Brent Declines as Iran Looks to Upgrade Kharg Island Infrastructure

The M1 (Sep’26) is currently printing at $83.91/bbl. In the news, Iran is accelerating infrastructure upgrades at Kharg Island, its main oil export terminal, as US President Trump continues to threaten potential strikes or seizure of the facility. Projects will focus on improving safety, equipment reliability and operational readiness to ensure export continuity, according to Iran’s Oil Terminals Co. These upgrades reportedly will include enhanced fire detection systems and safety measures at the terminal and crude storage facilities, as Tehran prepares for the risk of further US action if negotiations fail. In India, the nation plans to source up to a quarter of its LPG imports from the US in 2027, reducing reliance on the Middle East while supporting ongoing trade negotiations with Washington, according to Reuters sources. The move follows India’s worst LPG supply disruption earlier this year, after the Iran war and closure of the Strait of Hormuz disrupted regional flows. The government was forced to divert petrochemical feedstocks to household use to manage shortages. Elsewhere, more than eight VLCCs are currently heading towards Egypt’s Sidi Kerir port to load Saudi crude, as Saudi Arabia continues to adjust export routes to avoid growing risks around key regional chokepoints. Following the Houthis’ announcement of a blockade on Saudi shipments in the Bab el-Mandeb Strait last week, Saudi Arabia has shifted more crude flows from Yanbu to Egypt’s Ain Sokhna port, before moving barrels through the SUMED pipeline to Sidi Kerir for onward export. The move follows recent attacks on Saudi-linked tankers in the Red Sea, prompting Saudi and Western operators to reroute cargoes through Egypt and the Suez Canal to bypass the Bab el-Mandeb. Vessel-tracking data shows at least eight VLCCs are currently scheduled to arrive at Sidi Kerir over the next two to three weeks. In other news, OPEC+ is expected to pause its gradual output increases after September and hold production targets steady for the remainder of the year, according to Reuters sources. The pause would mark the end of several months of planned hikes, which have largely remained theoretical as the Iran war disrupted Middle Eastern exports and limited some members’ ability to raise output. Finally, as of the time of writing, the front-month (Oct/Nov) and 6-month (Oct/Apr’26) Brent futures spreads are at $1.84/bbl and $6.40/bbl, respectively.

This afternoon in Brent/Dubai we traded in a large range. There was initially a lot of Sep EFS and Oct EFS buying by producer which saw us rally from $7/bbl in Aug Brent/Dubai to $7.60/bbl. However once this was taken out, the Aug/Sep Dubai spread remained very well bid on Brent futures, and the Aug/Sep box sold off from $0.40/bbl to -$0.20/bbl. With it, it took the Aug Brent/Dubai down to $6.70/bbl, whilst the Sep Brent/Dubai traded rangebound between $6.80/bbl to $7/bbl. There was buying of the Aug/Sep box by trade around $0.12/bbl to $0.15/bbl as we moved lower. There was some buying of Dubai spreads further down the curve, Oct through Jan Dubai spreads bid as we approached $0/bbl.

A strong afternoon in VLSFO, spreads went bid on higher crude, especially Aug/Sep which began the afternoon trading around $39.00/mt before trading up to $41.50/mt with not much selling interest. The crack followed suit supported by spread strength as well as Chinese arbers buying Sing flat price and cracks. The front Sing crack traded up to $21.90/bbl. Euro 0.5 benefitted from Sing strength with the Euro crack trading up to $9.10/bbl from $8.00/bbl. Euro spreads were largely illiquid this afternoon, with Aug/Sep trading up to $30.00/mt.

A largely quiet afternoon on HSFO. Chinese arbers were buyers on deferred 380 cracks. However were not very aggressive. 380 E/W firmed up this afternoon combined with barge crack selling saw the 380 crack well supported. It traded up from -$2.50/bbl to -$2.20/bbl. The 380 E/W was implied up to $42.50/mt in August. Aug/Sep 380 remained largely rangebound between $18.50/mt and $19.00/mt. The bare crack initially saw some selling down to -$9.05/bbl before recovering up to -$8.90/bbl by the end of the window.

This afternoon in distillates, Sing gasoil spreads saw good buying step up despite lower ICE gasoil, with Sep/Oct trading from $8.40/bbl up to $8.50/bbl. E/W was well offered in Oct, hit down to -$63/mt, while Q1 remained bid at -$52/mt. Regrade saw selling in the front hit on screen, Sep trading from $2/bbl down to $1.75/bbl.\

Prompt ICE gasoil spreads ripped, with Aug/Sep from $70/mt up to $77.50/mt, while the front future crack remained rangebound between $69/bbl and $70/bbl. European jet diffs weakened overall, with Q4 down from $125/mt to $120/mt post-window. Both heating oil spreads and HOGOs moved higher, with the Aug HOGO swap trading from 22.5c/gal up to 23.5c/gal.

It was a strong afternoon in gasoline. RBBRs rallied but there was good arb selling around 25.20c/gal in August, which pushed Aug EBOB cracks up from $38.30/bbl to $39.50/bbl, with Q4 trading at $18.10/bbl. Spreads were resilient even as Brent came off, with Aug/Sep remaining around $75/mt. E/W continued to sell off, trading down from -$12/bbl to -$12.75/bbl as 92 cracks remained stable around $26.60/bbl.

This afternoon in naphtha, MOC better offered with prompt crack trading rangebound during the window between -$0.55/bbl and -$0.65/bbl, with more interest sell-side. Sticky buying in Sep/Oct crack roll at $2/bbl, with buyside interest in Oct and Sep crack today, with buying in Sep between -$3.10/bbl and -$3/bbl. Aug/Sep E/W box continues to be implied lower from Aug/Sep MOPJ being better offered, seeing prompt E/W trade down to $43/mt end of window.

This afternoon in NGLs, FEI spreads traded back down to the morning’s levels after some initial strength prior to the crude move, with Sep/Oct initially trading at $25.50/mt, before softening to $24/mt. Aug/Sep FEI sold down to $34/mt, before settling $35/mt end window. There was also Dec/Dec FEI buying at $76/mt, down from yesterday’s closing level of $78/mt. Sep LST/FEI traded down to -$283/mt, before strengthening back to -$280/mt following the crude move. Q4 LST/FEI was trading at -$239/mt, down $2 from yesterday’s close, but rallied into end window to print at -$231/mt. There was also an importer buying the Sep C3 ENT/ FEI arb at -$296/mt for full cargo size, which eventually strengthened to -$287/mt with crude. There was selling of the Aug/Sep/Oct LST fly at flat across the afternoon, and the Aug/Sep spread was getting lifted at -0.875c/gal. Aug/Q4 LST buying at -2.625c/gal on the day as well. In butane, there was good spread interest down the curve, with Aug/Sep initially trading at 1c/gal, before weakening to 0.625c/gal by close. Oct/Dec was lifted at 1.375c/gal, and Dec/Jan was trading at 1.25c/gal. There was also CAL 27 C4 ENT interest, Q1/2 trading at 12c/gal and Q2 / Q3 was lifted at 1c/gal.