Mid-Day Oil Summary: Crude Surges on Middle Eastern Tensions

Brent crude surged up to a high of nearly 89$/bbl earlier before pulling back slightly amid Middle East tension and the threat to future crude supplies from the region although there is no immediate impact of flows.

• Brent DEC 23 up 3.6% at 87.59$/bbl
• WTI NOV 23 up 3.7% at 85.89$/bbl
• Gasoil OCT 23 up 2.6% at 890.75$/mt
• WTI-Brent down -0.16$/bbl at -3.41$/bbl
• There are reports that Iran was involved in the Hamas attack on Israel and reprisals on Iran could risk crude shipping through the Strait of Hormuz, which the state has previously warned it could close. Only recently the US eased sanctions on Iran to allow more oil shipments. Some analysts have reduced expectations that Saudi Arabia will ease the current voluntary production cuts.
• OPEC forecasts oil consumption will rise 16% over the next two decades to reach 116mn bpd in 2045 – a 6mn bpd rise over prior predictions, according to the 2023 OPEC World Oil Outlook.
• A collection of OPEC+ nations Bahrain, Iraq, Kuwait, Oman, Saudi Arabia and the United Arab Emirates stated their commitment to "collective and individual voluntary adjustments" towards oil production levels over the weekend.
• Goldman Sachs estimates Saudi Arabia’s crude production will stay flat at 9mbpd during 1Q24 – meaning an extension to voluntary cuts – before starting to rise by 0.25mbpd per quarter from 2Q24, the bank said in a note.
• Turkey has yet to notify Iraq about whether the oil exports pipeline is ready to begin operations according to senior Iraqi officials speaking with Reuters.
• China released its fourth batch of crude oil import quotas for non-state-owned totalling 9.54m mt and below expectations, according to OilChem.
• Diesel markets regained some ground this morning before easing back with the partial lifting of the Russian fuel export as of Saturday, while exports cannot exceed levels since in the past eight months, Russia’s Deputy PM said.
• Russia has imposed a diesel export quota on fuel producers. This month, exports are not allowed to exceed the average of the past 8-months. Russia’s Novak earlier claimed that lifting the ban on Russian seaborne diesel has helped stop overstocking and supported refinery runs at major refineries. Russia’s Transneft resumed loading of oil products on Saturday. Around 26k mt of diesel left the Port of Novorossiysk, while 43k mt was exported from Primorsk.
• The Russian ban on gasoline exports remains in place, while diesel exports by rail are also banned according to Russia’s Deputy PM Novak on Monday.
• Exports of refined products from China in September are estimated to have been 4.01m mt, up 28% compared to August, according to OilChem’s tracking of ship schedules.
  • US gasoline crack down -0.3$/bbl at 8.98$/bbl
  • US ULSD crack down -0.4$/bbl at 38.98$/bbl