Oil Rises on Sharp U.S. Stock Draws and Optimism Over Trade Talks

Oil prices climbed after U.S. EIA data showed crude inventories fell by nearly 7 million barrels, far exceeding the expected 211,000-barrel drop, while gasoline and distillate stocks also declined more than anticipated. Brent crude settled at $64.92 per barrel (+0.8%) and WTI at $60.48 per barrel (+0.6%), reversing pressure from previous oversupply concerns. Strong implied oil demand, coupled with declining inventories, challenged expectations of a market glut despite record U.S. production and ongoing OPEC+ output increases. Optimism over U.S.-China talks, including a U.S.-South Korea trade deal, helped ease fears of slowing economic growth and weaker oil demand. Still, economic uncertainties remain, highlighted by the Federal Reserve’s 25-basis-point rate cut and cautious outlooks, while OPEC+ considers a modest 137,000 bpd output increase in December.

___________________________________

Oil Supertanker Earnings Jump to $125,000/Day Amid Rising Supply and Sanctions

Earnings for supertankers carrying two million barrels from the Middle East to China surged 40% to $125,000 per day, the highest level since April 2020, as global oil supply expands and demand for unsanctioned vessels rises. Rates have been driven up by increased production both within and outside OPEC+ and the recent U.S. sanctions on major Russian oil companies. The sanctions have forced some refiners to seek alternative cargoes, contributing to higher tanker utilization. Frontline CEO Lars Barstad highlighted that sanctioned barrels are remaining longer on ships, ton miles have increased due to larger Atlantic-to-Asia shipments, and additional OPEC barrels are entering the market. This combination of factors has created a sharp spike in earnings, reflecting tight tanker availability amid growing oil flows.

___________________________________

Mittal-Linked Indian Refiner Halts Russian Oil Imports Amid New Sanctions

HPCL-Mittal Energy Ltd (HMEL), partly owned by steel magnate Lakshmi Niwas Mittal, announced it has suspended all Russian crude purchases following new U.S., EU, and U.K. sanctions targeting top Russian producers Lukoil and Rosneft. The decision came after reports that the company had received Russian oil via vessels allegedly linked to sanctions evasion. HMEL clarified that it buys crude on a “delivered” basis and therefore had no knowledge of the specific ships used for transport, adding that the vessel delivering its cargo was not sanctioned at the time. The refinery, located in Punjab, India, has a processing capacity of 226,000 bpd. India, which became the largest buyer of discounted Russian seaborne oil since 2022, now faces growing scrutiny as refiners reassess compliance with tightening Western restrictions.

___________________________________

Sanctioned Aframax Tanker Cancels Indian Delivery Amid Russian Export Pressure

The 107,000-dwt Furia tanker, carrying Russian crude from Rosneft, reportedly aborted a planned discharge in India after the U.S. sanctioned Rosneft last week. AIS tracking showed the Sierra Leone-flagged vessel moving slowly back northeast in the Baltic Sea, signaling issues with its voyage from Primorsk to Port Said. The Furia, blacklisted in the UK, highlights growing disruptions in Russian crude exports to India as sanctions expand. Indian refiner Bharat Petroleum plans to issue a spot crude tender seeking non-sanctioned Russian oil, while analysts expect major Indian and some Chinese refiners to scale back purchases of Russian barrels. The situation may boost demand for mainstream tankers, particularly VLCCs, for long-haul cargoes from the Middle East and Atlantic.

___________________________________

Iran Deepens Oil Discounts to China as Sanctions and Quota Limits Curb Demand

Discounts on Iranian crude to China have widened to more than $8 per barrel below ICE Brent— the deepest in over a year— as new U.S., U.K., and EU sanctions on Russia and Iran disrupt trade and dampen demand. Chinese independent refiners, already facing a shortage of import quotas, have slowed purchases, driving bids down to as low as $10 below Brent to offset rising sanctions risks. September imports of Iranian oil dropped to 1.2 million bpd, the lowest since May and below the 1.38 million bpd average for 2025. The market is facing oversupply as unsold Russian cargoes add to Iran’s already ample exports, creating what traders described as a “directionless” market. Refiners now await potential new import quotas from Beijing in November, which could revive buying activity.

___________________________________

Pemex Crude Output Falls as Domestic Refining and Fuel Production Rise

Mexico’s state oil company Pemex saw crude and condensate production drop 5.6% year-on-year to 1.65 million bpd in September, struggling to offset declining fields despite cash injections and tax relief. Crude processing at its seven refineries rose 7.7% to 949,772 bpd, though this remains 10% below August levels and at 68% of total capacity (1.4 million bpd). The new Olmeca refinery processed 194,874 bpd, contributing to rising output of refined products, which grew nearly 13% to 1.02 million bpd, including gasoline up 27% to 361,689 bpd and diesel up 52% to 248,958 bpd. Crude exports fell 13% to 570,499 bpd, while imports of refined products declined 18%, reflecting the government’s focus on domestic refining. Fuel oil output dropped 40%, showing a shift toward higher-value petroleum products to meet internal demand.

