OPIS Insights

Barron’s Senior Energy Writer Laura Sanicola and OPIS Chief Oil Analyst Denton Cinquegrana discuss what’s ahead for oil this week.

Watch this week’s episode for insights into the aftermath of US sanctions imposed on two of Russia’s largest oil companies.

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanicola, author of Barron’s Energy Insider newsletter, and I’m here today with Denton Cinquegrana, chief oil analyst at OPIS. Denton, thanks for joining me.

DENTON CINQUEGRANA: You got it, Laura. How are you today?

SANICOLA: Good. So let’s talk oil and the fact that the US sanctions imposed on two of Russia’s largest oil companies a couple of weeks ago or more than a couple weeks ago at this point, which were kind of expected to have a more dramatic impact on the price of oil globally. That’s really not materialized. Can you explain what’s went on in the past couple of weeks?

CINQUEGRANA: Yeah. So there was an initial pop when the sanctions on Russneft and Lukoil were announced in the five percent area. But right now, we’re just kinda trickling back towards levels we were around the time of the announcement. WTI, either side of sixty, Brent low sixties. So prices have really kinda pulled back after an initial pop.

The two kinda countries to keep an eye on there are are obviously China and India. Those were the ones who are taking on a lot of Russian oil. India has decided to to play a little bit nice and probably purchase more US crude oil, but also the recent meeting between president Xi and presidents Trump probably has China also playing a little bit nice here. So but right now, the fact that prices haven’t really reacted or they had that initial reaction, I should say, and then kind of revert back to where they were just as further proof that this is the glut that we’ve been hearing so much about for the second half of 2025 is looks like it’s starting to show show itself.

SANICOLA: Yeah. And you’ve seen in recent conferences in the Middle East and in Europe executives trying to say, well, we don’t see a glut, but everything else and everyone else is pointing to a glut of oil. And, you know, those sanctions were expected to have a little bit more impact. In terms of the impact of Russia on products markets, we obviously have a lot less refining capacity as Ukraine strikes Russian refining infrastructure. And tell me about what that’s done for diesel. I mean, I’m seeing numbers here that I don’t even recall since, you know, the initial invasion of Russia into Ukraine.

CINQUEGRANA: Yeah. So diesel has been kind of the, for lack of a better term, beneficiary of this action. Russia’s a significant exporter of diesel. And right now, some of the refining margins based on NYMEX futures sees diesel at about forty five dollars a barrel over crude oil. We peaked in 2022 somewhere in the seventy, seventy plus, which obviously was kind of a maybe once in a lifetime type of thing. But on a more historical basis, you’re probably looking about fifteen to twenty five dollars a barrel. So we’re, you know, good doubling of of the historical averages.

US diesel inventories are relatively tight to begin with, so that has kind of been the case for the past two and a half, three years. But you haven’t seen significant price fights for retail diesel at least. So but the diesel markets are quite strong. And gasoline, despite the fact that it’s early November, is still holding up quite well. Retail gasoline prices have kinda inched up a little bit. You’ve seen some refinery kind of flare ups here and there, kinda more regional, but it was enough to kinda lift the entire entire complex there.

SANICOLA: Right. Well, this should all bode decently well for refiners who’ve done reporting earnings now, and they were by and large constructive with, you know, positive outlooks towards next year. So we’ll see how these cracks hold up for them, and, we’ll see everybody else next week.