Easing last week and lower this morning as Trump ”non-enforcement of sanctions towards China” carries more weight than halt in OPEC+ quotas in Q1-26. Brent crude calmed and fell back 1.3% to $65.07/b last week following the rally the week before when it touched down to $60.07/b before rising to a high of $66.78/b on the back of new US sanctions on Rosneft and Lukeoil. These new sanctions naturally affect the biggest buyers of Russian crude oil which are India and China. Trump said after his meeting last week with Xi Jinping that: ”we didn’t really discuss the oil”. China has stated explicitly that it opposes the new unilateral US sanctions with no basis in international law. There is thus no point for Trump to try to enforce the new sanctions versus China. The meeting last week showed that he didn’t even want to talk to Xi Jinping about it. Keeping these sanctions operational on 21 November onwards when they kick into force will be an embarrassment for Donald Trump. Come that date, China will likely explicitly defy the new US sanctions in yet another show of force versus the US.

Halt in OPEC+ quotas shows that 2026 won’t be a bloodbath for oil. Though still surplus in the cards. Brent crude started up 0.4% this morning on the news that OPEC+ will keep quotas unchanged in Q1-26 following another increase of 137k b/d in December. But following a brief jump it has fallen back and is now down slightly at $64.7/b. The halt in quotas for Q1-26 doesn’t do anything to projected surplus in Q1-26. So rising stocks and a pressure towards the downside for oil is still the main picture ahead. But it shows that OPEC+ hasn’t forgotten about the price. It still cares about price. It tells us that 2026 won’t be a bloodbath or graveyard for oil with an average Brent crude oil price of say $45/b. The year will be controlled by OPEC+ according to how it wants to play it in a balance between price and volume where the group is in a process of taking back market share.

Better beyond the 2026 weakness. Increasing comments in the market that the oil market it will be better later. After some slight pain and surplus in 2026. This is definitely what it looks like. The production forecast for non-OPEC+ production by the US EIA is basically sideways with no growth from September 2025. Thus beyond surplus 2026, this places OPEC+ in a very comfortable situation and with good market control.

US IEA October forecast for US liquids and non-OPEC+, non-US production. No net production growth outside of OPEC+ from September 2025 to end of 2026. OPEC+ is already in good position to control the market. It still want’s to take back some more market share. Thus still 2026 weakness.

Down this morning with concerns that US won’t enforce Russian oil sanctions towards China. Brent crude closed up 0.7% yesterday to a close of $65.0/b after having traded in a fairly narrow range of $64.06 – 65.15/b. This morning it is down 0.1% at $64.7/b while the ICE Gasoil crack is down 1% as reports from Trump’s high level talks with Xi Jinping sows doubts about the enforcement of the new US sanctions towards Russia’s Lukoil and Rosneft.

Concerns that US sanctions will create significant friction in crude and product markets. Much focus in the oil market yesterday was on whether the recent new sanctions on Rosneft and Lukeoil would have a material impact on the supply/demand balance in the global oil market. Total CEO, Patrick Pouyanne, said that the market was underestimating the sanctions with three Indian refineries accounting for half of India’s Russian crude oil imports now placing crude oil orders elsewhere. FGE added that there would be massive trade friction over the coming 6-8 weeks with 800k b/d of products and 1m b/d of crude at risk of being stranded at sea in November and December. While Brent crude traded to an intraday low of $60.07/b on 20 October, it is currently only up $3.4/b since its lowest recent close of $61.3/b on 17 October. That is not much in the scale of things. Maybe the market is underestimating the problem as argued by Total and FGE. But Russia and its shadow fleet companions have been hard at work avoiding western sanctions since 2022. Today they are experts at this. Ship to ship transfers of crude to hide that the oil is coming from Russia. Blending Russian crude into other streams. And if Russian crude oil is cheap then there is a lot of profits on the table for willing hands. 

