Brent Dips to $83/bbl as the US Set to Back Iraq-Syria Crude Oil Pipeline

In the news, the US is backing efforts by Iraq and Syria to revive the Kirkuk-Baniyas crude pipeline, according to a State Department official, in a move aimed at reducing reliance on the Strait of Hormuz. The pipeline, which has been largely out of service since 2003, would transport Iraqi crude to Syria's Mediterranean coast. Bloomberg has also reported that Chevron could play a role in the project, although the company declined to comment. In Russia, the Salavat petrochemical complex has halted operations following a Ukrainian drone strike, according to Reuters sources. Both primary crude distillation units were damaged and shut down, with repairs expected to take weeks or potentially months. The complex accounts for around 2.7% of Russia's refining capacity and produced roughly 2.5Mmt of diesel and 1.5Mmt of gasoline in 2024. In China, fuel oil demand remains weak after imports fell to a record monthly low, as refiners cut run rates and switched to cheaper crude following the US-Iran war. The weak appetite from one of Asia's largest HSFO importers is expected to cap prices, despite recent strength driven by renewed Middle East tensions. Elsewhere, a tanker carrying Mexican crude for Japan's Cosmo Oil is expected to arrive as early as Friday, 17 Jul, providing an alternative to Middle Eastern supplies. It will be the first Mexican crude cargo to reach Japan since the Iran war began in late February, having travelled via the Cape of Good Hope. The shipment follows an agreement between Japan and Mexico in April to strengthen energy cooperation amid ongoing disruptions to global oil flows. Related, Japanese refiners are looking to diversify crude supply following the Iran crisis, while also supporting Middle Eastern export infrastructure, including pipeline projects that bypass the Strait of Hormuz. The industry said it will strengthen supply chains by deepening ties with producers, securing tanker capacity, and improving refinery flexibility. Finally, at the time of writing, the front-month (Sep/Oct) and 6-month (Sep/Mar’27) Brent futures spreads are at $1.22/bbl and $5.50/bbl, respectively.

This afternoon in Brent/Dubai was very quiet, with Aug Brent/Dubai trading rangebound between $5/bbl to $5.40/bbl. There was trade buying of Aug and Sep Brent/Dubai towards the highs, but Dated/Dubai selling towards the end of the day sent us back down to the range lows. There was late buying of Aug/Sep/Oct Dubai fly, which sent the Aug/Sep spread higher from $0.50/bbl to $0.75/bbl, but the spreads were very illiquid on screen. The boxes were quiet, some selling of Sep/Oct and Sep/Nov Brent/Dubai boxes by tradehouse.

This afternoon in Dated we saw better sell-side flow pre window with Aug DFL trading down to lows of $1.08/bbl. However we did see buying 1-9 Sep vs Cal Sep at $0.69/bbl which seemed high vs where Aug Sep was trading and 10-14 Aug vs Cal Sep at $1.35/bbl. In the paper window we continued to see all only paper on the sell side of CFDs and market makers lifting. 20-24s were lifted up to -$0.75/bbl, 27-31s up to -$0.31/bbl and 3-7s up to $1.20/bbl. The physical window was quiet with majors offering Midland and troll above curve. Saw a bit of a recovery post window with some Aug DFL buying coming in.

VLSFO continued to weaken into the afternoon. Sing spreads drifted off with Aug/Sep selling down to $38.00/mt by end of day. Spread sell off was led by Sing crack weakness OTC, with Aug trading through $19.66/bbl on screen, ending the day at $19.55/bbl. Euro spreads were a bit more volatile, trading down to $22.50/mt in the window before $23.50/mt got lifted post window. 0.5 E/W had a fair amount of selling this afternoon, resulting in the Euro crack not selling off as much as the Sing crack but still weaker, closing the afternoon around $7.30/bbl.

In HSFO, Chinese arbers were initially sellers of Nov 380 cracks, however, this flow got taken down fairly quickly and we saw little price action. 380 cracks remained largely unchanged trading around -$2.50/bbl. The barge crack came off a touch down to -$7.50/bbl from this mornings finish of -$7.00/bbl. As a result 380 E/W was stronger up to $32.50/mt. Barge spreads came off with the barge crack and Aug/Sep barges traded down to $7.00/mt.

This afternoon in distillates, Sing gasoil spreads saw mixed interest on lower ICE gasoil, with Sep/Oct trading down from $6.45/bbl to $6/bbl. Front E/W traded higher, with Aug moving from -$68/mt up to -$64.75/mt, lifted post window. Regrade firmed overall, with Aug moving from -$0.25/bbl up to $0.15/bbl, while Q4 was bid at $2.50/bbl.

Prompt ICE gasoil spreads sold off throughout the afternoon, with Sep/Dec trading from $150/mt down to $137/mt, while cracks dumped from $62/bbl down to $60/mt in Sep. Euro jet rebounded from this morning’s lows, trading from $102/mt up to $110/mt. Both heating oil spreads and HOGOs sold off, with the Aug HOGO swap trading from 31.0c/gal down to 30.2c/gal.

This afternoon gasoline was strong. RBBRs rallied post-stats but arbs stayed relatively rangebound, with tradehouses on the sellside in Aug around 27c/gal and in Q4 at 26.10c/gal. Arb selling pushed EBOB cracks up from $33.60/bbl to $34.55/bbl with barges also strong. Spreads also went bid in the window, with Aug/Sep rallying from $67.50/mt to $71/mt. Aug E/W came off -$13/bbl to $13.50/bbl on the back of EBOB and RBBRs strength, with 92 cracks seeing scaleback selling up to $21.10/bbl.

Naphtha was better offered this afternoon seeing the Aug crack trade down from -$1.95/bbl to -$2.40/bbl during the window, with scale back buying in Q4'26 and Q1'27 cracks from small trade, with the Q1'27 crack trading at lows of -$7.40/bbl this afternoon. Aug/Sep MOPJ sees better selling, coming off to $32/mt - almost $10/mt lower than where it opened this morning at $41/mt, with the Aug/Sep box trading down from $7.50/mt to $6.50/mt.

This afternoon in NGLs, FEI continued to be soft, trading down across the afternoon. Aug/Sep FEI was trading at $18/mt, having ended the morning at $25/mt, and Sep/Oct was trading at $7.50/mt. LST/FEI remained stronger, settling at -$266/mt, having traded at -$285/mt at the beginning of the day. There was also LST/FEI buying in Q1 at -$191/mt. There was pronap buying out of Q4 at -$124.50/mt before it eventually settled -$126/mt post window. LST had a quieter day today, although spreads were better offered, Sep/Oct weakened from -0.375c/gal to -0.5c/gal, and Q4'26/ Q1'27 was trading at flat. We also had an Aug/4Q seller at -1.5c/gal. Butane also had a relatively muted afternoon, but there was some buying of Sep/Oct C4 ENT at -1c/gal, and Aug/Dec at -0.5c/gal. C4/C3 trading in both Aug and 4Q at 23.5c/gal and 22.875c/gal, respectively.