Brent fell 2% yesterday to $62.49/b and is trading slightly lower this morning at $62.4/b. It is being pushed  towards the 60-line by the booming amount of oil at sea. Oil at sea has increased by 2.5 million barrels every day since mid August and it keeps on moving higher. Last week it increased by 2.0 mb/d and stands at 1398 mb and the highest since Vortexa data in Bloomberg started in 2016. Higher than the previous peak in May 2020 when both Russia and Saudi Arabia had opened their taps on full throttle during that spring while global demand collapsed due to Covid-19.

The only reason why Brent crude hasn’t fallen faster and deeper is because of the US sanctions related to Rosneft and Lukoil which were announced on 22 October. Brent touched down to the 60-line only two days ahead of that announcement with almost all front-end backwardation in the Brent curve gone on 20 October. These new sanctions didn’t prevent Russian oil from coming onto water, but it added a lot of friction to the offtake of Russian crude oil. Brent crude bounced to $66.78/b just a few days after the sanctions were announced and the front-end backwardation strengthened again. Lots of oil at sea, and rising, but much of it hard to touch as they were Russian barrels.

But these sanctions are predominantly just friction. Russian crude keeps flowing into the global market and from there it gradually merges into the general stream of oil in the global market with ship to ship transferers and blending in pools of other oil. Frictions and delays, but it keeps flowing.

The global market has implicitly been running a surplus of 2.5 mb/d since mid-August. The easy read of the oil at sea from Vortexa is that the global oil market has been running a surplus of some 2.5 mb/d since mid-August and that the market keeps running a surplus of such magnitude.

The blob of oil at sea will eventually come on shore. Eventually the current huge blob of oil at sea will move onshore where the sensation of rising crude oil stocks will be more tangible and explicit.

Yet higher stock build in Q1 as global demand falls by 1.5 mb/d. Global demand in Q4 is usually weaker than in Q3 and Q1 demand is usually significantly weaker than Q4. Thus the rate of increase in oil at sea or oil in onshore stocks will likely be an even stronger force as we move into Q1-26 when global demand is about 1.5 mb/d lower than in Q4-25.

First price tumbles. The OPEC+ steps in with cuts. The rapid rise in crude stocks at sea or onshore is set to continue until OPEC+ says ”STOP”. The order of events is: a) The price tumbles into the low 50ies and then b) OPEC+ steps in with fresh cuts. Typically in that sequence.

And yes, we do expect OPEC+ to make adjustments and cutbacks in production when the Brent crude oil price tumbles to the low 50ies.

Crude oil at sea shooting higher at an average rate of 2.5 mb/d since mid-August and 2.0 mb/d last week. Increasingly pushing Brent crude lower but with friction and delay as much of the oil at sea is Russian or Iranian oil with sanctions attached. 

Brent crude fell 3.8% yesterday to $62.71/b. With that Brent has eradicated most of the gains it got when the US announced sanctions related to oil sales by Rosneft and Lukeoil on 22 October.  Just before that it traded around $61/b and briefly touched $60.07/b. The US sanctions then distorted the reality of a global market in surplus. But reality has now reemerged. We never held much belief that 1) The sanctions would prevent Russian oil from flowing to the market via the dark fleet and diverse ship to ship transferee. Russia and the world has after all perfected this art since 2022. Extra friction in oil to market, yes, but no real hinderance. And 2) That Trump/US would really enforce these sanctions which won’t really kick in before 21 November. And post that date they will likely be rolled forward or discarded. So now we are almost back to where we were pre the US sanctions announcement. 

OPEC revising (and admitting) that the global oil market was running a surplus of 0.5 mb/d in Q3-25 probably helped to drive Brent crude lower yesterday. The group has steadfastly promoted a view of very strong demand while IEA and EIA have estimated supply/demand surpluses. Given OPEC’s heavy role in the physical global oil market the group has gotten the benefit of the doubt of the market. I.e. the group probably knows what it is talking about given its massive physical presence in the global oil market. The global oil market has also gotten increasingly less transparent over the past years as non-OECD increasingly holds the dominant share of global consumption. And visibility there is low.

US EIA report: US liquids production keeps growing by 243 kb/d YoY  in 2026. Brent = $55/b in 2026. The monthly energy report from the US energy department was neither a joy for oil prices yesterday. It estimated that total US hydrocarbon liquids production would grow by 243 kb/d YoY to 2026 to a total of 23.8 mb/d. It has upped its 2026 forecast from 23.4 mb/d in September to 23.6 mb/d in October and now 23.8 mb/d. For now prices are ticking lower while US EIA liquids production estimates keeps ticking higher. EIA expects Brent to average $55/b in 2026.

IEA OMR today. Call-on-OPEC 2026 at only 25.4 mb/d. I.e. OPEC needs to cut production by 3.7 mb/d if it wants to balance the market. The IEA estimated in its Monthly Oil Market Report that a balanced oil market in 2026 would require OPEC to produce only 25.4 mb/d. That is 3.7 mb/d less than the group’s production of 29.1 mb/d in October.

OPEC+ now has to make some hard choices. Will it choose market share or will it choose price? Since August there has been no further decline in US shale oil drilling rig count. It has instead ticked up 4 to now 414 rigs. A lower oil price is thus needed to drive US production lower and  make room for OPEC+. Down in the 50ies we need to go for that to happen. We think that first into the 50ies. Then lower US oil rig count. Then lastly OPEC+ action to stabilize the market.

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.