But it is highly unlikely that the US will enforce Russian oil sanctions when it comes to China. Both crude oil and gasoil are down this morning in part because Trump said about his meeting with Xi Jinping that ”we really didn’t discuss the (Russian) oil”. China is one of the biggest buyers of Russian crude oil. Not discussing the new US sanctions with China is a clear signal that these sanctions won’t be enforced. China has been standing up against the US this year on any issue of importance. China’s Foreign Ministry spokesperson Guo Jiakun stated right after the new sanctions were announced that China “oppose unilateral sanctions which lack a basis in international law and authorization of the UN Security Council”. China won’t be bullied by over something as important as its oil purchases. If Trump tried to push the issue on sanctions on Russian oil versus China he would lose. He would get nowhere. So sensibly enough he didn’t lift the topic at the high level meeting. So China will likely pick up Russian crude cargoes who no one else dare to touch. Naturally at a bargain as well. If at all, the new sanctions are not in effect anyhow before 21 November. And as it said in the sanctions: ”may” and ”run the risk of” be prosecuted. Donald Trump thus stands free to not enforce the new sanctions. And how can he enforce them versus India if he can’t/won’t enforce them versus China. Again, as we said on 24 October: ”Sell the (sanctions) rally..”. 

OPEC+ likely to lift its December quotas by 137k b/d on 2 November. OPEC+ will on 2 November discuss what it wants to do with its quotas for December. We expect the group to lift its quotas with an additional 137k b/d as it has done the last couple of meetings.

Crude oil at sea rose 69m b over week to 26 October and is up 253m b since mid-August.

After reaching USD 66.78 per barrel on Friday afternoon, Brent crude has since traded mostly sideways, yet dipping lower this morning. The market appears to be consolidating last week’s sharp gains, with Brent now easing back to around USD 64.5 per barrel, roughly USD 2.3 below Friday’s peak but still well above last Monday’s USD 60.07 low.

The rebound last week was initially driven by Washington’s decision to blacklist Russia’s two largest oil producers, Rosneft and Lukoil, which together account for nearly half of the country’s crude exports. The move sparked a wave of risk repricing and short covering, with Brent rallying almost 10% from Monday’s trough. Yet, the market is now questioning the actual effectiveness of the sanctions. While a full blacklisting sounds dramatic, the mechanisms for enforcement remain unclear, and so far, there are no signs of disrupted Russian flows.

In practice, these measures are unlikely to materially affect Russian supply or revenues in the near term, yet we have now seen Indian refiners reportedly paused new orders for Russian barrels pending government guidance. BPCL is expected to issue a replacement spot tender within 7–10 days, potentially sourcing crude from non-sanctioned entities instead. Meanwhile, Lukoil is exploring the sale of overseas assets, and Germany has requested extra time for Rosneft to reorganize its refining interests in the country.

The broader market focus is now shifting toward this week’s Fed decision and Sunday’s OPEC+ meeting, both seen as potential short-term price drivers. Renewed U.S.-China trade dialogue ahead of Trump’s meeting with President Xi Jinping in South Korea is also lending some macro support.

In short, while the White House’s latest move adds to geopolitical noise, it does not yet represent a true supply disruption. If Washington had intended to apply real pressure, it could have advanced the long-standing Senate bill enforcing secondary sanctions on buyers of Russian oil, legislation with overwhelming backing, or delivered more direct military assistance to Ukraine. Instead, the latest action looks more like political theatre than policy shift, projecting toughness without imposing material economic pain.

Still, while the immediate supply impact appears limited, the episode has refocused attention on Russia’s export vulnerability and underscored the ongoing geopolitical risk premium in the oil market. Combined with counter-seasonal draws in U.S. crude inventories, record-high barrels at sea, and ongoing uncertainty ahead of the OPEC+ meeting, short-term fundamentals remain somewhat tighter than the broader surplus story suggests.

i.e., the sanctions may prove mostly symbolic, but the combination of geopolitics and uneven inventory draws is likely to keep Brent volatile around the low to mid-USD 60s in the days ahead.