Dated Brent Surges Above $120 Amid Severe Physical Oil Market Squeeze

Physical oil markets have tightened sharply as Europe's main benchmark, Dated Brent, surged above $120 per barrel, moving in the opposite direction of ICE Brent, which slipped toward $101. According to OilPrice, extreme market volatility this week has been driven by several overlapping factors, including European diesel stock releases, droned tankers in the Strait of Hormuz, and China reinstating its refined product export ban.

Supply Disruptions and Policy Responses

OPEC+ is expected to keep November output targets unchanged at its upcoming meeting. Core producers continue to pump 5 million barrels per day below pre-war levels, despite August production rising by 630,000 barrels per day month-over-month to 25 million barrels per day. Meanwhile, European Union governments are considering the release of 50 million barrels—representing about 17% of EU emergency diesel inventories—over a 20-day period. This follows threats from US President Donald Trump regarding a potential diesel export ban.

In Asia, Beijing has suspended most October refined product export shipments, reinstating its previous export ban. Chinese diesel stocks are reported to be around 20 million barrels below pre-war levels, with gasoline inventories falling 9 million barrels short of targets. At the same time, Russia extended its diesel export ban through October, removing approximately 10% of seaborne supply just as winter demand rises, though Deputy Prime Minister Novak hinted at a potential early lifting due to improving domestic supply.

Key facts

• Dated Brent surpassed $120 per barrel, signaling severe physical market tightness.
• ICE Brent edged lower to $101 per barrel during volatile weekly trading.
• OPEC+ output stands at 25 million barrels per day, remaining 5 million barrels per day below pre-war levels.
• China suspended most October refined product export shipments during the Golden Week period.