Energy

1. Oil export bump
2. Europe’s gas scramble
3. Refinery race
4. Mineral deals
5. Canada’s LNG expansion

Oil majors prepare for another quarter of record profits, and US pensions are a key source of fossil fuel finance.

Mid East oil exports grow

Oil prices bounced back as signs of a recovery in Middle East exports were outweighed by enduring concerns about supplies from the region and little sign of progress in US-Iran talks. Middle East producers exported more oil in September than in any month since the start of the conflict, said research firm Kpler, with shipments through the Strait of Hormuz and bypass routes reaching nearly 80% of prewar levels last week. Saudi Arabia, meanwhile, restored half the output along its pipeline to the Red Sea and resumed exporting crude from its western coast. But analysts voiced caution that any progress on supply was dependent on less efficient, less reliable operations than prior to the conflict.

American and Iranian officials spoke with mediators on Monday after US President Donald Trump rejected Tehran’s proposal to reopen the Strait of Hormuz and resume talks on its nuclear program in exchange for the US lifting its naval blockade and removing sanctions. Trump denied reports he had offered the Iranians sanctions relief for concrete nuclear concessions. The Wall Street Journal warned that Iran’s loss of de facto control over Hormuz increased “the risk it will resort to military escalation to bolster its position.”

Europe’s winter worries

European energy ministers meet today, fearing coming shortfalls of natural gas and diesel ahead of winter. Europe typically refills its gas stockpiles over summer, but curbs on tanker traffic through the Strait of Hormuz have upended that strategy, leaving reserves far lower than usual. Governments are trying to replenish them by upping imports, but they are competing for supplies with Asian countries also badly hit by the Middle East conflict, sparking a bidding war.

European officials also worry that a prospective US diesel export ban would hammer the continent’s economies, with American diesel accounting for over half of the bloc’s imports. Each week of a ban would increase European wholesale diesel prices by $3 a barrel, although a reserve drawdown could offset about half the price hike, according to Goldman Sachs analysis. Some senior officials in Brussels found solace in US assurances that a ban was unlikely. One sign of (grim) hope: Experts fear the global fallout from the El Niño weather pattern, but argue it could help Europe by increasing renewables output and reducing gas demand.

Africa and Asia’s refining future

Africa and Asia are expected to drive a boom in global oil refining capacity by 2030 as countries seek to meet rising demand, reduce reliance on imports, and expand exports, new analysis found. The BloombergNEF projections reverse several years of limited additions and high closure rates as energy supply disruptions caused by the US-Iran war pushed refining margins to record highs and strengthened the case for investment in supply-chain infrastructure.

The outlook found Africa and the Asia-Pacific region would account for 95% of total refining growth, half of which is already operational or under construction. China and India account for more than two thirds of expected global capacity additions in 2026 and 2027, while Africa is forecast to add the equivalent of half the continent’s existing capacity by 2030, led by the expansion of Nigeria’s Dangote refinery. In contrast, markets like Europe and the US face further closures.

US-Kenya minerals deal

The US and Kenya are in “very advanced” talks on a critical minerals deal, Nairobi’s mining minister told Semafor. Hassan Ali Joho said discussions have focused on building refineries and processing plants that could supply the US, and would include “necessary incentives,” such as special economic zones, support infrastructure, and tax concessions. Joho said the government — which wants to create wealth through industrialization — aims to grow the mining sector’s contribution to Kenya’s GDP tenfold within the next decade.

The minister’s comments come weeks after a senior American official said the US was ready to help Kenya develop its local mineral processing. Washington has unveiled investments across Africa as it looks to challenge China’s access to minerals, though it could be years before the new US projects become productive. African nations have sought to capture more value from the mineral supply chain and are pushing for investments and job-creation at home.

Canada targets LNG exports

A group of oil companies led by Shell took a final investment decision worth up to $23 billion on a massive expansion of Canada’s LNG export capacity. The project started exports last year, after numerous cost and deadline overruns, but Canada’s LNG exports remain far below those of the US and other big exporters. The terminal expansion, however, could push Canada into the top five exporters as it races to gain market share in Asia, ahead of the US.

New Energy

• Solar developers in Japan are buying out-of-favour golf courses to build renewable power generation capacity because of local opposition to large-scale projects.
• Europe’s power grids are set to exceed 80% zero-carbon generation by 2030, but the EU will still fall short of its renewable targets, Wood Mackenzie’s market outlook found.

Fossil Fuels

• A Kenyan court paused the construction of the $16 billion Dangote refinery on Lamu island after a group of residents filed a case opposing the project. Nigeria’s Dangote Group said the ruling would not stop the groundbreaking ceremony on Wednesday, but may affect activities at the site.
• BP, Chevron, Exxon Mobil, Shell, and TotalEnergies are expected to report combined third-quarter profits of around $53 billion, more than double the same period last year, according to RBC Capital Markets estimates.
• California’s attorney general is preparing for a high-profile legal fight with the White House’s rollback of climate regulations.
• China can easily accommodate the 10 million tonnes of coal it agreed to import from the US in 2027 and 2028, making the most specific pledge of the Trump-Xi summit an easy promise to keep, Bloomberg reports.

Finance