Crude Oil Prices Surge Amid Tightening Global Supplies

Crude oil prices surged today, reaching a +2.70% gain as global diesel and gasoline supplies continued to shrink. The increase was largely driven by Russia's extension of its diesel export ban, which has further tightened the market. Additionally, attacks on vessels transiting the Strait of Hormuz remain a concern, with three tankers reported to have been struck in the strait on Tuesday.

The Energy Information Administration (EIA) reported that gasoline inventories fell to a nearly 12-year low, while distillate stockpiles unexpectedly declined. Crude oil supplies at Cushing, the delivery point of WTI futures, rose +553,000 bbl. US crude oil production in the week ending September 25 reached a new record high of 13.955 million bpd.

Despite the tight supply, OPEC delegates approved their final increase of +188,000 bpd in crude production for September, with plans to hold output steady for the rest of the year after the September hike. However, persistent US-Iran military attacks in the region may hinder these efforts. The International Energy Agency (IEA) warned that high oil prices and restricted supply will cause the biggest drop in global oil demand this year since the Covid-19 pandemic.