Brent closes in on $100 on supply risk ramp-up

Nov’26 Brent futures rallied to a high of $99.46/bbl at 09:30 BST and is softer at $98.35/bbl at 10:42 BST (time of writing). Iran raised the threat level around Hormuz, saying it plans to establish a maritime “exclusion zone” outside the Strait and that vessels entering without Iranian permission could be targeted. Tehran also said its upgraded Qassem Basir ballistic missile had been used against US warships and warned that US naval forces enforcing the blockade are now legitimate targets. The Houthi campaign against Saudi Arabia escalated sharply, with ballistic missiles and drones targeting Abha, Khamis Mushait, Jazan and Najran. Houthi media said targets included Abha airport, King Khalid air base and Aramco facilities in Abha and Jizan. Jizan’s oil infrastructure was hit, with fires reported at the Jizan refinery. The attacks came alongside renewed Houthi ground fighting against Saudi-backed Yemeni forces, while Riyadh said it would take “all necessary operational measures” in response. Trans Mountain is accelerating efforts to expand west-coast exports to Asia as the Iran war disrupts Persian Gulf flows and Canada seeks to diversify trade away from the US. West-coast capacity will rise from 890 kb/d to ~980 kb/d by end-2026, with a further increase to 1.2 mb/d by end-2028, followed by another 1 mb/d between 2032–34. CEO Mark Maki said the additional capacity is being brought forward by geopolitics, with heavy Canadian crude expected to target strong demand in China, India, South Korea and Thailand, particularly as Asian buyers reassess supply security. Russia resumed missile and drone strikes on Kyiv after the three-day pause during US envoy visits. Ukraine said it intercepted a range of weapons, including ballistic missiles and drones. Nov/Dec’26 and Nov/May’27 Brent futures spreads are at $4.04/bbl and $15.98/bbl, respectively.

This morning in Brent/Dubai we gapped lower, selling of Nov'26 and Dec'26 by bank and fund, more buyside interest of Oct'26 Brent/Dubai by trade. The Oct/Nov'26 Dubai spread was also well bid , which traded up from $5.00/bbl to $5.45/bbl. This meant that into the window, the Oct'26 Brent/Dubai moved lower, down from $0.95/bbl to $0.20/bbl. However post window, trade came in to buy Oct'26 Brent/Dubai, the Oct/Nov'26 spread sold back off from $5.45/bbl to $5.10/bbl, meaning we rallied in the Brent/Dubai. The boxes all came off aggressively with the morning buying of Dubai spreads, the Oct/Nov'26 box trading between -$1.70/bbl to -$1.95/bbl. There was some fund selling of Q1/Q2'27 box which traded in decent size at $0.38/bbl.

380 spreads initially opened lower this morning before getting quite aggressively bid up from $16.50/mt to $18.25/mt pre window and then gaining a further 50c to $18.75/mt during the window. Oct 380 crack also encountered real buying on screen from -$5.80/bbl to -$5.20/bbl. Oct/Nov Barges traded between $13.50/mt and $13.75/mt while Oct Barge crack was rangebound trading between -$11.10/bbl and -$10.95/bbl during the window.

Sing 0.5% spreads opened at similar levels to last nights close, Oct/Nov traded at $38.00/mt in lower volume while Nov/Dec traded up from $26.75/mt to $27.25/mt. Oct Sing Cracks opened around 80c higher at $19.80/bbl due to higher crude, this strength continued into the morning with on screen buying up to $20.45/bbl by window end. It has sold back down to $20.10/bbl post window. Euro 0.5 spreads traded in very low volume this morning, Oct/Nov and Nov/Dec traded at $17.75/mt and $9.50/mt respectively. Oct Euro crack encountered selling on screen getting offered down from $4.50/bbl to $4.10/bbl, Oct 0.5 E/W is implied $5 higher at $102.25/mt.

