Three right arrows
Position coordinates
Insight Weekly Market Report Market Report - 06.10.2026

Market Report Week 41 - 06.10.2026

Other insights Oct. 06, 2026
Market Report Week 41 - 06.10.2026 Download the full report here

Crude oil and geopolitics: More oil is moving, but the recovery remains fragile

In this issue of the Weekly Market Report, we cover three sections: crude oil and geopolitics, a special focus on diesel and gasoil (MGO), and the EUA market. We also briefly discuss recent developments in the bunker fuel market, including the elevated East-West spread.
The Weekly Market Report will take an autumn break next week.


Several Dan-Bunkering colleagues, including the author of this report, will attend the SIBCON 2026 bunker conference in Singapore. If you are also attending, please reach out and come by our booth.


Note: Deadline for text and charts: Monday, Oct 5th.

Bunker Port Brief

Fujairah remains relatively well supplied, while availability is tighter in Walvis Bay and Port Louis, where notice periods remain elevated.


New York

Demand is still strong into Q4 on contract, spot demand waning. Premiums to indices still high on VLSFO and LSMGO, HS premium to Sing static and seeing demand. Distillate avail into winter will be an issue.

ARA

Mostly well-supplied market, but on prompt both VLSFO / HSFO are tight on avails.

Fujairah

VLSFO premiums are firming on tight cargo availability, although further arrivals expected in October should provide some relief. HSFO supply remains ample, with premiums under downward pressure amid oversupply. Bunker operations are running normally despite ongoing regional tensions.

Durban

Tight avails and a lack of barges are pushing premiums up significantly in Durban. Replenishment dates are still unknown, so this situation is expected to continue in the short term.

Port Louis

Avails seem to be improving in the region; demand, however, remains low compared to the last week or two.

Walvis Bay

Demand remains constant in WB, and it is currently the port with the most bunker requests from clients in the Southern African region; barge avails remain OK, and premiums are competitive as suppliers try to shift as much volume as they can.

Skaw

Nothing of note this early in the week.

Gibraltar

Demand is still stable – not so many requests in the Straits, maybe due to the market still being high – only the Peninsula at the moment has prompt availability for MGO, as others are waiting for new cargo to come.

Zhoushan

LSFO Premium may drop by 15-18 next week as all suppliers return to the office after the national holiday, and there will be news on the new cargo quota. HSFO Premium may drop by 15-20 as cargo will be arriving on 14. October. LSMGO Premium may remain.

Hong Kong

Avails for HSFO are very tight, with the earliest delivery date on/around 18. October for most suppliers. Some suppliers may be able to offer prompt dates but at very high premiums. Avails for other grades are normal. Demand is lower than usual this week due to the China Golden Week Holidays.

Seoul

Still the same situation. Extremely tight stock availability for HSFO & VLSFO. HSFO stock is especially limited and can only be offered case by case. EDD is far out to the end of the month, and there are no good signs on November stock availability either. All in all, literally limited, tight stock availability with a high premium at this moment.

 

For port availability and demand, download the full report here.

Chart 1 0610

The crude market has eased as more barrels leave the Middle East. Middle Eastern exports were close to – and by some estimates briefly above – pre-war levels at the end of September, supported by shipments through Hormuz, STS transfers and bypass pipelines through Saudi Arabia and the UAE. This is a significant improvement, but it should not be confused with a normalisation of supply.


The weekend was another reminder of how fragile the recovery is. Attacks on commercial shipping in and around the Strait of Hormuz have intensified again. At the same time, the Saudi-backed Yemeni government has launched a major offensive against the Houthis, adding renewed uncertainty around Bab el-Mandeb and the Red Sea.


The physical market also remains extremely tight. Dated Brent is trading around USD 127/bbl, well above the futures market. That is an important signal: even though more crude is leaving the Middle East, prompt barrels remain scarce and expensive. Depleted inventories, high freight rates, longer voyages and uncertainty over the reliability of future cargoes continue to support physical prices.


