EMD022 - Weekly Rally

Energy markets close the week with their strongest performance since June on Friday, September 26, 2025. Both WTI and Brent crude are heading for weekly gains of approximately 4.4%, marking their largest weekly advance in over three months, as geopolitical tensions override growing oversupply concerns. The week's rally was driven primarily by escalating geopolitical pressure on Russian energy flows. President Trump intensified diplomatic efforts, urging Turkish President Erdogan to cease crude oil imports from Russia while discussing energy security with Hungarian Prime Minister Viktor Orban. Ukrainian drone strikes continued disrupting Russian energy infrastructure throughout the week, while NATO issued warnings about airspace violations. However, oversupply pressures are mounting as Iraqi Kurdistan prepares to resume oil exports through Turkey's Ceyhan port on Saturday. Initial flows are expected at 230,000 barrels per day, potentially scaling to 500,000 bpd, adding significant supply to already well-supplied markets following Wednesday's breakthrough agreement between eight energy companies and Iraqi federal/Kurdish governments. Natural gas markets showed strength, with Henry Hub rising to $3.22 per MMBtu, up 0.93% daily and 11.73% for the month. European TTF gas increased to €32.46 per MWh, supported by ample inventories and ongoing LNG transactions. The week's inventory data revealed continued tightness, with EIA reporting a 607,000-barrel crude draw against expectations for builds, gasoline down 1.1 million barrels, and distillates falling 1.7 million barrels. Refinery utilization remained robust at 93% capacity. Looking ahead, markets face a critical test as Kurdish oil flows resume while geopolitical tensions maintain risk premiums. The 4.4% weekly rally reflects markets pricing in supply disruption risks, but the return of significant Iraqi volumes could quickly shift sentiment toward oversupply concerns that have dominated recent weeks. This episode analyzes how energy executives should position for markets caught between the week's strongest geopolitical-driven rally since June and the looming oversupply challenge from Saturday's Kurdish oil resumption.