Standard Chartered: Russian Diesel Will Not Add New Supply

Commodity analysts at Standard Chartered have projected that global crude prices will remain elevated despite heightened market volatility, with upside risks persisting across the sector. According to OilPrice, President Trump recently announced that Russia would supply diesel to international markets, starting with 300,000 tonnes immediately, 500,000 tons in November, 1 million tons thereafter, and an additional 3 million tons conditional on the status of Russian refineries.

However, energy experts remain skeptical regarding Moscow's capacity to boost near-term output. Ukrainian strikes have significantly degraded Russian refining capacity, while domestic fuel shortages and export restrictions continue to constrain international shipments. Furthermore, analysts note that barrels redirected to the United States or other buyers cannot automatically be treated as incremental global supply, as they simply become unavailable to existing customers.

Shipping and Infrastructure Pressures

Beyond production constraints, geopolitical tensions and logistical bottlenecks continue to support higher energy costs. OPEC ministers recently warned that shipping and insurance costs have risen to more than one-third of the commodity's value. Longer voyages, additional handling, elevated insurance premiums, and reliance on alternative routes continue to raise delivered costs for consumers.

At the same time, regional infrastructure vulnerabilities persist in the Middle East. Yemen's Iran-aligned Houthis claimed responsibility for recent missile attacks affecting King Khalid International Airport and Dammam airport, alongside an intercepted missile over Riyadh. Standard Chartered highlighted that the renewed Saudi-Houthi conflict poses a direct threat to regional logistics networks on which supply recoveries depend.

European Gas Market Balance

On the natural gas front, Standard Chartered projected that European prices will remain elevated as early cooler weather increases the competition between heating demand and storage injections. Europe's first cold spell tightened regional fundamentals, with CNWE's LDC demand increasing 26% week-on-week while storage injections rose 8%. Despite higher Norwegian Continental Shelf flows and LNG sendout providing some relief, TTF gas prices jumped 10.2% over the past week to trade at €85.83 per MWh.

Key facts

• Brent crude for December delivery traded down 0.2% at $106 per barrel, while WTI crude for November delivery jumped 3.6% to $98 per barrel.
• President Trump announced plans for Russia to supply diesel starting with 300,000 tonnes immediately, followed by 500,000 tons in November, 1 million tons thereafter, and 3 million tons conditional on refinery conditions.
• OPEC ministers warned that shipping and insurance costs have risen to more than one-third of the commodity's value.
• TTF gas prices rose 10.2% over the past week to trade at €85.83 per MWh amid cooler European weather.