Oil Prices Rebound as Market Reassesses Supply Outlook and U.S.-China Trade Tensions

Oil prices rose on Tuesday, rebounding from five-month lows as investors reassessed concerns about oversupply and awaited progress in the U.S.-China trade dispute. Brent crude increased by $0.31 to $61.32 a barrel, while WTI gained $0.30 to $57.82. The recovery followed a sharp decline driven by record U.S. production and OPEC+ supply hikes, though low U.S. crude and distillate inventories provided some support. Analysts noted that both Brent and WTI futures have shifted toward contango, signaling abundant near-term supply, but UBS said the market remains oversupplied rather than in a glut. Market attention also focused on potential outcomes of Trump’s meeting with Xi Jinping next week, a Reuters poll showing rising U.S. stockpiles, and a U.S. plan to purchase 1 million barrels for its Strategic Petroleum Reserve.

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China Port Congestion Worsens Amid U.S.-China Shipping Disputes and New Fees

Waiting times for commodity vessels at Chinese ports reached their longest this year, averaging 2.66 days to berth as of the week ending Oct. 19, up 17% from the previous week, reflecting disruptions from U.S.-China maritime tensions. The delays affect crude, iron ore, and other bulk cargoes, as China imposed extra fees on vessels with American links in retaliation for U.S. measures. Washington also sanctioned a major oil-import terminal operator, Rizhao, further complicating shipments, including Iranian crude. Port-specific waits rose sharply, with Dongjiakou averaging 2.79 days and Yantai 2.7 days, up from 1.8 days the prior week. Analysts noted vessel operators are holding ships offshore amid uncertainty over fees and port access.

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China Urges Shipowners to Counter US ‘Protectionism’ Amid Port Fee Dispute

China’s transport minister Liu Wei urged shipowners and port operators to unite against US “protectionism” and promote free trade, following the tit-for-tat port fees imposed by both countries on each other’s vessels. Speaking at the North Bund Summit in Shanghai, Liu described the US charges as unilateral and protective, framing China’s retaliatory $56-per-net-tonne levy on US ships as necessary to safeguard domestic shipping interests. He called for global cooperation to create a fair, open, and sustainable shipping ecosystem, emphasizing shared benefits and mutual understanding. The US fees of $50 per net tonne on Chinese ships have caused widespread disruption, prompting resignations and corporate relocations, including Pacific Basin Shipping moving half its fleet and headquarters to Singapore. The spat adds tension ahead of the upcoming Trump-Xi meeting at the Asia-Pacific Economic Cooperation summit.

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Trump Administration Moves to Refill Oil Reserves with 1 Million-Barrel Purchase Amid Low Prices

The Trump administration will purchase 1 million barrels of crude oil to begin refilling the U.S. Strategic Petroleum Reserve, which currently sits at about 60% capacity after major drawdowns during the Biden era. The Energy Department will use $171 million allocated under Trump’s tax and spending law to buy oil for delivery in December and January, with bids due by Oct. 28. Energy Secretary Chris Wright said the move strengthens U.S. energy security and reverses “costly” policies of the previous administration. With WTI crude down about 30% from its January peak to around $58 a barrel, officials view this as an opportune time to buy. Analysts noted that limited funding will restrict how much crude can be added, as $171 million covers only about 3 million barrels at current prices.

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Reliance Boosts Middle East Oil Buys Amid U.S. Pressure on Russian Crude

India’s Reliance Industries has increased purchases of Middle Eastern crude, acquiring at least 2.5 million barrels including Iraq’s Basrah Medium and Qatar’s Al-Shaheen and Qatar Land, reflecting growing Western pressure on Russian oil imports. While Reliance normally buys some Mideast crude, traders noted the recent activity is unusually high, and the company is also seeking oil comparable in quality to Russian grades. Historically India’s largest buyer of Russian crude, Reliance faces U.S. pressure to curb imports, though local refiners suggest they may reduce but not fully stop Russian purchases. The upcoming EU ban on fuel derived from Russian crude, effective January 21, could further affect Reliance’s refined product exports. President Trump reiterated that India would scale back Russian oil purchases, claiming direct discussions with Prime Minister Modi, though New Delhi has not confirmed this.

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Chevron and Shell Cut Output at Kazakhstan’s Karachaganak Field After Ukrainian Strike on Russian Gas Plant

Chevron, Shell, and Eni have reduced oil and gas output at Kazakhstan’s Karachaganak field by 25–30% after a Ukrainian drone strike damaged Russia’s Orenburg gas processing plant, which supports their operations. Kazakhstan’s energy minister Erlan Akkenzhenov said daily production fell by 8,500–9,000 metric tons (≈67,000–70,000 barrels), though output could normalize within three days. The field, one of Kazakhstan’s largest, typically produces 35,000–35,500 tons per day (≈275,000 barrels) but dropped to 25,000–28,000 tons following the strike. The Orenburg facility, one of the world’s biggest gas plants, processes raw gas sent from Karachaganak, and the disruption highlights the vulnerability of regional energy infrastructure to the expanding Ukraine–Russia conflict. Kazakhstan, responsible for 2% of global oil supply, has also imposed fuel price controls amid 12.9% inflation driven by war-related economic pressures.

