Distillates

This afternoon Oct’25 futures reached a low of $65.30/bbl at 14.35 BST but strengthened to $66.18/bbl at 17.52 BST, a level we have seen resistance from around midday yesterday. European leaders are at the White House for Ukraine talks with Volodymyr Zelenskyy and Donald Trump. Zelensky said Ukraine is ready for a ceasefire and a new security framework, after accusing Vladimir Putin of trying to undermine diplomacy with strikes. Trump’s envoy claimed Putin agreed to strong security guarantees, possibly NATO-style, though Moscow has not commented. China’s refined fuel exports hit 5.34 million mt in July, the highest since June 2024, driven by surging shipments of diesel, gasoline, and jet fuel. Strong refinery runs, with crude throughput at 14.85 mb/d, supported the rise despite a slight dip from June’s near two-year high. Brazil’s ANP granted Petrobras and CNOOC an 18-month extension to explore the Aram block in the Santos Basin pre-salt, shifting the deadline to 30 June 2029. The consortium is drilling two deepwater wells after recent hydrocarbon discoveries. Top US and Iraqi officials met to discuss restarting oil exports from Iraq’s Kurdistan region, halted since March 2023 amid disputes over export authority. Before the shutdown, flows averaged over 400kb/d, but disagreements with foreign oil firms and recent drone attacks on oilfields have stalled progress. Ukraine said it hit the Nikolskoye pumping station on the Druzhba pipeline, disrupting oil flows to Hungary and Slovakia. The attack comes as President Zelenskyy visits Washington for talks with Donald Trump, while Moscow has yet to comment. Pakistan is set to roll out a real-time digital tracking system this month to monitor petroleum products from import to retail, aiming to curb smuggling and black marketing. Backed by the Petroleum (Amendment) Act 2025, the system will enable regulators to track fuel across the supply chain and enforce penalties for illegal trade. Finally, the front (Oct/Nov) and 6-month (Oct/Apr) Brent futures spreads are at $0.55/bbl and $1.34/bbl, respectively.

The Oct’25 Brent crude futures trended between $65.90 and $66.60/bbl on Friday afternoon. Prices have been rangebound between $65 and $67/bbl this week. Markets are in a wait-and-see mode ahead of the Trump-Putin summit. Trump posted “HIGH STAKES!!!” on Truth Social today, and speaking on board Air Force One, he said that no business would be discussed unless he sees progress for ending the war in Ukraine. Meanwhile, the Kremlin expects the summit to last 6-7 hours, adding that Russia expects the talks to yield a “result”. In other news, the first two cargoes of Venezuelan oil exported by energy major Chevron set sail for the US after their license was reinstated. Enterprise Products Partners said on Friday that the Seaway crude oil pipeline system resumed full operations after a crude oil leak from its oil terminal earlier this week. The pipeline runs from Cushing to Freeport and connects to the Enterprise Crude Houston (ECHO) terminal. Finally, the front (Oct/Nov) and 6-month (Oct/Apr) Brent futures spreads are at $0.55/bbl and $1.30/bbl respectively.

The Oct’25 Brent Futures contract rallied to $66.67/bbl at 14:21 BST before softening to $66.22 at 15.20/bbl. Prices have since bounced back to $66.70/bbl at 17:15 BST (time of writing). In the news, Phillips 66 has reduced gasoline output at its 258 kb/d Bayway refinery in New Jersey following a fire near the plant’s Fluid Catalytic Cracking unit. The fire, involving ancillary equipment, caused a production outage, though the cause remains unclear. The refinery is expected to resume full operations within days. In other news, Russia-backed Indian refiner Nayara Energy said it is working with government authorities and partners to maintain stable operations at its 400 kb/d Vadinar refinery and ensure continued fuel supply, despite EU sanctions disrupting its supply chain. The sanctions forced Nayara to cut output to 70–80% and affected exports and domestic shipping. Azule Energy, a joint venture between BP and Eni, is considering drilling a second gas exploration well in Angola after its successful Gajajeira-01 discovery, which is estimated to hold over 1 trillion cubic feet of gas and 100 mb of condensate. Angola, aiming to boost gas production by over 20% in five years to meet rising domestic and export demand, is shifting focus from oil as its crude output stagnates despite exiting OPEC. Angola targets $60 Bn in oil and gas investments over five years, with key projects like Azule’s New Gas Consortium and Chevron’s Sanha Lean project expected to drive growth. Finally, the front-month Oct-Nov and the 6-month Oct/Apr spreads are at $0.63/bbl and $1.59/bbl respectively.

The Oct’25 Brent crude futures declined by $1 on Wednesday afternoon, falling from $66 to $65/bbl. The prevailing direction of prices is increasingly bearish as headlines develop ahead of the Trump-Putin summit of Friday, with European leaders speaking to both Trump and Zelenskyy. In other news, Ukraine claimed a strike on an oil-pumping station in Russian’s Bryansk region (near border with Ukraine and Belarus), though flows from the system to Europe seem to remain uninterrupted for now. Western sanctions on Russia’s oil exports have slowed the growth of its shadow tanker fleet, now estimated at 1,200-1,600 vessels, making it harder to find suitable ships, though high profits still entice smaller, risk-tolerant operators. The Kurdistan Regional Government and Iraq’s Ministry of Oil have agreed on a new export mechanism allocating 50kb/d for local use and sending the rest to SOMO for export, pending coordination with Türkiye. Finally, the front (Oct/Nov) and 6-month (Oct/Apr) Brent futures spreads are at $0.46/bbl and $1.00/bbl respectively.

