Weekly Insights - 5th October 2025

Oil

Today (Sunday 5th October), OPEC+ agreed a production increase of 137,000b/d for November, the same modest hike as October. Saudi Arabia were pushing for a larger increase in order to regain market share, and would have preferred to see as much as quadruple this figure, given its ability to ramp up production in a short timeframe. Russia on the other hand advocated for a repeat of the October increase (137,000b/d) to avoid downward pressure on oil prices, and the fact it would struggle to boost output due to sanctions over its war in Ukraine.

After years of production cuts, the group has increased its oil output targets by more than 2.7mmb/d this year, equating to around 2.5% of global demand. The shift in policy is designed to regain market share from rivals such as U.S. shale producers. OPEC said in its statement today that the group views the global economic outlook as steady, with healthy market fundamentals, exhibited by low oil inventories.

Brent prices fell below $65 per barrel on Friday, with fears of a supply glut in Q4 2025 lasting into 2026 due to falling demand and rising U.S. supply. Indeed, in the U.S., crude output set fresh records. July production was 13.642 million b/d, an all-time high (see chart below)

Source: EIA

Staying with the U.S., fuel oil imports into the U.S. Gulf Coast (USGC) hit a two-and-a-half-year high in September, driven by a jump in cargoes from the Middle East. This comes as refiners look to fill an increasing gap left by declining heavy crude supplies, particularly from U.S.-sanctioned Venezuela. Further, domestic fuel stocks have been declining following U.S. sanctions on Russia, cutting off a key fuel oil supplier and forcing refiners to source barrels from elsewhere. The USGC accounts for over 55% of total U.S. refining capacity, with many refineries designed to process heavy, sour crude, qualities typical of Latin American grades. When those supplies are in shortage, refiners can pivot to fuel oil, which secondary units can turn into more valuable products like diesel and gasoline.

Geopolitics continue to tighten supplies. On Tuesday (30th September), Russia imposed a partial diesel export ban. Though as noted in my diesel market analysis last week, the ban only affects resellers of Russian diesel, who account for just 1.5-2% of diesel exports, with the majority coming directly from producers. There are currently no plans to extend this ban to direct producers. The country did however extend its existing ban on gasoline exports (applying to both producers and resellers) through year-end. The cuts come after weeks of fuel shortages triggered by Ukrainian drone strikes on Russian oil facilities.

Gas & Power

European gas remains ample. By Wednesday (October 3rd), EU-wide storage was 82.5% full (up from 81.6% in late September), with two-thirds of EU member states having already exceeded EU gas storage targets. The headline target is set at 90% of capacity, but derogations and flexibilities reduce this for some countries. This has helped Dutch TTF gas prices slip into the low- €30s/MWh, as warmer weather and generous LNG inflows cushion the market.

U.S. LNG exports hit record highs for the second month running. August saw 9.33mt shipped and September reached around 9.4mt. Europe received 66% of the exports, with Asia's share at 17%.

According to ship certifier DNV, LNG demand for ships is set to at least double by 2030. Currently, 781 dual-fuelled ships can now use LNG, though based on today's orderbook, that number will be at least 1,417 by 2030.

On the power side, abundant renewables and gas have generally kept wholesale prices in check. Early October data shows record wind generation (e.g. UK 24GW, Germany 54GW) from Storm Amy temporarily pushing day-ahead prices below zero in both countries. In the U.S., the EIA projects record electricity demand (4,187 TWh in 2025) with renewables picking up share (wind and solar 25% next year), and gas share edging down (40% from 42%).

Metals

Precious metals remain triumphant. Gold reached new highs ($3,895/oz on Oct. 1st) as investors continue to flock to safe havens amid Fed rate cuts and geopolitical uncertainties. Silver similarly surged, hitting $47.83/oz, its highest level since 2011.

In contrast, base metals are generally subdued, though copper is tightening. A September accident shut down Freeport's Grasberg mine, lifting LME copper to 15-month peaks ($10,485/ton) and prompting analysts to forecast a large deficit (400kt in 2025).

Aluminium also looks increasingly tight - China's production has effectively hit its 45Mt cap (c.44.5Mt now), and LME inventories have fallen to just 700kt. Some strategists argue that prices may need to exceed $3,000/ton ($2,711.3/ton at the time of writing) to balance this shortfall.

Ags

As discussed in last week's insights, grain markets are soft on the back of significant supply. Argentina's new government's suspension of export taxes on soy, corn, wheat (and related products) led to a rally in soy prices (+$50/t jump), though analysts warn of a rush to sell that could flood the market, limiting price rises.

In the U.S., record corn and soybean harvests are expected to push prices lower, with record high corn crops dampening prices, even as China's buyers have shifted to cheap Brazilian supplies. The current U.S. government shutdown is also delaying farm aid and loans.

One exception continues to be coffee, with U.S. Arabica futures hitting a brief peak of $4.24/lb in mid-September, near the all-time high. This was driven by 50% U.S. tariffs on Brazilian coffee, and drought concerns in Brazil.

Macro

Broad economic indicators suggest slowing growth with sticky inflation. China's official data remain soft: manufacturing PMI at 49.8 in September (sixth consecutive month is contraction territory) and services PMI barely 50.0, reinforcing talk of more stimulus. Some economists now expect small rate cuts and RRR cuts by year-end.

In the U.S., markets are pricing in further Fed rate cuts this year (markets saw the Fed's first 2025 cut in September, and expect up to two more by year end). Markets broadly now price roughly a 98% probability of a cut in October, and 90% in December.

However, caution should remain in order to balance growth and inflation risks. The ongoing federal government shutdown has thrown a spanner into many key data releases, most notably the monthly employment report (due Friday October 3rd) being delayed.

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