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Russia Delivers First 105,000-Ton Oil Cargo to Georgia’s New Kulevi Refinery

Russia’s Russneft has delivered its first oil shipment to Georgia’s newly built Kulevi refinery, marking a milestone in deepening economic ties between the two countries despite the absence of formal diplomatic relations since their 2008 conflict. The tanker Kayseri transported 105,340 metric tons of Siberian Light crude from Novorossiisk to Kulevi on October 6. The refinery, which began operations this month, has an initial capacity of 1.2 million tons per year (about 24,000 bpd) and plans to expand to 4 million tons annually by 2028. Georgia aims to reduce reliance on fuel imports from Russia, Turkey, Azerbaijan, Romania, and Kazakhstan, while Russia continues diversifying exports amid Western sanctions.

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VLCC Owners Weigh Short vs Long Haul in Red-Hot Middle East Spot Market

VLCC owners face a strategic choice in the “overpriced” Middle East Gulf spot market, where short-haul trips to China earn around $87,200 per day, while longer US Gulf-to-Asia voyages fetch about $75,000 per day. Shorter Middle East voyages allow for roughly 2.5 trips in 50 days, potentially out-earning a single long-haul voyage if spot rates hold, but future rates are uncertain. Sentosa Ship Brokers suggests a pragmatic approach is to lock in strong returns for as long as they remain available, given the high current rates. Market dynamics are influenced by geopolitical and logistical factors, including US sanctions, new Chinese port fees affecting US-linked vessels, and ongoing pressure on India to reduce Russian oil imports. Analysts note sentiment is strong, with VLCC spot rates approaching $100,000 per day, underpinned by limited visible activity but steady off-market cargo securing.

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Floating Storage May Boost VLCC Rates Amid Surging Supply

Tanker analysts are optimistic that floating storage could ignite a new bull market for VLCCs, as rising oil supply and slowing demand create incentives for storing crude at sea. With global inventories expected to rise by 911 million barrels by the end of 2026, storage on tankers could become economical if oil prices slip into contango, where spot prices are lower than futures. In an extreme scenario, 10% of the tanker fleet could be tied up in floating storage, potentially pushing VLCC rates above $200,000 per day in 2026, while a moderate case could see rates around $63,000 per day. The last significant floating storage boom occurred during the Covid-19 pandemic, driving VLCC rates above $264,000 per day at their peak as inventories surged. Currently, VLCCs earn about $85,292 per day, supported by abundant OPEC exports and expectations for storage-driven demand if contango emerges.

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Shipowners Skeptical of Achieving 2050 Net-Zero Shipping Targets

A survey of shipowner executives shows widespread pessimism about meeting the IMO’s 2050 net-zero emissions targets, with about half doubting the goal can be achieved and only 29% believing it will be met on time. The study, conducted before the IMO voted to delay the carbon levy, highlighted challenges in shifting roughly 90,000 ships to low-emission fuels within the timeframe. Executives were more confident about hitting interim targets for 2030 and 2040, which rely on retrofitting and existing technologies, but the 2050 goal requires costly, harder-to-source green fuels. Amid uncertainty over which fuelling technology will dominate, shipowners are adopting a variety of options for newbuilds. Despite skepticism, nine out of ten companies are implementing emissions-reduction measures, such as engine and propeller upgrades.

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CMB.Tech Takes Full Control of Namibian Green Hydrogen Project Amid IMO Delay

Belgian shipowner CMB.Tech is taking full control of the Cleanergy Solutions Namibia green hydrogen and ammonia project by acquiring the 51% stake held by Ohlthaver & List Group, adding to its existing 49% through H2 Infra. The project, recently inaugurated by Namibia’s prime minister, aims to expand into rail and maritime, including a hydrogen-powered locomotive and a dual-fuel harbour vessel for Walvis Bay port. Despite the IMO’s delay on carbon tax plans, CMB.Tech reaffirmed its commitment to green fuels, focusing on ammonia and hydrogen for its fleet of tankers, bulkers, offshore, and container ships. Analysts at Fearnley Securities noted the project has helped the company secure ship deals and expertise, though significant capital expenditure is still needed, likely shared with partners. The investment is seen as a positive long-term strategic move with minimal short-term equity impact.