Donna Dong
Research Analyst, Flux
Brent Eases to $93.19/bbl
Brent slips to $93 as US plans SPR refill, while high jet fuel costs pressure airlines and fuel demand.
The Aug’26 Brent futures contract eased from $95.26/bbl at 12:26 BST to $93.19/bbl at 17:23 BST (time of writing).
In the news, companies that borrowed oil from the US Strategic Petroleum Reserve (SPR) will return an additional 40mb at a premium once Iran's conflict ends, Energy Secretary Chris Wright announced on Fox Business. Since the US-Israeli conflict with Iran began in February, fuel prices surged, but Wright reassured that SPR levels remain low and are not concerning. "I'm not worried because we're not selling any barrels; we're supplying the market as needed and trading those barrels," he said. He added, "Each barrel we release, we get 1.25 barrels back next year. After the conflict, we will add 40mb to the SPR at no cost to taxpayers, as deals are secured." The DOE is loaning about 133mb stored in Texas and Louisiana caverns to companies, which will repay in crude plus premiums of up to 24%. This system aims to stabilise markets at no expense to US taxpayers. In the EU, transport chief Apostolos Tzitzikostas has said there are no indications of upcoming jet fuel shortages. However, high prices are causing airlines to eliminate unprofitable routes. The main issue remains the sharp increase in prices, as jet fuel accounts for 25-30% of airlines' operating costs, according to the International Air Transport Association. Tzitzikostas explained, "This is why we see that some airlines are choosing to cancel some of their routes that didn't make any economic sense." In India, the nation will begin distributing gasoline blended with 85% ethanol (E85), which will be approximately 20 rupees per litre cheaper than the standard E20 fuel, according to Oil Minister Hardeep Singh Puri on Friday. Indian automakers are beginning to introduce flex-fuel vehicles that can run on higher ethanol blends. Finally, at the time of writing, the front-month (Aug/Sep) and 6-month (Aug/Feb) Brent futures spreads are at $2.32/bbl and $10.49/bbl, respectively.
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