European Oil Report - 11 October

Welcome to the European oil report, for week ending 11 October 2026. We will focus on Brent, spreads, crude supply, refinery demand, inventories and major news.

Price Review

Brent settled at around 104.72 USD/bbl on Friday 9 October 2026, up 2.4% week-on-week from the previous week's settlement of 102.25 USD/bbl. The week was a round trip: Brent fell to around 98 USD/bbl on Tuesday, its lowest level since early September, as Gulf exports picked up and the G7 agreed to release emergency stocks. It then jumped about 4% on Thursday as Iran stepped up attacks on tankers and a hurricane shut in US Gulf production.

WTI settled at around 91.85 USD/bbl, up 0.8% on the week. The Brent-WTI spread widened from about 11.14 USD to 12.87 USD, because the Hormuz risk hits Brent harder than US crude.

Gasoline settled at around 3.27 USD/gal, slightly below last week's 3.31 USD/gal. Heating Oil settled at around 4.68 USD/gal, up from 4.50 USD/gal the week before, though still below its mid-September peak of about 5.20 USD/gal. Once again diesel is holding up much better than gasoline, which tells us the tightness is still in diesel rather than in crude.

ICE Gasoil swung sharply during the week. It fell to about 1,330 USD/t on Tuesday after the G7 stock release, then rallied to around 1,500 USD/t by Thursday. That puts the Gasoil vs Brent spread at roughly 95 USD/bbl, up from around 80 USD a week earlier and well above the August record of about 75 USD/bbl, although below the September highs. Gasoline cracks are much weaker by comparison.

Crude Supply

OPEC supply:

Seven OPEC+ countries met online on 4 October and agreed to keep their November output targets unchanged, the second month in a row with no change. The group has signalled a pause on further increases until the end of the year. The next meeting of the seven countries is on 1 November, and a full ministerial meeting on 29 November will set policy for 2027. A review of members' production capacity, which will be used to set the 2027 quotas, has been delayed.

As before, the quotas are mostly paper barrels. Gulf output is still far below pre-war levels: according to OPEC data, Saudi Arabia produced only around 6.24 million bpd in August, its lowest since 1990. There were some signs of recovery this week, with Vitol's CEO saying roughly 12 million bpd of crude and 2 million bpd of products had been leaving the Middle East on tankers over the previous 7 to 10 days. But Iran stepped up its attacks on tankers, with around a dozen attacks between 28 September and 2 October, and Kpler data showed tanker flows on Tuesday at their lowest since late July. Iran has also warned Gulf countries that opening new export routes will be treated as hostile. Overall this is a slightly bullish indicator: the barrels exist, but getting them out is still difficult.

Non-OPEC supply:

The non-OPEC oil supply is stable, apart from a hurricane in the US Gulf:

•        The most recent estimate of US crude oil production is around 13.96 mbpd, a record high. However, Hurricane Isaias forced producers in the US Gulf of Mexico to shut in around 1.3 to 1.5 million bpd, roughly 60-70% of the region's output, by the end of the week. The storm made landfall near Destin, Florida late on Friday as a Category 2. The outage should be temporary, but it will show up as a big drop in next week's production figures.

•        US rig count rose by 5 to 603, the highest since 2024 and the first time above 600 in two years. Oil rigs rose by 6 to 462 while gas rigs fell by 1 to 132. The count is up 56 rigs on the year, so the slow build in future US supply continues.

•        Oil output of Canada and Brazil remain stable. Canadian heavy crude (WCS) is trading at around 25.55 USD/bbl below WTI, its widest discount since 2023, mainly because of record tanker freight costs.

Overall, the supply section has turned slightly bullish, driven by the tanker attacks around Hormuz and the temporary hurricane outage in the US.

Refinery demand

Refinery demand remains strong. US refineries ran at 92.7% of capacity, up 0.2 points on the week, and crude runs rose by 223,000 bpd. Utilisation is lower than the 96-97% we saw in the summer, but that is normal for the autumn maintenance season. Total US crude and fuel exports reached 12.8 million bpd, the highest since May, as the rest of the world looks for diesel. The main risk this week was Hurricane Isaias, which threatened refineries along the US Gulf Coast.

