Morning Highlights: Oil Gains on U.S. Inventory Draws and U.S.-China Summit Optimism

Wednesday, October 29, 2025

Oil prices edged higher as data showed a sharper-than-expected drop in U.S. crude inventories and traders grew optimistic ahead of Thursday’s meeting between Presidents Trump and Xi in South Korea. Gains were capped by ongoing uncertainty over sanctions on Russian producers and the prospect of an OPEC+ output increase in December.

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Market Snapshot

• Brent crude up 7 cents to $64.47/bbl at 6:15 EST; WTI up 1 cent to $60.16.

• Prices recovered slightly after Tuesday’s near-2% decline, helped by U.S. stock draws and cautious optimism over trade talks.

• API data showed U.S. crude stocks down 4.02 mb for the week ended Oct 24, with gasoline down 6.35 mb and distillates off 4.36 mb.

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U.S.-China Developments

• China confirmed that President Xi will meet President Trump in Busan on Thursday, saying the talks would “inject new momentum” into bilateral ties.

• Beijing said it remains open to cooperation on fentanyl controls as Washington signaled possible tariff relief on Chinese goods.

• The market views the meeting as a potential stabilizer for trade relations between the world’s two largest oil consumers.

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Russia Sanctions and Market Response

• Traders continue to assess how U.S. sanctions on Rosneft and Lukoil will affect exports; Moscow said buyers must decide for themselves whether to purchase Russian energy.

• Some Indian refiners paused new orders pending government clarity, though Indian Oil said it would keep buying Russian crude within sanctions compliance.

• Germany confirmed U.S. assurances that Rosneft’s German assets will be exempt due to their transfer out of Russian control.

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OPEC+ Outlook

• The producer alliance is leaning toward a modest December output boost of about 137,000 bpd, according to sources familiar with the talks.

• Saudi Aramco’s CEO said global oil demand was strong even before sanctions were imposed, citing continued healthy Chinese consumption.

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U.S. Tariffs and Industry Impact

• A new Deloitte report warned that Trump’s expanded tariffs could raise costs for the oil and gas sector by 4%–40%, hitting rigs, valves, and specialized steel.

• The report said inflation and cost uncertainty could delay more than $50 billion in final investment decisions for offshore and greenfield projects into 2026.

• Companies are expected to renegotiate contracts and shift toward domestic or non-tariffed suppliers to build supply-chain resilience.

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India Energy Outlook

• Indian Oil plans a joint venture with global trader Vitol in Singapore to expand international crude and fuel trading.

• The five- to seven-year venture aims to cut procurement costs, boost margins, and leverage Vitol’s distribution network.

• India targets raising refining capacity to 6.2 mbpd by 2030 and as high as 9 mbpd longer term, consolidating its position as a top global refining hub.

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Prices are holding steady as traders balance bullish inventory data and diplomatic optimism against structural supply factors — including surplus capacity, sanctions uncertainty, and a possible OPEC+ output lift. The Trump–Xi summit Thursday could provide the next major directional cue for energy markets.