The Week in Oil: Crude Exports Recover But Regional Tensions Remain Elevated

By Giulia Petroni

Here's a look at what happened in oil markets in the week of Sept. 28-Oct. 2 and what the focus will be in the days to come.

OVERVIEW: Oil prices trade lower on Friday on signs that Gulf crude exports are recovering, although tensions in the region remain elevated amid concerns over further military action and attacks on shipping. Front-month Brent crude is trading at around $100 a barrel, headed for a weekly gain of 3.4%, while West Texas Intermediate futures are above $90 a barrel, on track for a loss of 2.3%.

MACRO: Markets have scaled back expectations for an imminent interest-rate hike by the Federal Reserve. PCE inflation data released earlier this week came in below expectations for August, while weaker-than-expected jobs data has further reduced expectations for additional tightening. The probability of a 25-basis-point rate hike at the FOMC's October meeting has fallen to around 21%, from roughly 70% a week ago, according to CME Group's FedWatch tool.

GEOPOLITICAL RISKS: With diplomatic efforts offering little clarity, markets face the risk of prolonged disruptions, keeping a sizable geopolitical premium embedded in oil prices.

Prospects of further escalation are also worrying investors. According to The Wall Street Journal, the Pentagon is sending a third aircraft-carrier strike group and an additional Marine expeditionary unit to the Middle East, adding around 9,000 to 10,000 troops to the region by the end of November. Meanwhile, shipping risks in the Strait of Hormuz remain high, with the U.K. Maritime Trade Operations reporting several attacks on tankers transiting the waterway in recent weeks.

SUPPLY AND DEMAND: Analysts say Middle East crude exports have now returned to prewar levels. Physical markets, however, continue to point to significant underlying tightness.

G-7 countries agreed to release 100 million barrels of crude and refined products from emergency reserves. The group said the coordinated release, to be carried out through the International Energy Agency over four months, would include a front-loaded diesel release, with a substantial portion to be made available within the first 20 days. The announcement would seem to end the threat of a U.S. ban on diesel exports, at least for now.

As broadly expected, Russia has extended its ban on diesel exports until the end of the month.

WHAT'S AHEAD: Key members of the OPEC+ alliance will meet virtually on Sunday to discuss output quotas for November, but analysts say the group is expected to keep production steady.

Next week's key U.S. events include September services PMI and ISM services data on Monday, followed by August trade figures on Tuesday. The main focus will be Wednesday's FOMC meeting minutes, which could offer further clues on the Fed's rate outlook. Weekly jobless claims are due Thursday, while Friday brings the University of Michigan's preliminary October consumer sentiment survey.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

October 02, 2026 12:03 ET (16:03 GMT)