This morning in gasoline, MOC better offered in both Oct'26 and Nov'26. 92 opens bid seeing better buying in spreads with refiner buying in Dec/Jan'27 up to $3.70/bbl with the Sep'26 crack trading $25.30/bbl end of window. E/W in Sep'26 traded up from -$7.75/bbl to -$7.25/bbl, with buyside in Q4'26+Q1'27 E/W strip -$5.75/bbl from a trade. Barges better offered today seeing EBOB open weaker, with Oct/Dec'26 getting hit at $142.50/mt – flipping to better bid post window with $144.50/mt getting lifted.

This morning in naphtha was mixed and fairly illiquid, with MOC bid, cracks better offered after briefly going bid pre-window, and spreads offered as crude pushed them higher. MOPJ cracks were illiquid but slightly better bid in the deferred, with Q1'27 bid around $0.15/bbl. Spreads were firmer to start before coming off slightly, with Oct/Nov'26 moving from $33.50/mt to $32.00/mt, Nov/Dec'26 around $33.00/mt and Nov/Jan'27 around $58.00/mt. Prompt E/W was initially better bid but eased slightly from last night’s levels, with Oct'26 moving from $59.50/mt to $59.00/mt, while the backend was bid, with Cal 27 trading at $34.25/mt, Q1'27 around $45.00/mt and the Oct/Nov'26 box coming off to $1.50/mt. NWE naphtha cracks were softer versus last night, with Oct'26 moving from around -$3.70/bbl to -$3.95/bbl before recovering slightly to -$3.80/bbl, while Q1'27 was around -$4.80/bbl. Spreads were illiquid and better offered, with no buying seen at these levels.

This morning in NGLs FEI opened stronger with Chinese buying flat price and spreads. FEI traded up to $830.00/mt in Oct'26 with Oct/Nov'26 trading $38.50/mt and Dec/Feb'27 trading $53.00/mt. The arb came off on the back of this trading down to -$394.00/mt in Oct'26 and -$358.00/mt in Q4'26. CP was also stronger trading $650.00/mt end window in Oct'26 with Oct/Nov'26 trading up to $17.00/mt. The E/W rallied on FEI strength trading $210.00/mt in Oct'26 as the European arb had buyside interest trading -$185.00/mt in Oct'26.

LME copper just notched a new all-time high. Worth flagging: ore grades are declining even as demand grows, and current projections point to a copper shortfall of roughly 100 million tonnes per year between 2030 and 2040.

USD/JPY is breaking down decisively. Putting pressure on the carry trade (yen financing of global asset purchases).

The 10 year rolling returns on Treasuries is now -2%, the worst in 100 YEARS.

While the S&P 500 looks calm on the surface, single-stock and cross-sector volatility have surged to levels last seen since the 2020 crash - a divergence that's historically preceded broader market stress, most notably the 2000 Dot-Com Bubble. The longer this gap between surface calm and underlying turbulence persists, the greater the risk it spills into the broader market.

An unexpected bounce in Friday’s payrolls, Wall Street expected +55,000 jobs in August.

The US economy delivered +162,000. Unemployment rate remains 4.1%. This makes the Sep 16th Fed meeting critical. OIS now prices 60% chance they hike but expect volatility. The hike, equities suffer and Warsh is seen as more hawkish, but if they stay on hold he’s seen as Trump’s puppet and bonds fall hard (yields higher)

Correlation between the 10Y and oil is the highest since the GFC.

German & Dutch gas storage levels look dangerously low heading towards winter.

The Dutch central bank moved 86 tonnes of gold out of New York and Ottawa to London. More than 1/4 of everything they held in North America. Done quietly between March and August, announced today. New York went from 31.3% of their reserves to 18.5%. London went from 18.1% to 32.1%. Stated reason is “increasing geopolitical unrest” and crisis readiness.

Short interest in the median S&P 500 stock is up to 3.2% of market cap, the highest level since 2009. This is now approaching the 2008 Financial Crisis peak of ~3.8%. By comparison, during the 2022 bear market, this percentage was ~1.7%. Furthermore, short interest among the most heavily shorted 10% of S&P 500 stocks is up to 8.0% of market cap, the highest in 8 years. Even during the 2000 Dot-Com Bubble burst, short interest never surged to these levels. The short trade is starting to look overcrowded.

Snowflake stock, surges over +22% after reporting stronger than expected earnings due to AI demand.