Oil falls below $93 as Democrats take control of Congress and hopes grow for a diplomatic breakthrough in the US-Iran war.
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During the first 22 days of October, Saudi Arabia exported more than 7 million barrels of crude per day, according to Vortexa data. Add refined products, and total exports reached roughly 8.5 million barrels per day—still slightly below the pre-war level of more than 9 million. The figures suggest Saudi production has climbed towards 9–10 million barrels per day, with the Red Sea route playing a crucial role. Why the surge? One possible explanation: Riyadh is pumping while it can, ahead of a potential renewed escalation after the US midterms or further attacks on oil infrastructure. For the oil market, the message is clear: supply is recovering, but geopolitical risks remain. Source: Javier Blas
WSJ: "Persian Gulf oil exports have surpassed prewar levels, as an improvised shipping system under U.S. protection is helping tankers move oil through one of Iran’s fiercest waves of attacks in the Strait of Hormuz. Middle East oil flows, including shipments through Hormuz and alternative routes across the region, averaged more than 24 million barrels a day in the week through Oct. 18, surpassing prewar levels of 23.3 million, according to ship tracker Kpler".
Meanwhile, today's Eurostat report shows eurozone industrial production contracted another 1.1% yoy. Europe’s energy shock is becoming an industrial competitiveness crisis. European diesel prices are approaching $200 per barrel, while eurozone industrial production has contracted by another 1.1% year on year. Germany’s industrial output is already almost 10% below its 2021 level. Another energy shock is hitting an industrial base with limited room to absorb it. The transmission mechanism is clear: → Higher transportation costs. → Higher production costs. → Renewed inflationary pressure. But pricing power has limits. When businesses can no longer pass higher costs on to customers, margins compress. Production is reduced. Investment is postponed. More factories become economically unviable. This is the risk of another stagflationary shock: weaker activity alongside higher prices. For the ECB, the dilemma is increasingly difficult. Raising rates could contain inflation, but would also weaken demand, increase sovereign financing pressures and accelerate industrial decline. Europe faces a growing risk that a temporary energy shock leaves permanent damage to its industrial capacity. Source: Lukas Ekwueme @ekwufinance Bloomberg