Oil Market Squeeze Intensifies as Dated Brent Tops $120

The global oil market is experiencing a severe squeeze, with Dated Brent surpassing $120 per barrel despite ICE Brent slipping to $101. The tight physical oil markets are attributed to several factors, including Europe's diesel stock release, tankers in the Strait of Hormuz, and China reinstating its refined product export ban.

OPEC+ is expected to maintain November output targets unchanged at their upcoming meeting, with core producers still producing 5 million barrels per day below pre-war levels. Meanwhile, EU governments are considering a massive diesel stock release of 50 million barrels over 20 days in response to US President Donald Trump's threat of a diesel export ban.

The United Nations Development Programme (UNDP) warns that fuel subsidies could exceed $1 trillion in 2026 due to the strain on budgets caused by high oil prices and rising borrowing costs. China has suspended most refined product exports, reinstating its previous ban, while the US Department of Energy has offered the last tranche of Strategic Petroleum Reserve (SPR) release.