Crude prices have entered their late-summer lull, and market participants seem fairly content with prices in the upper $60s. The geopolitical temperature rose at the end of last week and the start of this week as Russia and Ukraine intensified their reciprocal attacks. Ukrainian drone strikes on Russian energy infrastructure are said to have disrupted around one-fifth of the country’s refining capacity, amounting to 1.1mb/d of production. Trump’s matchmaker fantasy of reconciling Putin and Zelenskyy may have to wait a bit longer. While Powell’s dovish comments at Jackson Hole boosted sentiment in risk assets, Trump continues to cook up a storm against the Fed, for he fired Fed Reserve governor Lisa Cook “effective immediately”. Her removal would pave the way for a replacement governor who would be more amenable to rate cuts. Speaking of Cracker Barrel, unrelated to the oil market, the US chain restaurant has backtracked from its controversial rebrand following Trump’s personal intervention. Although Trump’s peace initiative was soured, he can surely sell this as a win to his base. Meanwhile, for India’s continued purchases of discounted Russian oil, US tariffs of 50% on goods from India kicked in on Wednesday. With bilateral relations between Washington and New Delhi soured, this has been a boon for sour crude grades in the Middle East, where Brent/Dubai collapsed below -$2/bbl in the front. This is all despite the optics of OPEC+ supply hikes. Indeed, Brent/Dubai has been falling from over $1/bbl in M1 since the beginning of June. Summer has never been so sour!
