Oil Rises on U.S.-China Trade Optimism and Russia Sanctions

Oil prices rose as optimism over a potential U.S.-China trade breakthrough boosted market sentiment and the outlook for global energy demand, with Brent climbing above $66 a barrel and WTI near $62. Top negotiators from both countries said they had agreed on key issues ahead of a meeting between Presidents Trump and Xi Jinping, easing fears after Treasury Secretary Scott Bessent confirmed Trump’s threat of 100% tariffs was off the table. The gains followed last week’s rally driven by U.S. sanctions on Russia’s top oil producers, Rosneft and Lukoil, which tightened global supply. Refiners in India and China have reduced Russian oil purchases, increasing demand for alternative crude grades. However, analysts cautioned that rising output from OPEC+ may limit further price gains despite the improved sentiment.

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China and US Reach Preliminary Trade Deal Framework Ahead of Trump-Xi Summit

China and the US have reached a preliminary consensus on key trade issues after high-level talks in Kuala Lumpur, addressing concerns over maritime, logistics, and shipbuilding sectors, among others. The discussions, led by Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent, also covered reciprocal tariff suspensions, agricultural trade, fentanyl law enforcement, and export controls. Bessent indicated that China is expected to resume significant purchases of US soybeans and delay its expanded rare earth licensing by a year, while both sides aim to announce a trade deal at the upcoming summit between Presidents Trump and Xi. Chinese officials emphasized that the talks were conducted with mutual respect and equal dialogue, aiming to stabilize bilateral trade relations and safeguard previous agreements. Both delegations highlighted the importance of a healthy, sustainable, and stable China-US economic relationship for global and domestic interests.

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Chinese State Refiners Join India in Halting Russian Oil Amid US Sanctions

Chinese state refiners, including PetroChina, Sinopec, CNOOC, and Zhenhua Oil, are temporarily suspending Russian oil imports following US sanctions on Rosneft and Lukoil, joining Indian refiners in curbing purchases. India and China together imported 3.1 million bpd of Russian crude in September, with independent Chinese “teapot” refiners continuing to import the majority of Russian oil. Analysts expect state refiners may seek workarounds since the commodity itself is not sanctioned, which could lead to stockbuilding and more Russian oil staying at sea. Current Russian oil inventories are estimated at 12.2 million barrels, rising to nearly 33 million when including shipments in transit. The sanctions are expected to benefit tankers, particularly VLCCs, as buyers shift to alternative crude sources from the Middle East.

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Oil Majors Halt VLCC Deliveries to UK-Sanctioned Chinese Refiner Yulong

Major oil suppliers, including TotalEnergies, BP, Saudi Aramco, Kuwait Petroleum, and PetroChina International, have cancelled Middle East and Canadian crude shipments to Chinese refiner Yulong Petrochemical after it was sanctioned by the UK. Most cancellations involve spot VLCC cargoes scheduled to load after 13 November, with some shipments totaling 2 million barrels. The sanctions and cancellations may push Yulong to increase Russian oil purchases, though Chinese state refiners are already temporarily suspending imports of Russian crude following US sanctions on Rosneft and Lukoil. Payment concerns via Western banks are also influencing the cancellations, while smaller suppliers with no UK exposure may continue supplying Yulong. The refiner, with a 400,000 bpd capacity, currently sources about half its crude from Russia.

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Reliance to Comply with Western Sanctions, Plans to End Direct Russian Oil Imports

India’s top Russian oil buyer, Reliance Industries, said it will comply with Western sanctions against Moscow while maintaining ties with its suppliers, following new U.S. sanctions on Rosneft and Lukoil that require companies to end transactions by November 21. Reliance, which operates the world’s largest refinery complex in Jamnagar and has a deal to buy nearly 500,000 bpd from Rosneft, is reportedly planning to halt direct imports from the Russian producer. The EU’s latest sanctions ban fuel from refineries that processed Russian oil within 60 days of shipment starting January 21. Reliance said it will adapt contracts to reflect changing market and regulatory conditions and emphasized its diversified crude sourcing strategy to ensure stable operations and exports, including to Europe.

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Dangote to Expand Refinery, Set to Rival World’s Largest Facility

Nigerian billionaire Aliko Dangote plans to more than double the capacity of his refinery from 650,000 to 1.4 million bpd, aiming to make it one of the largest in the world and rival Reliance Industries’ facility. The expansion will be staged, first increasing output to 700,000 bpd next year and then doubling over three years, while polypropylene production will grow from 900,000 to 2.4 million metric tons annually. Funding will come from cash flows, an IPO listing at least 10% of shares, and other sources. The Dangote Refinery, operational since January 2024, has helped Nigeria become a net exporter of refined products but has faced domestic crude supply challenges and occasional unit shutdowns. Dangote intends to serve African markets through new distribution agreements, including a tank farm in Namibia supplying neighboring countries, anticipating rising regional demand for petroleum products.

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BP Restarts 440,000-bpd Whiting Refinery After Power Outage

BP’s 440,000 bpd Whiting refinery in Indiana resumed operations on Friday after a power outage caused by an external electrical disruption led to a temporary evacuation. Power was restored and all personnel have returned to the site, BP said. The company was in the process of restarting its 110,000 bpd fluid catalytic cracking unit, which had been offline following a fire last week. The refinery has also been undergoing planned maintenance on key units since mid-September, expected to last two months. Whiting is the largest refinery in the U.S. Midwest, producing gasoline, diesel, and jet fuel.

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Fredriksen and Alafouzos Secure Six-Figure VLCC Charters as Spot Rates Rebound

VLCC spot rates rebounded slightly after a four-day decline, with Clarksons reporting a rise of $2,200 to $79,500 per day on Friday, while John Fredriksen-backed Frontline and Alafouzos-backed Kyklades Maritime secured six-figure charters. Frontline’s 299,000-dwt Front Osen was fixed at $123,798 per day for a Middle East–South Korea voyage, and Kyklades’ 300,000-dwt Nissos Kea earned $138,972 per day for a Middle East–China voyage for Kuwait Petroleum. Jefferies analyst described the VLCC spot market as steady, with forward freight agreements indicating $85,000 per day for the rest of October and $90,000 per day in November. Despite some stalling in the market, sentiment is positive ahead of a seasonally stronger period. US sanctions on Russian oil, prompting Chinese and Indian refiners to avoid Russian barrels, are also expected to support mainstream tanker demand.

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Indonesia Plans Mandatory 10% Bioethanol Gasoline Blend by 2027

Indonesia plans to mandate a 10% bioethanol blend in gasoline by 2027 to reduce fuel import dependence and boost energy self-sufficiency using palm oil, sugar cane, cassava, and corn. Ethanol supply constraints have delayed the implementation, and the country will aim to source all bioethanol domestically. Minister Bahlil Lahadalia estimated that 1.4 million kilolitres of bioethanol will be needed to meet the requirement. In 2024, Indonesia’s production capacity was 303,325 kL, but actual output was 160,946 kL with imports of 11,829 kL. Domestic demand last year was 125,937 kL, while exports reached 46,839 kL.