Brent en-route to posting monthly gains on renewed supply tensions

The IRGC has said it struck and halted two oil tankers that attempted to pass through the Strait of Hormuz via an "unauthorised route" under US military air escort. In a statement, the IRGC added that four other oil tankers turned back following the incident. In other news, BP has put its UK North Sea oil and gas assets up for sale amid a portfolio overhaul by Chief Executive Officer Meg O'Neill. BP has worked in the North Sea for over six decades and operates five major production hubs in the region, including the Clair oilfield, which is the largest on the UK Continental Shelf. The decision follows a day after UK Prime Minister Andy Burnham said he planned to take a "pragmatic" approach to developing and using oil and gas resources in the North Sea after US President Donald Trump said the Prime Minister was planning to proceed with more drilling in the North Sea. China will raise its domestic retail price caps on gasoline and diesel from 01 Aug, as per the National Development and Reform Commission. The retail ceilings are planned to be raised by 685 yuan/mt ($101.40) and 655 yuan/mt ($96.90) for gasoline and diesel. Finally, at the time of writing, the Oct/Nov'26 and Oct/Apr'27 Brent futures spreads stand at $3.26/bbl and $10.05/bbl, respectively.

This morning in Brent/Dubai was very quiet. We opened weaker in the Aug Brent/Dubai, down $1/bbl at $6.22/bbl. There was some buying by trade, and we traded up to $6.60/bbl at the end of the window. There was some more product selling of the Q1 Brent/Dubai around $2.90/bbl. The Dubai spreads were also very choppy, with both trade interest to buy and sell the Aug/Sep Brent/Dubai box, so we traded range-bound around $3/bbl. The Brent/Dubai boxes were also quiet, with only some sell-side interest in the Jan/Feb box around $0.64/bbl.

A strong start to the last day of the week on VLSFO. The Sing crack was well bid after some respite in the window; it continued to power up, trading up to $27.60/bbl from the overnight close of $25.70/bbl. Sing spreads also powered up, supported by the crack and crude. Aug/Sep Sing traded up to $65.25/mt from $58.50/mt. Euro 0.5 was fairly illiquid this morning. The Euro crack traded up somewhat off the back of Sing 0.5, up to $9.70/bbl. Euro spreads didn’t really move, with Aug/Sep Euro trading around $29.00/mt in small size.

HSFO enjoyed a fairly range-bound start to the last day of the week. The 380 E/W came off a touch, trading down to $53.50/mt. However, 380 spreads remained supported with Aug/Sep 380 trading around $25.00/mt. The barge crack did not move from last night's close, trading between -$11.00/bbl and -$10.90/bbl. Aug/Sep barges were a touch stronger, trading around $8.75/mt.

This morning in distillates, Sing gasoil spreads were well bid into Q4, with Sep/Oct trading from $9.55/bbl up to $10.00/bbl, lifted last. The gasoil E/W opened higher, Aug lifted at -$68/mt, then traded up to -$66/mt before coming back down to -$70/mt into the end window. Regrade weakened overall, with Aug trading from -$3.00/bbl down to -$3.40/bbl.

Prompt ICE gasoil spreads rallied post-window, with Sep/Dec trading from lows of $190/mt up to $200.25/mt, while Oct cracks firmed to $66.30/bbl. Heating oil spreads firmed slightly, while HOGOs sold off, with the Aug HOGO swap down to 16.50c/gal.

It was a weak morning in gasoline. The East opened up better offered, with Aug'26 92 cracks trading down from $27.50/bbl to $26.20/bbl, and Q4 was valued at $15.30/bbl. Spreads were weak, as Aug/Sep came off from $7.90/bbl to $6.90/bbl. The gasoline E/W saw better sell-side interest as well, with Aug weakening from -$9/bbl to -$9.80/bbl. EBOB cracks opened weaker on lower RBBRs, trading at $35.50/bbl where they remained relatively balanced. Spreads opened well offered at $66.25/mt, before going bid post window and rallying back to $70.25/mt.

This morning in Naphtha, MOPJ MOC was better offered in Aug for small size. The E/W and MOPJ spreads were better offered, with aggressive selling in Sep/Dec MOPJ flat price spread from a trade, stepping down from $76.50/mt to $74.50/mt. The naphtha E/W got sold down to $38.50/mt, with the Aug/Sep E/W box trading at -$0.50/mt at the end of the window. NWE cracks were also better offered, seeing Aug trade down to lows of -$1.80/bbl, but recovered slightly post-window with some buying at -$1.50/bbl. Buying in Oct crack in both MOPJ and Europe early doors at -$0.05/bbl and -$4.50/bbl, respectively.

This morning in NGLs, Chinese were early FEI flat price buyers out of Sep and Oct at $658/mt and $635/mt, respectively. Aug LST/FEI opened the morning trading at -$330/mt, and it held there into the end of the window. FEI spreads had some buy-side interest, with Aug/Sep trading at $33/mt, and Dec/Dec at $84/mt, both $1 weaker than the closing levels of yesterday. Oct/Dec FEI was also trading at $22.50/mt with a trade house on the buy side. Post window, there was some Q4 FEI/MOPJ buying at -$70/mt, up $3 from yesterday’s close. The Sep arb was also lifted at -$294/mt. On screen, Aug FEI flat price was lifted $692/mt at the end of the window.

What didn’t happen overnight!

Hamas agrees to disarm after Trump proposes peace deal.

Kospi rallies 18%. Samsung is up 20%, SkHynix is up 25%. After Nasdaq surges 3.5% as dip buyers rotate into technology and chip stocks.

Microsoft rallies 15.5%, its biggest gain since COVID. Meanwhile, Apple stock falls nearly 4% despite posting stronger-than-expected earnings.

USDJPY falls 2.8% after Japanese MOF intervention. The dollar index falls 1.4% in 2 days from a perfect double top, a combination of Fed action (inaction) and Japanese intervention.

Weaker US GDP and softer-than-expected US inflation reading - US Q2 advance GDP came in at 1.5% vs 2.0% expected. The US Personal Consumption Expenditures (PCE) inflation measure fell from 4.1%/yr in May to 3.7%/yr in June, but still well above the Fed’s target.

Situational Awareness, a leverage AI/infrastructure book, run by 24-year-old ‘superstar trader’ Leopold Aschenbrenner, sold "the bulk" of its stock portfolio to Citadel after "big losses in AI," per WSJ. The hedge fund was up 439% by June, had a net asset value of $45 billion on July 1st, but this collapsed to a reported $10 billion…… LEVERAGE…. Manage risk!

Fitch is now warning that an AI Market Correction is emerging as a major credit risk, with “the medium- and long-term potential of [AI] being highly uncertain”.

OpenAI reportedly cut prices for GPT-5.6, per Axios. Pricing for GPT-5.6 Luna was reduced by roughly 80% to $0.20 per million input tokens, while GPT-5.6 Terra pricing was cut by 20% to $2 per million input tokens.

Japan’s unemployment rate remains at 2.5%.