Brent Breaks $80/bbl Following US-Iran Escalations

In the news, US President Trump has threatened fresh strikes against Iran, stating that the memorandum of understanding signed to end the war is now "over." Iranian state media have responded by warning that any renewed military action could lead to the closure of the Strait of Hormuz. Related, at least four oil and gas tankers have turned back from the Strait of Hormuz as renewed attacks have heightened security concerns. The move follows reports that an LNG tanker and a Saudi-flagged crude tanker were damaged after Iranian missile attacks, prompting maritime authorities to raise the threat level to "severe." Three empty QatarEnergy LNG tankers bound for Ras Laffan reversed course before entering the Strait, while the Indian-flagged VLCC Lila Vadinar, carrying 2mb of Kuwaiti crude, also turned back off the coast of Oman. War risk underwriters have advised shipping companies to pause voyages altogether, while others are reviewing policy terms following renewed attacks on vessels. War insurance rates for ships operating in the Gulf have already increased, rising towards 3% of vessel value from around 2% at the end of last week, according to Reuters sources. Elsewhere, Chevron-chartered tanker Yasa Polaris, which is used for Caspian Pipeline Consortium (CPC) shipments, was hit by a drone off Russia’s Black Sea coast, according to the vessel’s managing company. The attack comes as Ukraine has continued to target Russian energy infrastructure. The tanker was struck near the CPC marine terminal on 7 July while empty and awaiting operations, with no cargo onboard at the time. In China, the country has lifted refined fuel export restrictions for the remainder of July and allowed a private refiner to resume shipments after a four-month pause. This comes as China’s refining sector returns towards normal following disruptions from the Iran war. The restart of exports is expected to ease regional transport fuel prices after Beijing previously curbed shipments to prioritise domestic supply. Finally, as of the time of writing, the front-month (Sep/Oct) and 6-month (Sep/Mar’27) Brent futures spreads are at $0.58/bbl and $3.36/bbl, respectively.

The strong start to the day on VLSFO continued into the afternoon. Spread buying persisted in the market with Aug/Sep Sing trading up to $20.00/mt while the Sing crack got as high as $15.25/bbl. E/W buying was also present in the market which saw the Euro crack supported, but not as much as Sing. The Euro crack got up to $6.15/bbl post window.

In HSFO, spreads in both regions were fairly rangebound with Aug/Sep 380 and barges trading around $2.75/mt and $4.25/mt for the majority of the afternoon. Cracks were however weaker, with the barge crack leading the charge getting as low as -$9.35/bbl in the window. The 380 crack followed suit trading down to -$7.00/bbl.

This afternoon in distillates, Sing gasoil spreads rallied on the headlines, with Aug/Sep trading from $3/bbl up to $4.50/bbl last. E/W moved lower on crack selling in Sing, trading from -$68/mt down to -$72/mt before firming back to -$69/mt last. Kero spreads were scale-back offered, pushing Aug regrade down to -$2/bbl.

Prompt ICE gasoil spreads rallied, with Sep/Dec moving from $95/mt up to $115.25/mt, while Sep cracks firmed from $51/bbl up to $57.50/bbl. European jet diffs were relatively stable, with Aug between $57/mt and $58.50/mt, while Q4 traded at $77/mt. Both heating oil spreads and HOGOs rallied, with the Aug HOGO swap up to 31.8c/gal.

This afternoon in gasoline, RBBRs rallied around $3.50, with arbs remaining stable around 31.50c/gal. EBOB cracks got bid up from $29/bbl to highs of $31.90/bbl and Aug/Sep jumped from $50/mt to $58/mt on higher RBBRs and Brent spreads. E/W was a touch weaker in Aug, trading down from -$14/bbl to $14.20/bbl, as 92 cracks firmed from $15/bbl to $17.35/bbl and Aug/Sep traded up to $3.20/bbl.

This afternoon in naphtha, MOC touch better bid with crack seeing far more buying during the window with lack of depth sellside, seeing Aug naphtha crack trade up to -$3.10/bbl. E/W continues to rally, trading up to $48/mt in Aug with Cal'27 E/W trading up to $24.75/mt post window. Trade buyer of Nov E/W in particular this afternoon, seeing Nov E/W find buying up to $38.50/mt. Small selling interest in Q2'27 naphtha crack at -$8.35/bbl with Cal trading -$8.20/bbl and -$83.05/bbl this afternoon.

This afternoon in NGLs, FEI spreads continued trading up, seeing Aug/Sep hit the $14.50/mt trading level, and Sep/Oct was at $5.50/mt. In the deferred Dec26/Dec27 FEI was hit at $61/mt. LST/FEI found some support around the -$230/mt level and traded there across the afternoon, whilst Sep FEI was trading at the -$215/mt level. FEI/MOPJ buyside interest continued from the morning, as Aug was lifted at -$93/mt, down $8 from the earlier trading level. Q1 was also trading at -$63/mt. FEI/CP continued to strengthen across the afternoon to trade at $70/mt, before softening at close to settle at $66.50/mt. LST spread interest down the curve, with Nov/Dec trading at -0.375c/gal, and Q1/2'27 lifted at 6.125c/gal. There was also some Aug/Q4 selling at -0.25c/gal. Oct/Nov/Dec LST fly was also trading at 0.375c/gal with interest on the sell side. In butane, there was selling of the front spreads at the beginning of the afternoon with Sep/Oct at -1c/gal, and Aug/Sep at 0.375c/gal. C4/C3 LST interest in Aug and Q1'27, trading at 20.75c/gal and 18.5c/gal respectively. Post window there was selling of the Pronap and Euro Arb at -$137/mt and -$135/mt.