Donna Dong
Research Analyst, Flux
Brent Breaks $100/bbl
Brent tops 100 for first time since 2022 as Hormuz closure disrupts exports; IEA weighs reserves while producers declare force majeure.
The May’26 Brent futures contract gapped up to open at $116.31/bbl this morning, before trading down to $104.14/bbl at 10:00 GMT (time of writing).
This is the first time the M1 Brent futures contract has exceeded $100/bbl since 2022. In the news, G7 finance ministers and the International Energy Agency (IEA) are scheduled to discuss the potential release of emergency oil reserves today at 08:30 EDT (13:30 GMT). Talks will reportedly consider releasing between 300 and 400mb to combat soaring oil prices amid the Middle Eastern conflict. Elsewhere, Kuwait has begun shutting down oil production at some oilfields due to limited storage capacity and the closure of the Strait of Hormuz; the extent of the nation’s production outages has not yet been quantified. Kuwait Petroleum Corporation announced a force majeure on 07 March, with all major oil and gas exporters in the Middle East set to follow suit on exports within days if the Strait remains closed, according to Qatar’s Energy Minister Saad al-Kaabi. In other news, Saudi Aramco has offered more than 4mb of crude in rare tenders, due to export disruptions. In a tender that closed at 09:00 GMT today, Aramco offered 2mb of Arab Heavy crude for loading at Egypt's Ain Sokhna port on a free-on-board (FOB) basis. Additionally, in a separate tender that closed on Sunday, three traders reported that Aramco offered 650kb of Arab Light crude on a cost-and-freight (CFR) basis for loading at the Red Sea port of Yanbu. A third tender of 2mb of Arab Extra Light crude was sold to Japan's second-largest refiner, Idemitsu Kosan, with the cargo already on a vessel near Taiwan. In China, Wanhua Chemical has declared force majeure on supplies to its Middle East customers. The petrochemical major typically sells derivatives such as isocyanates, used in polyurethane products, to the Middle East. It operates two crackers with a combined ethylene capacity of 2.2mmt annually at its Yantai plant in the Shandong province. Both crackers are reportedly currently operating at high rates. Finally, at the time of writing, the front-month (May/Jun) and 6-month (May/Nov) spreads are at $6.78/bbl and $24.46/bbl, respectively.
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