___________________________________

UK Oil Sector Faces Tax and Carbon Cost Pressures Amid Potential Industry Shake-Up

UK Finance Minister Rachel Reeves is considering scrapping the windfall tax on oil and gas a year earlier than planned, potentially moving the energy profits levy end date from March 2030 to March 2029, seeking assurances it will boost investment and jobs. Introduced in 2022, the levy currently raises the effective tax rate on North Sea producers to 78%, and ending it sooner could unlock £40 billion ($53.7 billion) for projects, according to industry bodies. However, economists warn Reeves may need to raise income tax elsewhere, challenging previous Labour commitments, as the UK’s budget outlook shows a potential £20 billion shortfall due to lower productivity. At the same time, Exxon Mobil warns that UK oil refining could disappear if carbon costs continue rising, with emissions charges at its Fawley refinery expected to nearly double to £150 million ($198 million) within four to five years. Exxon urges carbon parity with competitors to preserve the remaining four refineries in operation, stressing that escalating costs combined with international competition threaten the sector’s viability.

___________________________________

Oil Supermajors Plan Production Growth Despite Oversupply and Weak Prices

Exxon, Chevron, Shell, BP, and TotalEnergies are expected to increase output 3.9% in 2025 and 4.7% in 2026, pursuing new projects, acquisitions, and prior investments despite weak crude prices and ongoing global oversupply. The strategy aims to prepare for long-term oil demand growth beyond 2030, even as short-term oversupply pressures the market and OPEC+ continues adding supply. US sanctions on Russian giants Rosneft and Lukoil helped temporarily support Brent prices, which rose 7.5% to over $65 per barrel, but supermajors are focused on future profitability rather than immediate price fluctuations. The companies are cutting costs, reducing low-carbon investments, trimming share buybacks, and eliminating up to 17,000 jobs collectively to fund upstream oil and gas production, the most profitable segment. Analysts project the five majors will post $21.76 billion in Q3 profits, up 7% from the prior quarter but less than half of 2022 levels, highlighting pressure on cash flow amid sustained investment in growth projects.

___________________________________

Indian Oil and Vitol to Launch Singapore Trading JV in 2026

Indian Oil Corp. plans to establish a joint venture with Vitol Inc. in Singapore in early 2026 to trade oil and fuel products, with an exit clause for Vitol after five to seven years. The partnership follows Indian Oil’s consideration of other companies, including BP and TotalEnergies, and aims to strengthen Vitol’s presence in India amid Western sanctions on Russian oil. The JV will leverage Vitol’s real-time market intelligence, global reach, and risk management systems to help Indian Oil source crude at lower prices. Indian Oil currently imports nearly 90% of its crude demand and expects to expand its processing capacity by 346,000 bpd to 1.76 million bpd next year. The move reflects a strategy to capture India’s projected leadership in global oil demand growth and regain market share from trading giants.

___________________________________

Product Tanker Rates Surge on Russian Sanctions and Supply Scarcity

Spot rates for LR2 tankers have jumped one-third in a week to around $34,100/day, driven by Western sanctions on Russian oil disrupting supply chains and boosting demand for compliant barrels. Tonne-mile growth is supported by longer trade routes and tight product availability, particularly diesel and jet fuel, with refinery margins rising in response to constrained flows. Analysts note that East–West arbitrage has reopened, increasing long-haul clean-product shipments from Asia and the Middle East to Europe, while Ukrainian drone strikes and financial caution add further supply friction. Smaller LR1 tankers have also benefited, reaching $27,000/day for eco ships, up 15% in a week, reflecting strong charterer willingness to pay for reliable tonnage. Brokers report bullish sentiment across the Middle East and Asia, with tight Eastern and Western tonnage lists driving higher rates and expectations of continued momentum for both short- and long-haul cargoes.

___________________________________

Petrobras Secures Tanker Capacity Amid Shifts in Global Oil Flows

Brazilian state energy company Petrobras has fixed two MR product tankers for three years: the 51,000-dwt Maersk Malaga at $22,000/day for clean cargoes, and the 50,000-dwt Ioannis Zafirakis at $23,000/day for dirty products, controlled by George Livanos’ Sun Enterprises. Petrobras also extended a deal for the 300,000-dwt VLCC Donoussa through October 2026, previously operating at $47,000/day. Brokers note that US sanctions on Russian exports may shift flows toward Brazil, potentially reducing tonne-miles for MRs in Europe and triggering higher Atlantic demand amid northern hemisphere heating needs. MR spot rates in the Atlantic were assessed at $28,500/day, down 6% in a day, while Pacific levels held at $21,300/day, with tighter tonnage clearing the market and supporting near-term rate stability. Regional variations persist, with northern Europe seeing weak enquiry, the Middle East Gulf tonnage thinning slowly, and northern Asia facing soft rates due to low clean cargo exports from China and South Korea.