Brent Gaps Up with Fresh Strikes

US and Saudi forces launched coordinated overnight strikes on Iran-aligned militia positions in Iraq in retaliation for what Washington said were more than 30 IRGC-directed drone attacks over the past month, including strikes targeting Saudi oil infrastructure. The operation marks a further escalation in US military involvement, with Washington signalling it will respond directly to attacks on regional partners as well as US personnel. The strikes also followed US accusations that Iran launched multiple ballistic missiles toward an American base in Jordan in an attempted surprise attack, although CENTCOM said all incoming missiles were successfully intercepted and no casualties were reported. Tehran has warned it will take "any action", including resuming war, to retain control of the Strait of Hormuz, and rejected Oman's proposed 50-50 shared-control mechanism. Trump and Netanyahu held talks the White House called "positive and productive". Iranian crude floating storage in Asia has risen 60% to 24.4mb since the US reimposed its naval blockade in mid-July, with a growing cluster of laden tankers idling off eastern Malaysia as Chinese teapot refiners continue to cut runs. Iranian Light discounts have widened to around $5/bbl below ICE Brent ($2.50/bbl 2 weeks ago), but weak refining margins have kept Shandong teapot utilisation at just over 48%, well below the five-year seasonal average of around 60%. Overall Iranian crude on the water remains above 130mb, with the blockade disrupting tanker logistics and limiting Iran's ability to reload and replenish offshore stocks. Argentina's oil production hit a record high in May, up 0.6% m/m and nearly 19% y/y, driven by continued growth in the Vaca Muerta shale basin, which now accounts for a record share of national oil and gas output. Total upstream investment in the basin is expected to exceed $10bn this year alongside new pipelines and export infrastructure. The API showed a 3.3mb US crude draw. Finally, the Oct/Nov’26 and Oct/Apr’27 Brent futures spreads are at $2.25/bbl and $7.77/bbl respectively.

Quiet morning in Dated. We saw some selling of 10-14 Aug cal Sep down to $2.95/bbl and sell side interest in balweek 1w offered at -$0.55/bbl. However, we did see some buying of 30-5 Aug vs oct ICE at $3.75/bbl and a refiner bidding 29-3 Aug cal Aug at $0.55/bbl. We saw a size seller of cal Aug 24-28 Aug hitting a $1.02/bbl bid. Further down the curve, we saw some Q1'27 DFL selling.

Yesterdays strength on VLSFO continued into today. Sing spreads were well bid off the bat today. Aug/Sep traded up to $46.50/mt before the Sing crack ran into some selling around $23.00/bbl. This saw spreads relax a touch into the window. However, everything went bid post window on bullish sentiment in the market. Aug/Sep Sing traded up to $50.00/mt while the Sing crack closed the morning around $23.75/bbl. 0.5 E/W was well bid today resulting in Euro 0.5 not being as strong as Sing 0.5. Euro spreads were implied up to $33.25/mt in Aug/Sep off the back of 0.5 E/W boxes, however, from there it did not move, with a seller on Aug/Sep Euro crack roll keeping it subdued. The Euro crack piggybacked off Sing 0.5 with Aug trading up to $10.00/bbl.

380 enjoyed a stronger morning off bullish market sentiment. The 380 E/W continued to climb on 380 being better supported. 380 cracks traded up to -$1.25/bbl from last night's close of -$2.25/bbl, while Aug/Sep spreads bought up to $21.50/mt. As mentioned, the 380 E/W was stronger, closing the morning around $48.00/mt. Barges were largely unmoved this morning. Aug/Sep barges traded around $9.25/mt while the barge crack was unmoved at -$9.00/bbl.

This morning in distillates, Sing gasoil spreads were mixed overall, with Aug/Sep trading from $9.15/bbl down to $8.95/bbl before firming back to $9.30/bbl last. E/W was also mixed, with Aug hit from -$68/mt down to -$75/mt before ripping back to -$68/mt, lifted post window. The front kero complex collapsed, with front regrade down to -$3.50/bbl, while the Aug/Sep regrade roll traded down to -$5.10/bbl.

Prompt ICE gasoil spreads opened higher and continued to climb, with Sep/Dec trading from $190/mt up to $199.50/mt, while front cracks traded up to $72.50/bbl. Heating oil spreads were range bound, while HOGOs sold off, with the Aug HOGO swap down to 21.5c/gal.

This morning in gasoline, we saw the east rally on overnight escalation news. Aug cracks traded up from $27/bbl to $28.10/bbl before softening during the window, and Q4 was bid at $15.50/bbl. Spreads went bid before the window as well from trade houses, as Aug/Sep firmed from $7/bbl to highs $7.60/bbl. E/W opened stronger at -$11.90/bbl and traded up to -$11.60/bbl. EBOB also started the morning strong, with Aug cracks trading up to $39.50/bbl before going better offered post window. Spreads were also supported, with Aug/Sep firming from $77/mt to $79.25/mt.

Quiet morning in terms of MOC for Naphtha, with Aug MOPJ MOC trading between -5c and +5c. E/W stronger on the back of higher crude, seeing Majors lifting $48/mt in Aug E/W this morning but selling off post window, seeing Aug get hit $45.25/mt with Q4 E/W getting hit $37/mt, offered on. Selling side interest in Dec/Jan MOPJ this morning at $12/mt with selling by trade in decent size on the May/June 27 box at $0.75/mt. Europe crack trades up to $0.30/bbl, up from -$0.25/bbl where it closed last night, with the Aug/Sep crack roll getting sold $2.70/bbl for decent size.

This morning in NGLs, Chinese came in as early FEI flat price buyers out of Oct at $637/mt. Aug/Sep FEI opened the morning at $39/mt, where it traded into window, up from last night’s close of $34.50/mt. Sep/Oct FEI was also trading higher than last night’s close, at $27/mt from $24/mt. There was also some Aug/Nov selling at $75/mt, which eventually strengthened to print $79/mt by end window. Sep LST/FEI traded down as FEI flat price was stronger, from -$288/mt to -$292/mt. The Aug/Sep Arb roll was also trading at -$43/mt on the day. There was a cross Aug/Sep C3 ENT/CP buyer at -$212/mt, and the Sep C4 ENT/CP traded at -$130/mt, where it closed the morning. In C3 CP, Aug/Sep opened at $35/mt and the FEI/CP was printing $96/mt, having closed the day at $79/mt last night. End window on screen Aug FEI flat price was hit at $710/mt.

Rate strategists at both Bk of America & JP Morgan now see yields higher with a hawkish Fed tonight.

BofA see 2 year yields higher, while JPM prefer a 5yr-30yr flattening trade.
Kospi, after another day of circuit breakers currently down 6%. An 80% rally over 10 weeks immediately followed by a 40% drop in five weeks.

The South Korea index has fallen from the world's 6th-largest stock market to 11th after the crash.

SK Hynix second-quarter profit surges 557% to a new high — but misses estimates, falls 13%.

Nasdaq 100 slides into correction territory as the AI sell-off deepens while the S&P 500 ex-AI quietly hits a fresh all-time high. The great market rotation is no longer just a theory.

Odd stat - For the first time in history SPX was positive three days in a row While QQQ was negative three days in a row.

CTAs haven’t even started selling yet.

Apple is now the second company in history to surpass $5 trillion in market cap. This makes Apple the largest company in the world, now 6% larger than Nvidia.

Goldman's high beta momentum basket on track for worst monthly performance in history, worse than 2000 and 2009.