US-Iran negotiations continue, but there is still little to suggest that a lasting agreement is close. Our base case remains that there will be no durable deal before the November midterm elections and that a more lasting reopening of Hormuz is more likely in Q2 2027.


Better flows reduce the immediate pressure, but renewed attacks and the elevated Dated Brent price show why the risk premium cannot disappear. For consumers, price dips still offer opportunities to add near-term hedges, while keeping more flexibility further out.

Chart 2 & 3 0610

MGO/gasoil and diesel: Stock releases offer relief, but do not solve the shortage

Diesel and gasoil prices have eased from September’s extreme levels, but the underlying market remains tight. The ICE gasoil crack briefly traded above USD 100/bbl in September and the Rotterdam diesel price above USD 200/bbl. Global diesel inventories remain low despite high refinery runs.


Unlike crude, refined-product flows from the Middle East have not normalised. Estimates still put exports at only around 50-60% of pre-war levels. Russia has extended diesel export restrictions following Ukrainian attacks on refineries, while China has suspended fuel exports for October. The product balance therefore remains considerably tighter than the crude balance.


The major change since Friday is the G7 agreement to release 100 million barrels of crude and refined products from emergency stocks over four months. The release starts immediately, with a substantial amount of diesel expected within the first 20 days. G7 countries also pledged to refrain from imposing energy export restrictions among themselves, reducing – for now – the risk of a US diesel export ban.
There are important caveats. The official agreement does not specify how much of the 100 million barrels will be diesel, and it remains unclear how much represents genuinely additional barrels rather than commitments left over from the 400-million-barrel emergency release agreed earlier this year. A stock release can cool the prompt market, but it does not create new refinery capacity or restore Middle Eastern and Russian supply.


The announcement has nevertheless taken some heat out of the market, and further short-term declines are possible as barrels reach the market. But reserves can only be released once, and renewed disruption in Hormuz, Russia or elsewhere could quickly tighten the balance again. Importantly, the risk of a US export ban should now be smaller. For MGO consumers, the same middle-distillate shortage remains the key risk. We continue to favour using price weakness to add product-specific hedges ahead of winter, particularly where backwardation provides lower forward entry levels.

Chart 4 & 5 0610

Lower HI5 and elevated East-West spread in the bunker

 

In the bunker market, MGO remains the product most directly exposed to the tight global middle-distillate market. The VLSFO market in Singapore also remains significantly tighter than in Rotterdam, while the strengthening of the HSFO crack over the past couple of weeks has reduced some of the previously extreme difference between high- and low-sulphur fuel oil (the HI5/scrubber spread).


Notably, East-West spreads remain elevated at or above the levels seen in March/April. Record-high tanker rates make it difficult for fuel to move despite the apparently attractive arbitrage.

Chart 5 0610

EUAs: Compliance support has faded, but the underlying market remains tight

The 30 September surrender deadline has passed, removing an important source of near-term EUA compliance buying. EUA prices weakened into the end of last week and on Monday, with the December 2026 contract trading below EUR 84/t, down 5% from the September peak.


Attention now shifts towards energy prices, positioning and the increasingly important debate over ETS reform. Expensive gas can still support coal-fired generation and therefore EUA demand. The German clean dark spread for Q1 2027 remains comfortably positive and well above the corresponding clean spark spread for gas. See the chart to the left below. 


However, mild weather, renewable generation and weak industrial activity provide counterweights. The passing of the compliance deadline also means the market may be more exposed to selling pressure in the short term.


Political risk is becoming more important. Parliament is discussing changes to the ETS, including mechanisms that could increase supply during periods of high prices, while the Council wants to suspend allowance invalidation in the Market Stability Reserve until the end of 2030. These remain proposals rather than immediate changes to auction supply.


We still expect a tighter market balance in 2027 and 2028 and therefore see value for consumers in adding hedges on price dips. The chart below to the right in the market balance from Bloomberg BI. 

Related insights

Explore all insights