Oil Prices Fall to 5-Month Low Amid Rising Oversupply Fears and U.S.-China Trade Tensions

Oil prices dropped to their lowest levels since early May, with Brent crude settling at $61.01 and WTI at $57.52 per barrel, as traders feared a growing global supply glut. The market has shifted into contango, where future contracts trade higher than near-term ones—its widest since December 2023 for Brent—signaling expectations of excess supply and increased storage demand. Both benchmarks have declined for three consecutive weeks, falling over 2% last week, following the IEA’s warning of a looming oversupply in 2026. Renewed U.S.-China trade tensions, including new port fees and export restrictions, added to demand concerns, with the WTO warning that prolonged decoupling could cut global output by 7%. Analysts also cited seasonal refinery maintenance and an expected 1.5 million-barrel rise in U.S. crude inventories as additional downward pressures on prices.

___________________________________

Brent Market Turns Deeply into Contango as Rising Supply Sparks Glut Fears

Prompt Brent crude futures traded 56 cents per barrel below the six-month contract on Monday—the deepest contango since December 2023—signaling growing expectations of oversupply. The shift reflects ample global output from OPEC+, the U.S., and other producers, coupled with seasonally weaker demand in Europe and Africa. The U.S. WTI market also entered contango last week, reinforcing the perception of a near-term surplus. Analysts said the situation is driven by increased Middle Eastern exports and resilient non-OPEC+ production, adding that “lots of oil at sea” will soon reach ports. The Brent market had been in backwardation for most of 2025, peaking near $7 per barrel in October after geopolitical tensions, but has now flipped as traders prepare for an extended period of oversupply and storage buildup.

___________________________________

Trump Warns India of “Massive” Tariffs Over Continued Russian Oil Imports

U.S. President Donald Trump warned that India would continue to face "massive" tariffs unless it halts imports of Russian oil, despite New Delhi denying any recent conversation between Trump and Prime Minister Narendra Modi on the issue. Trump claimed Modi assured him India would stop buying Russian oil, which has been a key irritant in trade talks—half of Trump’s 50% tariffs on Indian goods reportedly target those purchases. The White House said India has cut Russian oil imports by half, but Indian sources denied this, noting that refiners have already placed orders for November and December shipments. Current estimates show India’s Russian oil imports are expected to rise 20% this month to 1.9 million bpd, making it the largest buyer of seaborne Russian crude. Despite tensions, both sides describe ongoing trade talks as “congenial,” with further negotiations expected.

___________________________________

Ukraine Drone Strike on Russian Orenburg Gas Plant Cuts Kazakh Output by Up to 30%

A Ukrainian drone attack on Russia’s Orenburg gas plant forced Kazakhstan to reduce output at its Karachaganak oil and gas field by 25–30%, disrupting one of the region’s key energy links. The attack, part of Kyiv’s campaign to cripple Russian energy infrastructure, halted Orenburg’s intake of Kazakh gas, cutting Karachaganak’s output to 25,000–28,000 metric tons (196,500 bpd) from the usual 35,000–35,500 tons. Operated by a consortium including Chevron (18%), Shell (29.25%), Eni (29.25%), Lukoil (13.5%), and KazMunayGaz (10%), the field produced 263,000 bpd in 2024. The outage highlights the interdependence of Russian and Kazakh energy systems, as Karachaganak relies on Orenburg for gas processing and reinjection. Kazakhstan’s planned 4 bcm/year gas plant at the site—expected by 2028—has been suspended amid the disruption and search for new investors.

___________________________________

EU to End Russian Gas Imports by 2028 in Major Energy Shift

EU energy ministers agreed to phase out all Russian gas imports by January 1, 2028, marking a major step to cut Moscow’s energy revenues funding the war in Ukraine. The plan bans new gas contracts from January 2026, ends short-term contracts by June 2026, and phases out long-term contracts by 2028. Russia’s share of EU gas imports has already fallen to 12% from 45% before the 2022 invasion, though Hungary, France, and Belgium still receive Russian gas. The proposal passed with a “qualified majority” of member states and includes flexibilities for landlocked countries like Hungary and Slovakia, which had resisted a full cutoff. Separately, a new EU sanctions package may ban Russian LNG imports by January 2027, pending final approval by the European Parliament.

