Brent Eases on Newly Signed US-Iran MOU

In the news, the US and Iran have signed and released the full memorandum of understanding (MoU), which includes a commitment to reach a final agreement within the next 60 days, the reopening of the Strait of Hormuz, and the lifting of US sanctions on Iran. Other points reinforce that Iran “shall not procure or develop nuclear weapons” and that the US will commit a minimum of $300 million to the “reconstruction and economic development of…Iran.” Elsewhere, PetroChina and Indian Oil Corporation have failed to secure VLCCs to lift Iraqi Basrah crude in late June. Meanwhile, another Chinese major, Sinochem, is actively searching for a tanker. According to a PetroChina official, "there are tankers available, but the problem is it's too expensive, and there is ​no guarantee you can exit the strait." In Saudi Arabia, oil giant Aramco is contemplating expanding its global storage capacity following disruptions in energy supplies through the Strait of Hormuz caused by the Iran conflict. Aramco Chairman Yasir Al-Rumayyan announced that the company has existing storage facilities primarily in Asia, specifically in Korea and Japan, and is seriously considering increasing its storage infrastructure worldwide. In India, oil secretary Neeraj Mittal states that fuel retailers’ loans are nearing their limits as they shoulder losses from sales of gasoline, gasoil, and LPG at below-market prices. While other countries hiked fuel prices by up to 50% following the Iranian war, India has raised prices of gasoline and gasoil by less than 10%. In other news, local South Korean media has reported that the country will maintain current fuel price ceilings until more clarity on the US-Iran peace agreement is achieved. Yang Gi-wook, a senior official from the industry ministry, stated during a briefing that the government will determine the next ceiling levels after observing developments in reopening the Strait of Hormuz and changes in global oil prices. Yang added that the current caps are not expected to stay in place for more than two to four weeks, but he mentioned it's too early to determine when the price ceiling system will conclude. Finally, at the time of writing, the front-month (Aug/Sep) and 6-month (Aug/Feb) Brent futures spreads are at $0.23/bbl and $2.84/bbl, respectively.

A strong start to the morning on VLSFO. Sing cracks were well bid out of Singapore early doors this morning. The Jul Sing crack traded up to $13.00/bbl from $11.60/bbl. Spreads followed suit even on lower crude with Jul/Aug trading up to $17.50/mt from $14.50/mt. However, there was still selling on 0.5 E/W, which saw even more support for Euro 0.5. The Euro crack traded up to $7.00/bbl from $5.75/bbl. There was lots of buying on Jul/Aug Euro, closing the morning at $22.00/mt.

In HSFO, 380 strength returned this morning after selling that characterised the market earlier in the week left the market. Chinese arbers were buying 380 flat price this morning which saw the crack supported. The Jul 380 crack traded up to -$7.00/bbl from last night's levels of -$9.00/bbl. This buoyed the Jul 380 E/W, which went into lunch trading $5.75/mt up from negative numbers yesterday. Jul/Aug 380 went into backwardation after being in contango for a couple days, up to $1.00/mt. The barge crack was stronger off the back of 380 buying up to -$7.80/bbl from -$8.60/bbl last night.

This morning in distillates, Sing gasoil was sellside in Aug/Sep trading down from $1.50/bbl to $1/bbl on a box equivalent. E/W rallied from -$29.50/mt to -$28/mt before selling off into the window to reach -$33.25/mt. Regrade was well offered, being hit down 70c in Jul to trade at -$0.50/bbl, while kero spreads were also sellside in Jul/Sep at $2.20/bbl, putting pressure on the regrade rolls.

Prompt ICE gasoil sold off through the morning to lows of $10.25/mt, then bouncing post-window back to $12.75 in Jul/Aug. Aug cracks saw similar flows reaching down to $37.25/bbl before rallying to $38/bbl. European jet diffs continued to sell off, dropping to $64/mt in Jul.

This morning in gasoline, Sing 92 flat price traded end window at $96.80/bbl with MOC better bid. The East was mixed this morning, with cracks initially going better bid up to $19/bbl before softening to $18.75/bbl. Spreads also saw better buyside interest on open, trading up from $4.20/bbl to $4.65/bbl. E/W opened higher but weakened from -$6.75/bbl to -$7/bbl with EBOB cracks seeing mixed interest around $25.75/bbl. Spreads were supported in the front, with Jul/Aug valued at $24.75/mt post-window.

This morning in napthta, MOC better bid with both July and Aug MOC getting lifted +5c. MOPJ spreads better offered, with majors sell-side of Oct/Nov MOPJ at $8.25/mt, with July/Aug getting sold $9.50/mt, seeing prompt E/W trade down to $32.75/mt end of window. Some selling interest in Aug and Sep MOPJ cracks, trading -$3.30/bbl and -$2.90/bbl, respectively. Prompt Europe crack relatively rangebound this morning between -$6.15/bbl and -$6.05/bbl. Cal'27 naphtha crack gets lifted -$9/bbl.

This morning in NGLs, FEI flat price and spreads opened weak, with Jul/Aug trading at $10/mt, down from $14.50/mt at last night’s close, and July flat price bottoming out at $583/mt. FEI spreads found some buying across the morning, with Aug/Sep trading at $4/mt, and Dec/Dec lifted at $52/mt. Little action in LST/FEI, but was valued at -$208/mt end window, down from yesterday’s trading level of -$222/mt. In CP, there was flat price buying out of Jul, and the Sep/Oct spread was lifted at -$5/mt, where it settled post window. Jul FEI/CP was trading at $35/mt. End window on screen, July FEI flat price was lifted at $588/mt.

Big Changes at the Fed with Warsh Now Chair
• Rates held at 3.5–3.75% unanimously - the hold was expected, almost everything else wasn't.
• Forward guidance is dead. Warsh scrapped the dot plot as a signalling tool, calling projections "written in pencil" and declining to submit his own forecast - cutting the circular feedback loop between the Fed and markets.
• The tone was hawkish. 9 of 18 officials see at least one hike by end-2026; Warsh explicitly criticised "five years of misses on inflation" and closed repeatedly on "the Committee will deliver price stability."
• The Fed's own projections flag stagflation risk - 2026 core inflation revised up to 3.3%, growth cut to 2.2%, while Warsh acknowledged housing is already feeling policy restriction.
• Markets were rattled despite no rate move - ~$1.5tn wiped in minutes: S&P −1.2%, Gold −2.22%, Silver −3.95%; 2-year yield jumped 13bps to 4.19%.
• The key takeaway: a Fed that refuses to telegraph its moves has structurally reintroduced volatility - markets spent 15 years being guided and now have to relearn how to price genuine uncertainty.