Brent Hits 6-Week Highs As Houthis Claim Strikes On Red Sea Tankers

Prices have since climbed to the $97 level, seeing intraday highs of $98.43/bbl. Crude is at a six-week high as US-Iran tensions escalate, with the US military using a B-1 long-range bomber to strike IRGC targets in Iran, the first time since fighting with Iran resumed. This comes after President Trump’s Truth Social post vowing to destroy an Iranian bridge or power plant every time Iran shoots at a ship in Strait of Hormuz. In addition, the Houthis claimed to have struck two Saudi oil tankers in the Red Sea, marking the first operational strike since the group declared a naval blockade against Saudi vessels. The operator of Vietnam's largest oil refinery, Nghi Son Refinery and Petrochemical LLC, has secured sufficient crude oil for its operations through to the end of September, state energy firm Petrovietnam said on Thursday. TotalEnergies reported a 67% rise in Q2 earnings on Thursday, its best quarter in nearly three years, buoyed by higher oil prices and strong profit margins for refining fuels amid supply disruptions from the Iran conflict. US refiners are importing the most Venezuelan oil since 2017, as the threat of wildfires in Canada risks disrupting supplies, where imports have risen up to 800kb/d for cargos arriving in July. Russia is set to receive a 42kt shipment of gasoline from India’s Vadinar refinery, underscoring the severity of Russia’s fuel shortages after Ukrainian drone strikes cut domestic refining capacity by about 40%. Finally, the Sep/Oct’26 and Sep/Mar’27 Brent futures spreads are at $5.54/bbl and $16.30/bbl respectively.

This morning in Brent/Dubai, we initially traded in a tight range between $4.5/bbl to $4.7/bbl, before a very strong window saw us sell off down to $4/bbl. The Dubai spreads moved higher throughout the morning, up from $3.3/bbl to $3.94/bbl in the Aug/Sep. During the window, the Aug/Sep box moved much lower, down from $0/bbl to -$0.46/bbl. There was selling in backend 2027 coming off product crack flows. The Q1 BD was well offered, trading between $2/bbl to $1.83/bbl. The Sep and Oct BD were also well offered by trade following the window.

Selling on 380 E/W we saw yesterday afternoon on 380 E/W continued into this morning. The Aug 380 E/W traded down to $49.00/mt from overnight levels of $52.00/mt. Even on higher crude 380 spreads came in better offered with Aug/Sep trading down a touch to $27.00/mt while the 380 crack in Aug traded down to -$2.00/bbl. The barge crack also came under pressure selling down to -$9.70/bbl from -$8.90/bbl. Barge spreads came off as a result with Aug/Sep closing the morning around $9.00/mt.

VLSFO was initially better bid this morning. Aug/Sep Sing traded as high as $45.00/mt before coming off into the window and trading as low as $43.75/mt. The Sing crack was fairly well offered in Aug this morning. Aug Sing crack traded from $21.60/bbl to $20.60/bbl in a fairly straight line. E/W came under pressure as a result, meaning Euro 0.5 was not as weak as Sing. Aug Euro crack traded down to $7.60/bbl from $7.95/bbl. Euro spreads continued to experience buying with Aug/Sep Euro trading up to $30.75/mt.

It was another strong morning in the east on gasoline. Aug 92 cracks rallied from $28.50/bbl to highs of $30/bbl before weakening to $29/bbl post window, and Q4 was trading at $16.60/bbl. Spreads got lifted aggressively as well, with aug/sep trading up to $8.10/bbl. EW continued to move up, trading up to highs of -$5.10/bbl before softening to -$6/bbl. EBOB was relatively weak again, with cracks coming off from $35.50/bbl to $35/bbl and Q1 was offered around $14/bbl. Spreads saw better sellside interest as well, as aug/sep remained balanced around $70.50/mt.

Initially a bid morning in Nap. MOC opens bid – seeing +5c getting lifted in Aug MOPJ MOC early this morning, with trade buying up to 10c in Aug. EW rallies up to $76/mt in Aug, with sell side interest again in the Oct+Nov EW strip. Aug Nap crack rallying to $2.2/bbl. Interest in MOC then flips to better offered, seeing EW sell off, trading down to $72/mt end of window, with the Nap crack getting hit down to lows of $1.1/bbl. Consistent buying this morning in Sep/Dec MOPJ, with Dec Nap crack better offered by funds.

This morning in NGLs, Aug LST/FEI opened trading at -$376/mt, down from last night’s closing level of -$368/mt. There was also an early buyer of the Q4'26/Q1'27 LST/FEI roll at -$56/mt. Across the morning FEI flat price traded up on crude, and as a result LST/FEI came off, with Aug trading down to -$380/mt, and Sep down to -$330/mt. Aug/Sep FEI remained relatively firm, trading at $48/mt, before coming off $1 into end window. Post window Aug FEI/MOPJ got lifted at -$123.5/mt, before being implied at -$127.5/mt due to Nap being stronger. There was C3/C4 CP selling in Aug at -$25/mt, and the Aug/Sep CP spread traded down from $44/mt to $40/mt. Sep C4 ENT/MOPJ was trading -$315/mt with Euro trade on the buyside. End window on screen, Aug FEI flat price was hit at $781/mt.

* 2-year yields make new cycle highs, with 30-year just 5bp away (Chart 1: Bloomberg). The OIS now prices 42bp hikes by the FED by year end (33% chance they hike next week). ECB 48bp hikes by y/e, BOE 46bp. Since 2007, the Treasury market has ballooned to $31 trillion from $4.5 trillion while debt as a percentage of US gross domestic product has doubled to exceed 100%. All told, years of excessive spending have propelled annual interest cost above $1 trillion.

*Alphabet beat, stock falls 3%. Alphabet beat on every headline number - revenue up 24% to $119.8 billion, Cloud up 82%, EPS of $9.11 - but most of that EPS came from paper gains on equity investments rather than operations, with adjusted EPS closer to $2.85. The company also swung to negative free cash flow for the first time since going public as capex guidance rose to $195-205 billion, while long-term debt roughly doubled and buybacks paused. Shares fell about 3% despite the revenue and Cloud beat.

* China is returning to the LNG market, with weekly LNG imports more than doubling to 22-month high.

* Even if Hormuz opens, we don't think Europe can reach target gas storage level before winter, says Equinor CFO.

* Tesla sold more cars than ever this quarter, but it had to cut prices and offer more incentives to make it happen. More sales. Less profit per car. Stock fell 3% after hours…. Meanwhile SpaceX hits its lowest level since IPO at $118.3.

* Global investors have rarely been this bullish: Bank of America's Bull & Bear Indicator is up to 9.6 points, the highest since December 2020. The gauge measures equity and bond fund flows, hedge fund and fund manager equity positioning, credit market conditions, and market breadth. This metric is now at its 3rd-highest level in 24 years, indicating an extremely positive market sentiment.

* Nvidia stock higher, CDS wider. Scratch head! (Source: Michael J. Kramer) More Americans own Bitcoin (18.6%), than Gold (10.8%)

* Nasdaq Comp remains in a tight converging range. 25,000 remains critical support.

“NYSE margin debt is reaching historic levels:” Deutsche Bank analysts.