War Profiteering. The Energy Report 08/20/2025

Just last week, it was reported that leading Chinese refiners made strategic moves by purchasing approximately 13 cargoes of western Russian crude for October and at least two additional shipments for November, according to Kpler analyst Muyu Xu. Each of these 15 cargoes, ranging from 700,000 to 1 million barrels, will be transported from Russia’s Arctic and Black Sea ports—routes traditionally dominated by Indian buyers. Notably, Reuters has confirmed China’s acquisition of all 15 Russian oil cargoes for this period. Why single out India and let China off the hook, you ask? Bessent explained that China’s bump in Russian oil imports, from 13% to 16%, is pretty tame—just a little portfolio diversification.

But India? They skyrocketed from less than 1% to a jaw-dropping 42%, raking in an extra $16 billion by buying cut-rate Russian crude and flipping it for profit during wartime. Bessent called this the “Indian arbitrage,” and he’s not having any of it—labeling the move flat-out unacceptable. Yet Reuters reports today that Russia expects to continue supplying oil to India despite warnings from the United States, Russian embassy officials in New Delhi said on Wednesday, adding that Moscow hopes trilateral talks will soon take place with India and China.

If sanctions on Russian oil are lifted due to a peace deal, the market might initially view it as bearish. However, experts suggest it could be bullish because demand for Russian oil would rise, and Russia would no longer need to offer large discounts, potentially reversing any negative impact on supply.

The oil inventory numbers from the American Petroleum Institute yesterday were supportive with a 2.4 million barrel drawdown in gasoline that was higher than the markets expectations. We also saw an increase of 1,000,000 barrels in gasoline inventories and an increase of 500,000 barrels in distillate, yet the products and the crack spreads remain strong.

Heating oil cracks cracked up and in part it could be because the  BP’s Whiting refinery, the Midwest’s biggest at 440,000 barrels per day—was hit by major flooding Monday after storms hammered northwest Indiana. The plant flared materials to stay safe, but BP hasn’t said if production is down. With Whiting so vital to Midwest fuel, any hiccup can send spot prices jumping—especially with inventories already tight.

Meanwhile, BP’s European woes continue. Both crude units at its 400,000-bpd Rotterdam plant went offline in June—one for maintenance, one unexpectedly—leaving a major refinery dark. The Atlantic Basin market tightened, margins rose, but BP’s downstream stress just got worse according to reports.

Another important factor to watch is the potential economic benefits if a peace deal between Russia and Ukraine is reached. If such an agreement is made, President Trump could shift his focus to trade—and let’s face it, he’d be in a strong negotiating position after ending eight wars in seven months. That’s quite an impressive track record.

Natural gas continues to take a hit as production numbers stay incredibly strong breaking records and the possibility that tropical storms may do more damage to the demand side of the equation than the supply side of the equation. The possibility of storm surges flooding and power outages are high reducing demand to expectations for natural gas

Fox Weather is reporting that Hurricane Erin closed beaches from Florida to New York, unleashes monster waves, rip currents, extreme erosion Hurricane Erin continues to churn in the Atlantic waters hundreds of miles off the U.S., prompting officials to close beaches along the East Coast from the mid-Atlantic to the Northeast due to massive waves and potentially deadly rip currents just as families take their final vacations of the summer.

The Fox Weather Forecast Center is also reporting that, “outside of Hurricane Erin in the western Atlantic, the National Hurricane Center (NHC) is monitoring two areas of disturbed weather in the Atlantic Ocean, but forecasters say neither appears likely to develop into a tropical cyclone that would immediately threaten any landmasses. The first disturbance, roughly 1,000 miles east of the Lesser Antilles, continues to produce a broad area of disorganized showers and thunderstorms. The disturbance has been given a medium chance of development over the next several days, but the FOX Forecast Center said that given its current structure of being spread out, it would take until at least the end of the week to consolidate into a tropical depression or tropical storm.

Download the Fox Weather ap to keep up to date on the storms ! Stay tuned to the Fox Business Network.

Keep your eye on the market moves—because in this game, every barrel counts! Call Phil Flynn to open your account at 888-264-5665 or email me atpflynn@pricegroup.com.