The reason margins stay this high is still that refining capacity, not crude, is the bottleneck. On top of the war damage in the Gulf, Ukrainian drone strikes keep hitting Russian refineries, Russia has banned diesel exports by producers until 31 October, and China suspended most of its fuel exports for October (although it now plans to resume them after its Golden Week holiday). Strong refinery demand for crude is a bullish indicator.

Inventories

US Commercial Crude Oil stock is at 424.1 million bbl, down 3.2 million bbl week-on-week, and around 1% above the five-year average for this time of year. Analysts had expected a build of about 1.7 million bbl, so the draw was a bullish surprise. Cushing built slightly, by 0.4 million bbl.

The Strategic Petroleum Reserve is at 283.0 million bbl, down 0.8 million bbl week-on-week and around 30% lower than a year ago. That is the lowest level in more than four decades, and it is now inside the normal operational minimum range of 250-300 million bbl, so there is very little room left to draw on it. The pace of releases has slowed compared with the summer, when the SPR was falling by around 3 million bbl a week.

Products are still tight. Gasoline stocks rose by 0.4 million bbl to 204.7 million bbl, 6% below the five-year average. Distillate stocks were unchanged at 105.1 million bbl and are about 12% below the five-year average, at a time of year when they normally build ahead of winter. The EIA says East Coast distillate stocks were as much as 32% below normal in September.

In Europe the main news this week was on the policy side. On 2 October the G7 agreed to release 100 million barrels of diesel and crude from emergency stocks, with the IEA working out the details this month. On Friday the US also issued a six-month licence, running until 7 April 2027, that allows Russian diesel onto global markets. Both should ease the European diesel shortage over the winter, but the barrels take time to arrive and European diesel stocks remain low going into the heating season. Overall this section is bullish: crude drew, products stay low and the SPR is nearly used up.

Major news

The week was again about Iran and the Strait of Hormuz, and the news pulled in both directions. Early in the week prices fell as Gulf exports recovered and the G7 stock release sank in, with Brent touching 98 USD/bbl on Tuesday. On Thursday Brent jumped about 4% as Iran stepped up attacks on tankers (the latest hit a chemical tanker about 51 nautical miles off Qatar) and Hurricane Isaias shut in US Gulf production.

On the diplomatic side, Iran has offered to reopen the strait within seven days if the US accepts its conditions, and Foreign Minister Araghchi said Tehran was reviewing Washington's reply. On Thursday President Trump called the talks “productive” and said the US would not strike Iran again before the 3 November midterm elections, which held prices back on Friday. However, on Sunday an Iranian security official called the US response “insufficient” and said Iran had stopped responding, so a deal does not look close.

Other news was mixed. China plans to resume fuel exports and the US opened the door to Russian diesel, both bearish for products. On the other hand, the US sanctioned another 17 vessels carrying Iranian oil, and attacks on Saudi airports in Jazan and Najran on Monday show that the Saudi-Houthi conflict is escalating. So the physical risk is still there even while the diplomatic news is cautiously positive.

The EIA's October Short-Term Energy Outlook, released this week, raised its 4Q26 Brent forecast by 14 USD to 105 USD/bbl, close to current prices. It expects Middle East supply to stay constrained until the end of the year, with outages of about 4.5 million bpd, and Brent to fall to an average of 84 USD/bbl in 2027 as more oil gets through Hormuz or around it. The next outlook is due on 10 November.

Balance Table

Total count: +2.5 points, indicating a moderately bullish market. This is a clear change from the slightly bearish reading in August, and this time the fundamentals are doing the work: crude stocks are drawing, product stocks are low and Gulf supply is still disrupted.

The key question is still Hormuz. If Iran and the US agree on the seven-day reopening plan, Brent could fall quickly, as it did in August, because a large risk premium is built into the price. If talks stall, and the weekend comments from Tehran suggest they might, prices are likely to stay above 100 USD/bbl. In the short term, watch the hurricane: if Gulf of Mexico output comes back quickly, part of Thursday's rally could reverse. Brent remains extremely sensitive to geopolitical news.

One last point worth watching: diesel. The G7 stock release and Russian diesel will help over the winter, but neither adds refining capacity, so product cracks are likely to stay historically wide for a while yet.