Oil Market: Brent and WTI Decline but Remain Above $100
On Thursday evening, Brent was trading around $104 per barrel, while WTI was in the $101–102 range. Earlier in the week, Brent had climbed to $109; over the month, the benchmark gained about 14%, and more than 50% compared to the same time last year. Key drivers include:
- Saudi Arabia: The kingdom expects to restore about half of the capacity of the East-West pipeline, damaged by drone attacks last week, within a few days and achieve full load in approximately six weeks. This route has a capacity of up to 7 million b/d and is the primary bypass of the Strait of Hormuz.
- Hormuz: According to the U.S. Energy Department, approximately 18 million barrels of oil and petroleum products passed through the strait earlier this week; Riyadh is increasing shipments with the support of American military forces.
- U.S. Stocks: Commercial oil inventories decreased by 0.64 million barrels to 423.4 million, lower than market expectations, although industry estimates beforehand indicated a rise of 7.1 million.
- Supply Risks: Houthi advances towards the Bab-el-Mandeb Strait, the shutdown of several oilfields in Libya with the threat of force majeure, and Tehran's refusal to negotiate with Washington until its conditions are met.
Supply and Demand: OPEC and IEA Estimates
- Saudi Arabia reported to OPEC a drop in production in August to 6.24 million b/d—the lowest since 1990; secondary sources estimate the level closer to 7.3 million b/d.
- The IEA, in its September report, lowered its forecast for global supply in 2026 to 100.7 million b/d (a decrease of 5.7 million b/d year-on-year).
- Global oil demand is expected to decline by 2.5 million b/d in 2026, with a recovery of 2.6 million b/d in 2027.
- Global observed stocks fell by another 95 million barrels in August; the cumulative decrease since February is 507 million barrels.
Refined Products and Refineries: Diesel is the Main Market Deficit
The crisis is increasingly shifting from crude oil to refined products. Wholesale diesel prices in the U.S. exceeded $200 per barrel at the beginning of September—almost double pre-war levels, with retail prices reaching a record $5.90 per gallon. In the EU, diesel stands at around €2.04 per liter, near April's record.
- Net diesel exports from Gulf countries in August averaged about 390,000 b/d—one-quarter of pre-war levels; total shipments from the Gulf and Russia are 1.6 million b/d lower than in February.
- Global refining reached a summer peak of 81.4 million b/d, but a decrease of 2.6 million b/d is expected for the year.
- Refinery margins in the Atlantic Basin are at record levels; Singapore's profitability is restrained by high freight costs.
For refineries outside the conflict zone, this is a period of windfall profits; for fuel companies and consumers, it represents a cost shock.
Gas and LNG: Europe Enters Winter with Low Inventories
TTF futures fell to €76–77 per MWh on Thursday after attempting to stay above €80; prices approached €82 earlier in the week—the highest since late 2022. Year-on-year, gas prices in Europe have risen by over 130%. EU storage facilities are filled to only about 68%—one of the lowest levels in two decades for this date. Pressure is being exerted by limited supplies of Qatari LNG, scheduled maintenance in Norway, and competition with Asia for cargoes. Henry Hub in the U.S. is holding around $2.90 per million BTU—a record spread favors American LNG exporters.
Geopolitics: Energy Truce Between Russia and Ukraine in Question
On September 14, the U.S. President announced that Moscow and Kyiv had agreed to cease strikes on energy facilities, linking the rise in diesel prices primarily to this conflict. Kyiv stated that the agreement is not finalized and is only possible with partners' guarantees; Turkey is acting as a mediator. Previous attempts at such truces have proven short-lived. If the regime is established, the recovery of Russian oil refining could reduce the premium in distillates. The sanctions regime remains unchanged.
Russia: Fuel Export Restrictions Persist
- The ban on gasoline exports is in effect for all market participants until January 31, 2027.
- The ban on the export of diesel, marine fuel, and gas oils for producers has been extended until September 30; the market awaits a decision for October.
- According to the IEA, Russian refineries faced effective strikes on average every three days over the past eight months; since July, the country has begun importing petroleum products.
- The Urals discount to Brent has nearly vanished due to the reduction in shipments and high demand in Asia.
Asia: China Undercuts India in the Battle for Russian Oil
August imports of Russian oil to India fell by approximately 26% to about 2.1 million b/d, down from a record 2.8 million b/d in July; total crude imports dropped to 4.6 million b/d. Chinese processors are aggressively acquiring cargoes, substituting Middle Eastern volumes, while India partially compensates for losses with Venezuelan oil. The shortage of crude at Indian refineries threatens to decrease diesel and gasoline exports—an additional tension factor in the Asian refined products market.
Power, Renewables, and Coal: Insurance and Structural Shift
- Coal: Energy coal in Newcastle is around $145 per ton (+12% month-on-month, +40% year-on-year). The LNG shortage adds approximately 70 million tons of demand in Asia in 2026; coal generation in Japan has increased by 11%. Major producers have not sanctioned new mines, considering the surge cyclical.
- Renewables: By the end of 2025, renewables surpassed coal in global generation for the first time (33.8% vs. 33.0%), with wind and solar supplying more electricity than gas for the first time in April 2026 (22% vs. 20%). Solar capacity added in 2025 reached a record 647 GW.
High-priced imported gas strengthens the economics of renewables and storage, but in the short term, coal and nuclear power provide the balancing for the energy systems.
Macroeconomics: Fed Responds to Oil Inflation
On September 16, the Fed unanimously raised rates by 25 basis points to 3.75–4.00%—the first increase since 2023—and signaled the possibility of another hike before the end of the year. The regulator recognized that it cannot influence oil prices but intends to prevent inflation from spreading. U.S. 10-year bond yields are around 5%. For the energy sector, this means a rise in capital costs: capital-intensive renewable projects, networks, and LNG are under pressure, while oil companies with strong cash flows appear more resilient.
What Investors and Energy Sector Participants Should Monitor This Friday
- The pace of recovery in the East-West pipeline and shipments from Yanbu.
- Tanker traffic through the Hormuz and Bab-el-Mandeb straits.
- Confirmation of the energy truce by Moscow and Kyiv.
- Russia’s decision on diesel exports after September 30.
- The dynamics of TTF, injection rates in EU storage facilities, and the schedule for Norwegian maintenance.
- Weekly drilling activity statistics in the U.S. and diesel crack spreads.
The base scenario for the coming days is oil trading in the range of $100–110 per barrel, with increased sensitivity to news from the Middle East. Refined products and gas remain the most strained segments of the global energy market.
