets. Exports rose by over 600,000 bpd compared with August. The kingdom’s exports had previously been restrained during the summer due to higher domestic consumption for power generation. Shipments via the Sumed pipeline to Egypt reached levels not seen since March 2020, likely due to restocking at the Sidi Kerrir terminal. Saudi Arabia and OPEC+ will decide on the next production moves soon, amid easing Middle Eastern oil prices.

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Venezuela’s Oil Exports Top 1 Million bpd for First Time Since 2020

Venezuela’s oil exports averaged 1.09 million bpd in September, their highest since February 2020, driven by rising production, sales of accumulated stocks, and more diluent imports. The figure was 13% higher than August and 39% above September 2023, with about 84% of shipments going directly or indirectly to China through intermediaries. U.S. oil major Chevron exported 108,000 bpd to the U.S., up from 60,000 bpd in August, after receiving authorization from the Trump administration in late July. PDVSA has been draining inventories while cutting diluent imports to 41,000 bpd in September from 99,000 bpd in August, though purchases of Russian and Chinese heavy naphtha and light crude remain critical for blending extra heavy oil. Venezuela also shipped 52,000 bpd of crude and fuel to Cuba and exported methanol and byproducts to Europe, reporting crude output of 1.1 million bpd in August, the highest since 2019.

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ESPO Blend Oil Prices Ease as Chinese Refiners Run Low on Import Quotas

Premiums for Russia’s ESPO Blend crude loading from Kozmino port have softened for November cargoes, falling to around $1.70 per barrel above ICE Brent, down from $2 for October, due to limited import quotas for independent Chinese refiners. While state-owned refiners like Sinopec and PetroChina are exempt from quota limits, smaller “teapot” and four large integrated refiners depend on government-issued quotas, which are now largely depleted. These independent refiners account for over one-third of China’s crude imports, making their reduced purchasing power a key factor in lowering ESPO demand. Traders noted that refiners are choosing cheaper alternatives and that upcoming December cargoes may face further pressure from low quotas and tighter port regulations in Shandong. Freight rates for transporting Russian oil to China via Aframax tankers remained stable at $2–$3 million per one-way trip.

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European Refineries Invest in Green Projects to Secure Long-Term Survival

European oil refineries are increasingly investing in energy transition and green fuel projects as competition from modern plants in Asia, the Middle East, and Africa pressures older facilities, prompting closures in Europe. Companies like Essar are moving forward with major projects such as a blue hydrogen plant in the UK and a sustainable aviation fuel (SAF) facility at Stanlow, with government support playing a key role. PKN Orlen is focusing on co-processing and advanced biofuel production to meet rising EU demand under regulatory frameworks like RefuelEU Aviation and FuelEU Maritime. Executives describe decarbonisation and advanced fuels not merely as regulatory compliance but as a strategic business model to remain competitive and avoid closure. Concerns remain about fuel security, with the UK importing around 30% of its fuel, highlighting the risk if the number of domestic refineries falls below four.

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Nigerian Labor Union Ends Dangote Refinery Strike

Nigeria’s main oil labor union, Pengassan, has agreed to call off its strike at the Dangote refinery after two days of talks with the company and government officials. The strike was triggered by the firing of over 800 workers accused of sabotage. Dangote agreed to reassign the dismissed staff within the group with no loss of pay, addressing the union’s concerns. The stoppage threatened crude supply to the 650,000 bpd refinery, which supplies 35–50% of Nigeria’s gasoline demand and affects oil exports. Officials noted that the strike had minimal impact on oil production, and operations continued without disruption.

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VLCC Rates Slip Amid Charterer Control, Analysts Say Market Support Remains

VLCC earnings have cooled, with the fleet-weighted average rate falling to $83,300 per day, down 16.7% from last week, as charterers temporarily took control of the market. Analysts from Arctic Securities and Jefferies described the slowdown as a brief blip, citing growing oil demand, rising OPEC+ volumes, and increased US exports as factors providing market support. Forward freight agreements suggest the Middle East to China route could average around $70,000 per day in the near term. Notable recent fixtures include Barhi’s Sanam at $109,308/day and Maran Tankers’ Maran Antiope at $89,890/day, while smaller MRs saw a nearly 23% weekly jump to $31,600/day due to competition for non-Russian cargoes amid Russian export restrictions. Ukrainian drone strikes and other operational disruptions at Russian refineries contributed to tighter MR supply, highlighting short-term volatility in the tanker market.

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George Procopiou Orders Four VLCCs from Hengli Shipyard

George Procopiou’s Dynacom Tankers has added a quartet of 306,000-dwt VLCCs to its newbuilding programme at Hengli Shipbuilding in China, with each vessel valued at $118 million and deliveries scheduled for 2026–2027. This follows a similar resale deal by Hengli with John Fredriksen’s Seatankers. Procopiou already holds an extensive newbuilding relationship with Hengli, having placed 16 ships worth ~$750 million over the past two years, including bulkers and VLCCs. With this addition, Dynacom’s tanker orderbook rises to 55 vessels, making it the largest globally, while the wider family-controlled orderbook totals 83 ships. The move reflects confidence in China’s shipbuilding capacity and expectations of a VLCC supercycle, despite geopolitical tensions between the US and China.

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John Coustas Bets on Methanol as China Leads Shipping Fuel Transition

Greek shipowner John Coustas has chosen to prepare his 25 new container ships for methanol fuel rather than LNG, citing concerns over LNG infrastructure costs and ongoing methane emissions. Speaking at the TradeWinds Shipowners Forum, he highlighted that China is the only country delivering on alternative fuel production, with major players like Cosco and Maersk securing e-methanol off-take agreements. Coustas criticized LNG for requiring expensive ships, bunkering, and infrastructure while still allowing methane slippage. He also expressed skepticism about the IMO Net-Zero Framework, arguing that carbon tax revenues are unlikely to fund shipping decarbonization. Overall, Coustas is aligning his investment strategy with Chinese production capabilities rather than broader global or European mandates.

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U.S. LNG Exports Hit Consecutive Record, Reaching 9.4M MT in September

U.S. LNG exports hit a record 9.4 million metric tons (MT) in September, surpassing the previous record of 9.3 million MT in August, despite outages at the Sabine Pass and Cove Point facilities. Europe remained the top buyer, taking 6.22 million MT (two-thirds of total exports), while Asia received 1.63 million MT (17%), up from 1.47 million MT in August. Prices traded at $11.13 per mmBtu in Europe and $11.32 in Asia, leaving little incentive for U.S. suppliers to divert shipments between the two regions. Exports to Latin America fell to 0.63 million MT as seasonal demand eased, while Egypt imported 0.5 million MT (7 cargoes) amid declining domestic gas production. Additionally, five vessels carrying 0.4 million MT departed U.S. terminals in September still seeking buyers.