China halts oil exports, US troops increase in the Middle East, Brent crude rises to $102
Oil prices soared again, up 4% Thursday, with Brent at $102 and WTI at $93. This continues the upward trend seen in September. A new driver has emerged in China's oil export stop.
Oil prices were up and down in September.
At the beginning of October, Brent crude oil was quoted at $102.31 per barrel, rising by 4.37% in a single day, which was an increase of $4.28. WTI crude oil closed at $92.87 per barrel, rising by 2.71%, or $2.45. In the morning, oil prices dropped by 1%, and then China announced a suspension of the export of petroleum products, along with the US sending troops to the Middle East. The concern about global fuel shortage was immediately ignited, and oil prices turned upward.
Throughout September, oil prices showed a fluctuating trend. At the beginning of September, Brent crude oil reached $100 per barrel. Brent oil prices soared 8% in a single day on September 10, with Brent reaching around $110. By the end of September, Brent closed at $98 per barrel, with a considerable increase within the month. WTI crude oil also rose from $86 to above $90, reaching $96 per barrel at one point. The sharp increase on October 1st broke the fluctuation range of September and established a new upward trend for oil prices.
China suspends fuel exports, US troops increase in the Middle East.
This new variable in the current rise is China. It is reported that many refineries in the Chinese mainland have suspended the export of petroleum products to regions other than Hong Kong and Macao. This action is quite rare and has drawn market attention to the supply of refined oil products. Global diesel inventories are already tight, and China's export restrictions have made the situation even worse. After the decline in crude oil and fuel inventories, the market is also speculating whether China will increase crude oil imports.
The news of the US sending aircraft carriers and soldiers to the Middle East has stimulated market nerves. President Trump said that after the mid-term elections, he would consider re-initiating air strikes against Iran. His tough stance towards Iran has made traders quickly incorporate the risk of war into their trading. Another report states that three oil tankers were attacked by unknown ammunition while crossing the Strait of Hormuz. Investors priced in potential supply disruptions and pushed oil prices up.
Diesel fuel is the new target and Russia's supply cut has put pressure on the market.
This round of tension is not about the shortage of crude oil, but rather the shortage of diesel. The refining facilities in the Gulf region and Russia have been damaged, resulting in a continuous shortage of diesel. The global diesel inventory was already tight, and Russia has banned exports until October. The industry generally believes that the shortage is likely to persist until next year before easing. Russian President Putin stated that diesel will not be supplied to the global energy market unless the sanctions against Moscow are lifted.
The United States has been exposed to the accusation that it is asking Germany and France to reduce their emergency diesel reserves, otherwise it may face sanctions from the United States prohibiting diesel exports. The EU plans to discuss releasing diesel reserves, but the scale of release is limited and is difficult to reverse the overall supply and demand situation. All parties are worried about diesel, and the tightness of refined oil products has become a real support for the upward trend of oil prices.
The supply side is not all bad news.
Saudi Arabia resumed loading operations onto oil tankers at Yanbu Port two days ago, and the east-west oil pipeline has been back in operation. Goldman Sachs' report also stated that, including ships with their positioning transponders turned off, exports have returned to 23.3 million barrels per day in the past week. These news initially suppressed oil prices in the morning. However, funds are highly skeptical about the actual implementation effect.
Even if the export from ships with their positioning transponders turned off returns to the average level, it is still difficult to make up for the huge gap in the regular channels. After the oil pipelines in Saudi Arabia were restored, there is always the risk of being bombed again by the Houthi militants. China's restrictions on fuel exports will not have as significant an impact as those of Russia and the Middle East. But when supply is severely restricted, it becomes another source of pressure in the global fuel market. Analysts have raised the forecast for the average Brent crude oil price in 2026 to above $89.