___________________________________

EU Seeks Authority to Board Russia’s Shadow Fleet Amid Sanctions Evasion Surge

The European Union is pursuing new powers to board and inspect Russia’s shadow fleet, aiming to curb Moscow’s oil revenue and address safety and security risks from ageing vessels. The EEAS has proposed reinforcing the International Law of the Sea and establishing bilateral agreements with flag states for pre-authorized inspections. The shadow fleet, estimated at 600–1,400 ships, includes over 400 vessels already sanctioned, with a new EU sanctions package expected to raise that to around 560. Maritime intelligence firm Windward reported a doubling of stateless and falsely flagged ships this year, with a 22% increase in falsely flagged vessels in Q3 alone. The EU’s move follows G7 agreement to jointly target shadow fleets, reflecting concerns over their use for hybrid attacks and sanctions evasion.

___________________________________

China’s Crude Imports from Malaysia Drop to Two-Year Low Amid Shifting Supply

China’s crude oil imports from Malaysia fell 36.7% year-on-year in September to 3.87 million tons (0.94 million bpd), the lowest since August 2023, according to customs data. Imports from Russia declined 4.3% year-on-year to 8.29 million tons (2.02 million bpd) but rose slightly from August, while Saudi shipments fell 4.1% year-on-year to 7.13 million tons (1.73 million bpd). Brazilian imports surged 156% to 4.37 million tons (1.06 million bpd), reflecting a major shift in sourcing, while U.S. oil imports remained zero for the fourth consecutive month. Overall crude imports rose 3.87% year-on-year to 47.25 million tons. Other notable changes included Indonesia up 7212%(from 30,000 MT to 2,130,000 MT), Iraq up 11.2%, and Oman down 28.7%, highlighting a significant reshaping of China’s crude supply portfolio.

___________________________________

China’s Oil Refinery Throughput Hits Two-Year High at 15.26 Million bpd

China’s crude oil processing rose 6.8% year-on-year in September to 62.69 million metric tons (15.26 million bpd), marking the highest daily refinery throughput since September 2023. From January to September, total crude processed reached 550.81 million tons (14.73 million bpd), up 3.7% from last year. Refinery utilisation rates climbed, with state-owned refineries at 81.05% and independent refiners at 62.17%, both increases from the previous year. Domestic crude production also rose 4.1% in September to 17.77 million tons (4.32 million bpd), with total output for the first nine months up 1.7% to 162.63 million tons (4.35 million bpd). Natural gas production grew 9.4% in September to 21.2 billion cubic meters, reaching 194.9 bcm for the first nine months, up 6.4% year-on-year.

___________________________________

Sinokor Nets Nearly $50M from Sale of Four Former Ridgebury VLCCs

South Korea’s Sinokor has earned close to $50 million by selling four vintage VLCCs, including the Singapore Loyalty (2007) for $47 million, marking a nearly $3 million premium over its estimated value. The quartet, originally acquired from Ridgebury Tankers, includes sister ships Monaco Loyalty, Navarin (Atlantic Loyalty), and Nautilus (Pacific Loyalty), with previous sales ranging from $42 million to $44 million earlier this year. All vessels were built by Maersk Tankers at Dalian Shipbuilding and previously sold to Euronav in 2016 before Ridgebury acquired them. The sales reflect strong secondary market interest for older VLCCs, with most transactions aligned with VesselsValue and MSI Horizon market estimates. Sinokor has now fully divested this class of ships, completing a multi-year strategy of flipping former Ridgebury tonnage.

___________________________________

IMO Carbon Tax Delay Benefits Owners of Older Ships, Hampers Newbuilding Investment

Clarksons Securities highlighted that the IMO’s decision to postpone a global carbon tax vote until October 2026 favors owners of older, conventionally fuelled ships, allowing their trading lives to extend. Analysts described the delay as a “missed opportunity” for newbuilding investment, which would have been encouraged by a global carbon price through slow steaming and accelerated scrapping of older vessels. Even if adopted in 2026, the tax would not take effect before 2029, leaving the EU carbon scheme as the de facto benchmark. The postponement may slow new orders and soften newbuilding prices, while conventional ship designs regain short-term viability. Greek officials welcomed the delay, citing energy security and economic growth concerns, reflecting ongoing political divisions at the IMO.