Brent Declines as Trump Cancels 20% Fee

In the news, US President Trump has said the Strait of Hormuz remains open to all shipping except Iran, confirming that the US will impose a full blockade on vessels travelling to or from Iranian ports, or carrying Iranian cargo. Posting on Truth Social, Trump said: "The Strait of Hormuz is open to ALL ship traffic except for Iran." He also confirmed that the proposed 20% transit fee has been scrapped, stating that new trade and investment agreements with Gulf states will instead cover the costs of securing the waterway. In China, crude imports fell 41.3% m/m in June to 7.12mb/d, the lowest level since October 2016, as refinery run rates dropped to a ten-year low amid weak domestic demand and refined product export curbs. Seaborne crude imports fell to around 6mb/d, with Middle Eastern imports reaching their lowest level in a decade, while Iranian crude imports declined around 40% m/m to below 800kb/d, according to Vortexa. Elsewhere, Nigeria's Dangote refinery has started pricing domestic fuel sales in US dollars, citing limited crude availability under the government's naira-for-crude programme and higher global oil prices. The refinery said selling products in naira while purchasing crude in dollars had become unsustainable as access to locally priced crude had tightened. In other news, Brazil's National Energy Policy Council (CNPE) has temporarily increased the mandatory ethanol blend in gasoline to 32% from 30% for an initial 180-day period. The government said the move is expected to eliminate the need to import around 900 million litres of gasoline annually, while helping reduce exposure to volatility in global oil and fuel markets. Finally, as of the time of writing, the front-month (Sep/Oct) and 6-month (Sep/Mar’26) Brent futures spreads are at -$1.82/bbl and $7.36/bbl, respectively.

This afternoon in Dated we continued to trade higher with Aug DFL reaching highs of $2.59/bbl before coming off into the window with spreads selling off. In the physical window we saw the same major offering Brent cargos but not stepping down today, leaving the implied phys diff unchanged. In the paper window, we saw paper on the sell side on CFDs again, however CFDs traded higher throughout the window with market makers lifting 20-24 Jul CFD at -$0.50/bbl, 27-31 Jul CFD at flat and 3-7 Aug CFD up to $1.75/bbl. We saw buying of 20-24 Jul 1w at $0.30/bbl and 3w at -$0.20/bbl as well as buying of 27-31 2-week at $0.22/bbl. We saw some Q1 DFL selling come in having been bid up in the morning by a major.

Products relaxed somewhat in the afternoon on VLSFO. Aug/Sep Sing traded down to $39.00/mt from $43.00/mt. The crack followed a similar trend trading down to $20.90/bbl. However, post window Aug/Sep sing went well bid trading up to $41.00/mt, while the crack followed suit up to $21.30/bbl. Euro 0.5 drifted off as the day dragged on, before spreads went bid post window. Aug/Sep traded down to $26.00/mt before going $28.00/mt bid.

It was a similar story on HSFO, 380 spreads were a touch weaker. Trading down to $16.00/mt from $16.50/mt this morning. The 380 crack saw the majority of the move as Chinese arbers were selling 380 fp. The Aug 380 cracks sold down to -$2.20/bbl from -$1.50/bbl. Barge crack was a touch weaker off the back of it, however, relatively not as weak as 380 cracks closing the day at -$8.40/bbl. Barge spreads traded up a touch to $6.50/mt.

This afternoon in distillates, Sing gasoil spreads saw some selling in the front, with Aug/Sep stepping down on lower ICE gasoil from $9.40/bbl to $8/bbl offered last. E/W also sold off in the front, with Sep moving from -$56.50/mt down to hit -$66/mt on screen. Regrade came right back off from this morning’s stop-outs, with Aug trading from $5/mt down to $2/mt.

Prompt ICE gasoil spreads weakened overall, with Sep/Dec moving from $152.25/mt down to $146.50/mt, while cracks remained rangebound, with Sep between $59.75/bbl and $61.50/bbl and at $61/bbl post window. European jet diffs came off from this morning’s highs, with Aug down from $195/mt to $133/mt post-window. Both heating oil spreads and HOGOs firmed, with the Aug HOGO swap trading from 28.9c/gal up to 29.5c/gal.

This afternoon in gasoline, we had a RBBR rally post US open, with Aug arbs trading up to highs of 29c/gal before coming off end window to 28.10c/gal. EBOB cracks firmed from $32.25/bbl to $32.55/bbl in Aug but there was good scaleback selling interest. Spreads were mixed, with Aug/Sep remaining rangebound around $65/mt. The East was weaker this afternoon, with Aug E/W coming off from -$12.40/bbl to -$13/bbl and Aug 92 cracks softened from $20/bbl to $19.30/bbl.

This afternoon in naphtha, cracks sell off pre window whilst liquidity is low, seeing Aug naphtha crack down to -$2.45/bbl, where it gets lifted at this level and catches a bid during the window - closing -$1.95/bbl in Aug. Q4/Q1 crack roll trade sees scale back buying and gets hit down to $0.90/bbl but recovers during the window, implied around $1/bbl post window. Sell-side interest in Sep E/W this afternoon down to $47/mt with buying in Q4 E/W at $39.50/mt getting taken out, with Cal E/W valued at $25/mt.

This afternoon in NGLs, we saw a completely different environment to the morning's trends, with FEI coming off. Aug/Sep FEI sold off from a high of $30/mt to $25/mt by the end of the afternoon, and Sep/Oct was trading at $12/mt, also down $5 from the day’s highs. As FEI weakened, LST/FEI found strength in the front, with Aug arb trading down to -$277/mt, and Sep at -$248/mt, from -$290/mt and -$257/mt. LST spreads also better offered on the afternoon, seeing Aug/Sep trade at -0.125c/gal, eventually printing -0.375c/gal, and Q4'26/Q2'27 trade at 6.375c/gal. Aug ENT/LST was lifted at -2.5c/gal where it settled post-window. In butane there was some buying of spreads out of Aug/Sep and Sep/Oct at flat and -1c/gal, respectively. Bunap buying in Q4 returned from Friday, trading at the -$200/mt level.