The front-month (Oct’25) Brent futures contract has been rangebound between $66 and $66.65/bbl this afternoon, with prices sitting at $66.16/bbl at 17:25 BST (time of writing). OPEC, in its latest oil market report, increased its global oil demand forecast by 100kb/d m/m to +1.38mb/d y/y in 2026. 2025’s forecast was left unchanged at 1.29mb/d. Moreover, OPEC cut its estimate for growth from the US and other producers outside OPEC+ by 100kb/d m/m to +630kb/d y/y in 2026. In a report to parliament, India’s oil ministry said that Indian state oil refiners, which account for over 60% of the country’s refining capacity, will continue to use annual contracts to secure supplies and hedge against market volatilities since “increased imports of Russian crude into India may not last forever”. In other news, the US exported about 30% of its domestic primary energy production in 2024, as per the EIA. Moreover, the US exported 55% of its domestic production of crude oil and natural gas plant liquids (NGPL), 20% of its dry natural gas output and nearly 25% of its coal production. In macro news, US CPI held steady at 2.7% y/y in July, below expectations. Prices excluding food and energy, i.e., core CPI, increased by 3.1% y/y, above forecasts. Finally, at the time of writing, the front (Oct/Nov’25) and six-month (Oct/Apr’26) Brent futures spreads stand at $0.52/bbl and $1.23/bbl, respectively.

The front-month (Oct’25) Brent futures saw support this afternoon and briefly breached the $67/bbl handle at various points, the most recent of which was seen at circa 15:05 BST. However, the contract met resistance here and eased to $66.40/bbl by 16:15 BST. Prices subsequently moved between $66.50-66.80/bbl and stood at $66.70/bbl at 17:35 BST (time of writing). Iraq’s state news agency reported a gradual restoration of power following a significant power outage that hit central and Southern Iraq on Monday due to a sudden shutdown at the Hamidiya power plant in the western province of Anbar. In other news, Malaysian NOC Petronas has announced plans to increase the share of its international portfolio from 40-50% to 60% of its total business over the next decade. Moreover, US LNG developer NextDecade has secured $1.8 billion in funding from TotalEnergies and Global Infrastructure Partners to finance a fourth liquefaction plant at its Rio Grande LNG export project in Texas. In macro news, China continues to struggle with deflationary pressures, as per the National Bureau of Statistics, with a larger-than-expected decline of 3.6% y/y in July 2025 and an unchanged CPI print m/m. Finally, at the time of writing, the front-spread (Oct/Nov’25) and six-month (Oct/Apr’26) Brent futures contract stand at $0.63/bbl and $1.48/bbl, respectively.

The Oct’25 Brent crude futures strengthened throughout the day before losing almost a dollar in a minute, to $65.84/bbl at 15.08 BST following the Russia/US talk headline. Prices have corrected to $66.90/bbl by 17.19 BST (time of writing). Washington and Moscow are working on a potential Ukraine peace deal that would formalise Russia’s control over occupied territories, including Crimea and the Donbas region. A summit between President Trump and Putin could occur as early as next week. The U.S. is seeking support from Ukraine and European allies, though the deal remains uncertain. China’s President Xi Jinping told Vladimir Putin he welcomes US-Russia contact on resolving the Ukraine war and reaffirmed Beijing’s support for peace talks. The call, held at Putin’s request, followed Kremlin reports that Putin plans to meet Donald Trump soon to seek a diplomatic solution. Exxon Mobil has brought its fourth FPSO online in Guyana, four months ahead of schedule, targeting production of approximately 250 kb/d. This raises the country’s total installed output to around 900 kb/d. Four more FPSOs are planned by 2030. Norway plans its first new oil and gas licensing round in unexplored frontier areas since 2021, aiming to reinforce its role as a key energy supplier to Europe. Energy Minister Terje Aasland emphasised the sector’s importance for jobs and national revenue. The move follows a four-year moratorium agreed in 2021, and comes ahead of parliamentary elections on 8 Sep, with the Labour government narrowly leading in polls. A competing bid has emerged in the US auction of Citgo’s parent company. While a $7.4 billion offer from Gold Reserve was recommended, court officials are now reviewing an unsolicited bid, though it hasn’t yet been deemed superior. Iraq’s navy detained a Liberian-flagged tanker, Liliana, carrying 93,000 mt of fuel oil, as part of a crackdown on smuggling. The ship was seized near Basra and is suspected of attempting to smuggle Iraqi oil. Authorities are holding the vessel pending a judicial review. Finally, the front (Oct/Nov) and 6-month (Oct/Apr) Brent futures spreads are at $0.67/bbl and $1.63/bbl, respectively.