What’s Fueling the Market? Oil, Gas, and the Volatility Ahead

The oil and gas market is heading into fall with many moving parts, from global politics to refinery production shifts and evolving environmental regulations. In our latest FUELSCast episode, “Q3 Market Update: Tariffs, Economic Indicators, and the Road Ahead for Prices,” Andy Milton, SVP of Supply at Mansfield Energy, shared insights on the key factors shaping the market and what to expect in the months ahead.

In today’s article, we’re taking a closer look at that conversation, highlighting the main takeaways from the episode and explaining what they mean for fuel buyers heading into the fourth quarter of 2025.

Tariffs, Diplomacy, and Global Risk

Geopolitical tensions remain high, particularly as the U.S. and Russia continue to engage in fragile diplomacy.

“I don’t know if it’s going to be a good solution for either side or even a long-term solution,” Andy said, referring to the Trump-Putin meeting. “But something needs to happen, and hopefully it ends with a peaceful situation.”

Meanwhile, tariffs are making waves. They’re adding complexity to trade and fueling inflation concerns. The U.S. Producer Price Index (PPI) came in hotter than expected, suggesting price pressure could trickle down to consumers. On the export front, the weaker U.S. dollar, down over 5% year-over-year, is boosting energy exports.

Diesel Supply Recovers, But Risks Remain

Diesel inventories were tight earlier this summer, driving prices higher, particularly in June. The combination of steady demand, reduced production, refinery issues, and surging exports all contributed to this.

“We had multiple weeks in a row of very low diesel inventories,” Andy explained. “And then PAD 1 also got very, very low. So, we had a combination of decent demand, a little less production than normal, unplanned refinery issues, and exports rocketing higher.”

Today, diesel supply is improving. “Refining utilization’s been in the mid-90% range, so we’re really getting a lot of diesel supply in the market ahead of the winter, which was the worry.”

OPEC’s Production Moves and the Spare Capacity Question

OPEC has ramped production back up to pre-cut levels, leaving little spare capacity in the system. This leaves the market vulnerable to shocks, whether from geopolitical conflict, economic downturns, or unplanned refinery outages. Although prices recently tested the upper $50s per barrel range, Milton expects them to possibly soften heading into Q4. But lower prices today may set the stage for future supply constraints.

Changing Regulations: DEF and the EPA

New EPA rules affecting diesel exhaust fluid (DEF) systems could ease the burden on fleet operators. Beginning with 2027 engine models, the EPA will allow reduced torque—rather than full engine shutdown—if DEF levels fall too low. This regulatory change aims to reduce disruptions while still meeting emissions standards. The EPA is also re-evaluating older endangerment findings, suggesting broader policy shifts could be on the horizon.

Looking Ahead: Winter, Hurricanes, and Price Volatility

With hurricane season underway and winter approaching, energy markets may see more volatility. While no major weather events have yet disrupted fuel infrastructure, the risk remains.

A colder-than-expected winter, especially in the Northeast, where diesel inventories are low, could send prices higher. In addition to weather risk, Milton notes that global tension, from Middle East dynamics to regional conflicts in Asia, adds to the uncertainty.

Expect the Unexpected

From tariffs and refinery trends to Fed policy and international relations, the oil and gas landscape remains fluid. While U.S. supply is currently healthy and prices are relatively low, looming global events could shift the balance quickly.

As Milton puts it, the world is entering a “new normal” of volatility – where energy strategy, flexibility, and proactive planning matter more than ever.

Stay prepared and stay informed. Subscribe to our FUELSCast podcast channel for ongoing updates as the market continues to evolve.

Click here to play the episode!