Oil Traders Brace for a Wild Week as Brent Approaches $120

Fears of renewed U.S.-Iran hostilities are intensifying, with rising Hormuz attacks, reported explosions at Iran's Jask port and military repositioning overshadowing diplomatic efforts.With only several days left until the US midterm elections, oil prices are set for a hefty 13-14% month-on-month increase as ICE Brent trends around $118 per barrel. Qatari and Pakistani mediation notwithstanding, everything is pointing towards a resumption in US-Iran hostilities in the upcoming weeks – rising numbers of Hormuz attacks, reported explosions at Iran’s Jask port, reports of military repositioning as well as extremely bullish CTA positioning. The markets should brace for a set of extremely volatile trading sessions next week…War Turns Refining into Big Oil’s Profit Engine. US oil majors ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) both beat analyst expectations for Q3 profits, cashing in $15.4 billion and $9.9 billion respectively, with Exxon earning more from downstream than upstream for the first time in six years.Iran Claims Three Tankers Struck Hormuz Mines. Iran’s IRGC said three unidentified vessels struck naval mines, caught fire and were abandoned after using an “unauthorised” route and ignoring Tehran’s warnings, whilst the US Centcom disputes claims that the strait’s main shipping lane has been mined.Europe Taps SPRs to Cool Diesel Prices. EU governments will release 42 million barrels of strategic oil and product reserves over the next three months—half of it diesel—with France expecting pump-price relief of €0.12-0.18 per litre ($0.51-0.76 per gallon) within days after its 10-million-barrel release.Saudi Oil Pitches Discounted Crude to Europe. Saudi national oil firm Saudi Aramco (TADAWUL:2222) reportedly started offering discounted spot cargoes for October and November arrival to European buyers, seeking to maximize loadings through the Red Sea coast, in avoidance of the Houthis.ADNOC Pushes Toward Zero Reliance on Hormuz. Abu Dhabi’s national oil company ADNOC has told its clients that the second 1.5 million b/d pipeline to Fujairah, bypassing the Strait of Hormuz, would see first deliveries in early 2027, seeking to reduce transits of its offshore grades to a bare minimum.Compressor Failure Disrupts US Butane Exports. US refining giant Phillips 66 (NYSE:PSX) declared force majeure on butane loadings from its 260,000 b/d Freeport LPG terminal after a power outage and compressor failure, risking supply as US facilities operate at high rates to meet strong export demand.Buoyed by Record Margins, Valero Revives Houston Capacity. US refiner Valero Energy (NYSE:VLO) has agreed to buy LyondellBasell’s idled Houston refinery for $320 million and restart its 165,000 b/d distillation column by end-2027, defying calls to restart its 145,000 b/d Benicia plant in California.Russia Keeps Its Diesel Ban, Creates Caveat for US Exports. Moscow plans to extend diesel export restrictions through January while granting separate quotas for US-bound cargoes that could lift November shipments to 2.15 million tonnes and potentially 3.5 million tonnes by year-end.Egypt Turns to Fuel Oil as Its LNG Bill Surges. Egypt’s state energy company EGPC bought six fuel oil cargoes for November–December delivery as soaring LNG prices threaten the country’s finances as Cairo budgeted $10.1 for LNG imports in financial year 2026/2027, having already spent 60% of the sum.Europe Gas Crisis Deepens as Iran Risks Return. TTF, Europe’s natural gas benchmark, soared past €100 per MWh ($34 per MMBtu) and is heading for a 42% monthly gain as European inventories started net withdrawals even though storage sites are only 75% full, further buoyed by the risk of US-Iran hostilities.Chile’s Copper Slump Deepens Global Squeeze. Chile’s Q3 copper output slumped 12% year-on-year to 1.16 million tonnes, the lowest production level in at least two decades, driven lower by recurring mining accidents, inclement weather, operational problems and declining ore grades.Armed Group Again Disrupts Libya’s Oil Lifeline. Libya’s NOC reported another incident when an armed group shut a valve on the Hamada-Zawiya pipeline, halting flows to the 120,000 b/d Zawiya refinery – the country’s largest - highlighting persistent security risks to the country’s oil-dependent economy.Asia Fuel-Oil Spreads Hit Records as Freight Costs Surge. The east-west pricing spread for fuel oil ballooned to a record high in Asia this week, as record freight costs from Europe pushed the November 380-cst high-sulphur spread to $155 per tonne with the low-sulphur spread topping $200 per tonne.Japan to Reclaim LNG Import Crown from China. Japan is set to reclaim the LNG import crown from China this year, taking in 62 million tonnes whilst Chinese imports are expected to slump to 61 million tonnes, as mild winter expectations, almost-full Chinese storage and higher prices suppress demand.China’s Aluminium Boom Moves Abroad. Chinese aluminium producers are expanding across Asia and Africa in a bid to expand smelting capacity as Beijing’s 45-million-tonne capacity regulatory cap is pushing investment abroad, with at least 15 mtpa of new capacity planned or recently announced.By Tom Kool for Oilprice.comMore Top Reads From Oilprice.comBrent Hits $117 as Tanker Catches Fire in Strait of HormuzJapan to Tap $7 Billion from Government Fund to Subsidize Gasoline PricesEuropean Gas Tops 101 Euros for First Time Since 2022