Oil prices are positioned for a slight 2% weekly gain despite ongoing Middle Eastern tensions, yet the US benchmark West Texas Intermediate (WTI) is set for a steep 7% weekly decline as soaring freight prices and concerns over a potential diesel export ban have soured the outlook for the American crude market. With WTI now trading $12 per barrel below ICE Brent, market participants are expressing deep concerns about US refiners potentially cutting production runs and purchasing less crude, according to analysis from Oilprice.com. The widening spread between the two major crude benchmarks reflects a confluence of factors pressuring the US crude market.
Current price levels show WTI trading at $91.84 per barrel while Brent crude stands at $103.80 per barrel, based on market data from September 25, 2026. The proposed diesel export ban is generating significant concern across Atlantic markets. The European Union is pressing Washington over a mulled 90-day diesel export ban that could leave EU buyers scrambling for available volumes, particularly as the EU confronts a 700,000 barrel-per-day supply deficit following the closure of 11 major refineries over the past decade.
Germany has already responded to tight fuel supplies by approving a €0.17-per-litre fuel tax cut on gasoline and diesel from October through December 2026, costing federal and state governments $2.9 billion as the prolonged Iran war intensifies pressure on household budgets. Freight costs have become a critical market driver, with war-risk premiums for Yanbu-linked tankers soaring to approximately 3% of vessel value, up from less than 1% in early July. These elevated shipping costs are complicating the restoration of roughly 4 million barrels-per-day of exports through Saudi Arabia's Red Sea port of Yanbu.
Meanwhile, Iraq has blamed Saudi Arabia for allegedly purchasing 25 tankers in a transaction valued at approximately $4.5 billion, which lifted Iraqi crude transport costs from $26 to $37 per barrel. The Saudi government has denied these claims, attributing unprecedented regional shipping rates to conflict and disrupted navigation through the Strait of Hormuz. Diplomacy efforts regarding the Hormuz blockade continue as US and Iranian negotiators are reportedly discussing a phased deal that would see Iran reopen the Strait of Hormuz in exchange for a rollback of the US blockade.
However, these discussions occur amid reports of intensifying US military aircraft movement across the Middle East. Iran's Supreme Leader's adviser has warned that a new round of US or Israeli attacks could broaden the conflict beyond the Persian Gulf to the Indian Ocean, potentially threatening key export terminals outside Hormuz such as Fujairah and Sohar. Production disruptions in key regions are adding to market concerns.
Libya's National Oil Corporation denied declaring force majeure at the 300,000 barrel-per-day El Sharara field, despite confirming that production had been cut by 60% to just 120,000 barrels-per-day following actions by members of the Petroleum Facilities Guard who shut a key pipeline valve. Conversely, Russia's largest state oil firm Rosneft has begun commercial Vostok Oil loadings from the new Sever Bay terminal, with initial flows reaching 150,000 barrels-per-day, to be subsequently boosted to 600,000 barrels-per-day by late 2027 as Moscow eyes alternative shipping corridors. Indian refiners are accelerating diversification away from Middle Eastern suppliers due to persistent Hormuz disruptions.
Indian state refiners IOC, BPCL and HPCL plan to raise term US liquefied petroleum gas purchases by more than 25% to 2.76 million tonnes in 2027, seeking at least five monthly cargoes. Similarly, South Korea's Industry Ministry plans to cut the country's reliance on Middle Eastern crude oil from 70% in 2025 to 50% by 2035, seeking to add 20 million barrels of storage by 2030 and diversify naphtha flows. Egypt's energy situation has reached a critical juncture.
The country imported more gas than it produced in July 2026 for the first time in 15 years, with incoming flows reaching 3.3 billion cubic metres against 3.2 billion cubic metres produced domestically, amidst rising domestic power demand that now accounts for 64% of natural gas consumption. Source: Oilprice.com, September 25, 2026
Source: oilprice.com