October 2025 Market Pulse
The global crude market is entering a rare phase: the world’s largest producer, the United States, is pumping at record levels and consuming barrels at a pace that defies seasonal patterns. Add tightening chokepoints in Europe, Saudi pricing adjustments, and Libya’s upstream revival—and the Atlantic and Middle Eastern basins are now locked in a complex tug-of-war between abundance and constraint.
Wells Drilled in US Last 12 Months
Includes: Account Name, Well Name, Drilling Rig, Location…..
🛢 U.S. Production: Efficiency Fuels Record Highs
U.S. crude output remains at record levels, with the EIA’s recalibrated estimate hitting 13.63 million barrels per day (Mbd) in early October—consistent with monthly data from July. The gains are driven by technology, not rigs:
- Permian new-well productivity climbed to 1.67 thousand barrels per day (kbd) in September, up 0.2 kbd year-over-year.
- Bakken wells broke the 2 kbd mark for the first time since late 2021.
These productivity gains have masked a structural slowdown. Permian rig counts have fallen to 250–260, down from over 300 last year. The trend points to an approaching plateau by early 2026, as natural declines in legacy basins overtake incremental gains from new completions.
“We forecast that overall U.S. crude supply will enter a downward trend in the first half of 2026,” the report notes, suggesting a tightening market beyond this winter.
⛽ Demand Defies Gravity
Despite this record supply, U.S. refiners are running hot.
Early October saw refinery crude intake surge to 16.3 Mbd, a counter-seasonal rise as operators delayed maintenance to capture exceptional margins. Elevated crack spreads for diesel and gasoline have pulled barrels through the system at a rate rarely seen this time of year.
Demand strength is concentrated in PADD 1 (East Coast), PADD 2 (Midwest), and PADD 3 (Gulf Coast), where consumption is running well above normal levels.
Even so, inventories climbed nearly 4 million barrels to 420 million barrels in early October—an early signal that a short-term surplus may be forming.
Expect a few more EIA builds before balances tighten again heading into 2026.
⚖️ M1/M2 Spreads: Volatility Returns
U.S. crude spreads are swinging as traders wrestle with mixed signals.
- The Mars M1–M2 spread climbed to $0.80/bbl, its highest in a month.
- Demand is expected to briefly dip to 16 Mbd in October, before rebounding to 16.8 Mbd by December.
Even with strong domestic runs, regional oversupply looms. Ample light shale, Gulf of Mexico medium crudes, and heavy barrels from Canada and Venezuela will keep Gulf Coast pricing volatile through year-end.
🌍 Europe’s Fragile Flows: New Chokepoints and Old Risks
Denmark Targets the Shadow Fleet
Denmark is stepping up environmental inspections in the Skagen anchorage, a critical chokepoint for tankers moving Russian crude from the Baltic.
With 1.7 Mbd—nearly half of Russia’s seaborne exports—moving through this corridor, even minor inspection delays could ripple across global schedules and lift landed prices into India.
Czech Republic Taps Strategic Reserves
Meanwhile, Central Europe’s oil flow is under pressure as modernization work at Trieste throttles the Transalpine Pipeline (TAL)—the Czech Republic’s only remaining supply route after exiting Russian Druzhba flows.
Refiner Orlen Unipetrol has borrowed 1.5 million barrels from state reserves to maintain operations, underscoring how fragile the region’s post-Russia supply network remains.
🇱🇾 Libya’s Rebound Attracts Majors
Libya’s oil sector continues to stabilize. The National Oil Corporation confirmed that Eni has resumed offshore exploration drilling for the first time in five years. With production hitting 1.31 Mbd in August—a post-2017 high—majors like BP, Shell, and ExxonMobil are re-entering.
Es Sider, Libya’s flagship grade, is now trading at a $1/bbl premium to North Sea Dated, highlighting confidence in the country’s recovery and its importance to European supply.
🏝 Middle East: OSP Cuts Signal Softness
Saudi Aramco has trimmed November official selling prices (OSPs) for most grades, a move signaling growing concern over a potential supply glut.
- Arab Medium and Heavy to Asia dropped by $0.30/bbl, even as the Dubai M1–M3 spread firmed by $0.3–$0.4/bbl in September.
- Dubai backwardation has since collapsed to $0.8/bbl, down from nearly $2/bbl last month.
Aramco’s pricing strategy appears aimed at stimulating term liftings as OPEC+ gradually rolls back voluntary cuts. However, refiners are already well-covered for December arrivals, limiting near-term upside for Saudi exports.
🇨🇳 China’s Buying Behavior: Stockpiling Continues
Chinese refiners are expected to maintain high November nominations (~50 million barrels) after taking 51 million barrels in October.
Onshore inventories fell in September, indicating strong refinery runs and limited strategic reserve additions at higher prices. With softer Q4 pricing, China is likely refilling its SPR at an accelerated pace through March 2026, quietly supporting global demand even as the market braces for oversupply.
🇮🇶 ExxonMobil’s Return to Iraq
ExxonMobil’s new accord with Basra Oil Company and SOMO signals a revival of Iraq’s upstream ambitions. The plan includes boosting output at the Majnoon field (240 kbd) and expanding export capacity.
This aligns with Iraq’s broader goal to raise production capacity to 6 Mbd by 2029, up from 4.5 Mbd today.
Parallel expansions by BP (Kirkuk) and PetroChina (West Qurna-1) show growing international alignment behind Iraq’s development push.
⚡ Summary: Abundance Meets Fragility
The global oil market is simultaneously flooded and fragile.
- The U.S. is producing at record levels, but drilling activity suggests a near-term peak.
- European logistics remain vulnerable, exposed to chokepoints from Skagen to Trieste.
- OPEC+ is walking a fine line, balancing supply discipline against market share.
- Asia’s refiners, led by China, are absorbing surplus barrels—but stockpiling can only last so long.
As 2025 winds down, the system is stretched between short-term surplus and medium-term scarcity—a classic setup for volatility.
