G7 releases 100 million barrels, pushing diesel cracks to $70 from $85

The G7 said Oct. 2 it will release as much as 100 million barrels of crude and diesel over the next four months, and the ICE gasoil crack has already fallen to about $70 a barrel from as high as $85 in the middle of last week. Diesel buyers have not seen cracks fall since middle distillate margins hit record highs last month. Warren Patterson at ING tied the drop to the coming stock releases and a reduced chance of a U.S. ban on diesel exports. If the barrels actually move, wholesale diesel could ease into winter.

OPEC+ holds November steady

Seven OPEC+ producers, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, agreed Oct. 4 to keep output flat in November. They meet again Nov. 1 to look at the market. The backdrop is Brent above $100 since the fighting with Iran began on Feb. 28. On Oct. 5 the benchmark swung between $100 and $103 and was last at $101.83, down 0.4 percent. Prices have been jumpy on the open question of when the war ends.

Scarily thin inventories

Aramco CEO Amin Nasser warned Monday that the world has lost close to 3 billion barrels of gross oil supply since the Iran war started, out of stocks that began near 10 billion. He called the cushion "scarily thin" and said pressure at both ends of the barrel could intensify until Hormuz fully reopens and confidence returns. The G7 release lands on top of that.

Rabigh reports and ethanol

Reports circulated Monday of a possible fire or attack at the Petro Rabigh refining and petrochemical complex north of Jeddah. Iran's Tasnim agency, citing Yemeni sources, reported a refinery in the Jeddah area was hit. Saudi authorities have not confirmed anything, and Tasnim appears to be the only source for the attack claim, so treat it as unconfirmed.

On the renewable side, U.S. ethanol production fell 2.0 percent to 1.01 million barrels a day in the week ending Sept. 25, the lowest since late January, per the Renewable Fuels Association. Stocks dropped 3.3 percent to 23.9 million barrels, the lowest since the start of 2026, though still 4.8 percent above a year ago.

What to watch

The Nov. 1 OPEC+ meeting, whether the G7 barrels actually hit the market or stay an announcement, any Saudi confirmation on Petro Rabigh, and whether Hormuz traffic normalizes. If it does, crude could soften and take diesel cracks lower with it.