Oil Rises as U.S.–China Trade Talks Back on Track and Tensions Ease

Oil prices rose on Monday after the U.S. confirmed President Trump will meet Chinese President Xi Jinping later in October, easing trade tensions that had recently driven crude to five-month lows. Brent increased $0.59 to $63.32 per barrel, and WTI gained $0.59 to $59.49, rebounding from a 4% drop on Friday. U.S. Treasury Secretary Scott Bessent said the meeting remains scheduled in South Korea, signaling progress in negotiations between the world’s top two economies. China’s September oil imports climbed 3.9% year-on-year to 11.5 million bpd, while OPEC maintained its demand outlook and projected a smaller 2026 supply deficit. Gains were limited by a U.S.-brokered ceasefire in Gaza, as traders awaited confirmation that the peace would hold before adjusting positions.

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Sinopec Navigates Rizhao Sanctions with Proactive Refinery Measures

US sanctions on the Rizhao Shihua Crude Oil Terminal, which handles about 9% of China’s crude imports, are forcing tankers to divert and could trigger run cuts of up to 250,000 bpd at nearby Sinopec refineries. State-owned Sinopec is expected to be hardest hit, with the Luoyang refinery most vulnerable due to its reliance on a direct pipeline from Rizhao, while Yangzi and Jinling refineries may also face disruptions. The sanctions target China-Iran energy trade and extend beyond independent refiners, affecting major infrastructure partly owned by Sinopec. Some tankers, including Spherical carrying 2 million barrels of Brazilian crude, have already rerouted to other ports like Caofeidian. Analysts note that less than 25% of the terminal’s imports are sanctioned oil, so the impact on China’s overall crude demand is likely to be short-lived as cargoes are rerouted.

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Sinopec Diverts Supertanker After U.S. Sanctions Hit Key Chinese Oil Terminal

China’s Sinopec has diverted a 2-million-barrel supertanker and ordered several refineries to reduce crude processing after the U.S. sanctioned the Rizhao Shihua Crude Oil Terminal, a key import hub in Shandong province. The supertanker New Vista, carrying Abu Dhabi’s Upper Zakum crude, changed course from Rizhao to Ningbo and Zhoushan, arriving on October 15, ship tracking data showed. Following the sanctions, Sinopec instructed about six refineries to cut operating rates to 80% for the rest of October, reducing its total crude runs by an estimated 3.36% to 5.16 million bpd. The targeted Rizhao terminal, half-owned by a Sinopec logistics unit, was accused by Washington of handling Iranian crude from sanctioned vessels. Industry analysts said roughly 20% of Sinopec’s total crude imports pass through Rizhao.

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China’s September Crude Imports Up 3.9% Year-on-Year but Down 4.5% from August

China imported 47.25 million metric tons of crude oil in September, equal to 11.5 million bpd, marking a 3.9% year-on-year increase but a 4.5% decline from August as refineries operated at their highest utilisation rates of 73.45%. State-owned refineries ran at 81.05% capacity and independent refiners at 62.17%, supported by reduced maintenance involving 70.4 million tons of annual capacity. Despite strong throughput and higher gasoline and diesel output, domestic supply continued to outpace demand. Seaborne crude imports dropped to their lowest since January due to tight import quotas on independents and weaker arbitrage reducing inflows from Russia, Iran, Brazil, and West Africa. Over the first nine months of 2025, total crude imports rose 2.6% to 423 million tons, reflecting ongoing stockpiling. Natural gas imports, including LNG, fell 7.8% year-on-year in September to 11.05 million tons, while LNG imports dropped 6.2% in the same period.

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OPEC Sees Narrower 2026 Oil Supply Deficit as OPEC+ Boosts Output

OPEC said in its latest monthly report that global oil supply and demand are likely to be nearly balanced in 2026 as OPEC+ members increase production faster than expected. The revision marks a shift from last month’s projection of a significant supply shortfall, easing earlier concerns of tightness in the market. The group said global oil demand will grow by 1.3 million bpd in 2025 and slightly faster in 2026, supported by strong economic data from the U.S., Japan, India, and China. September production rose by 630,000 bpd to 43.05 million bpd, nearly matching the 43.1 million bpd expected demand for next year. Oil prices hovered near $63 per barrel, pressured by worries about a potential surplus amid OPEC’s faster unwinding of output cuts.

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Aramco Confirms It Can Sustain 12 Million bpd Output for One Year Without Extra Cost

Saudi Aramco CEO Amin Nasser said the company can maintain crude production at 12 million bpd for a full year without incurring additional costs, supported by extraction costs of $2 per barrel for oil and $1 per barrel for gas. Speaking at the Energy Intelligence Forum in London, he projected global oil demand to grow by 1.1–1.3 million bpd in 2025 and 1.2–1.4 million bpd in 2026, emphasizing the need for continued investment in supply. The Saudi energy ministry earlier reversed its plan to lift maximum capacity to 13 million bpd, reinstating the 12 million bpd cap. The IEA estimates Saudi Arabia’s spare capacity at 2.43 million bpd, out of OPEC+’s total 4.05 million bpd, with current output above 9.7 million bpd. Aramco continues to expand in petrochemicals, gaining majority control of Petro Rabigh, investing $3.4 billion in China’s Rongsheng Petrochemical, and building an $11 billion complex with TotalEnergies to produce 1.65 million tons of ethylene annually from 2027.

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Russia to Ease Gasoline Shortages, Prices Expected to Stabilize

Russian Finance Minister Anton Siluanov said gasoline shortages that have pushed prices up 10.2% since the start of the year are expected to be resolved soon. The price rise has been partly driven by Ukrainian drone attacks on Russian oil refineries, but authorities are closely monitoring the situation. Siluanov emphasized that ensuring fuel availability at gas stations is a priority to prevent disruption to regional economies and social sectors. He acknowledged that some supply constraints persist in certain regions but expressed confidence they would be overcome shortly. The government is focused on stabilizing supply rather than immediately controlling prices.

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U.S. and EU Clash Over Global Carbon Tax at IMO Shipping Summit

The International Maritime Organization (IMO) will vote this week on adopting a global carbon emissions fee for shipping, backed by an EU-led coalition including Britain, China, and Japan, but fiercely opposed by the United States. The proposed policy, which targets vessels over 5,000 tons, would penalize ships exceeding emission thresholds and reward cleaner operators, generating an estimated $11–12 billion annually by 2028–2030, according to University College London. Washington, which withdrew from April’s preliminary talks, has threatened port fees, visa restrictions, and other sanctions against nations supporting the plan. The U.S. State Department denounced the initiative as a “European-led neocolonial export of climate regulations,” while the EU urged adoption of the measure. If approved at the October 14–17 IMO meeting, the revenues would flow into a new IMO Net-Zero Fund, though the fund’s distribution remains undecided.