Brent Hits $81.91/bbl on Peace Doubts Before Retreating

In the news, US President Trump has warned that he might restart bombing Iran if it doesn't “behave.” He stated that the memorandum of understanding with Iran is not final and that he could resume military campaigns if he disapproved. In other news, the IEA has said in its monthly oil market report that it expects the oil market to move into a substantial supply surplus in 2027 following the reopening of the Strait of Hormuz. It estimates that supply will surge by 8mb/d, while demand will rise by just 2mb/d. However, this may be welcomed, as countries take the opportunity to replenish their depleted strategic reserves. Elsewhere, Russia plans to import fuel by sea this month due to a gasoline shortage caused by extensive drone attacks on its refineries. In an uncommon move for a major oil and refined-products exporter, Russia is expected to receive a cargo of gasoline via one of its western ports in June. The fuel will come from Asia, although sources did not specify the volumes or suppliers. In Europe, the region is shipping less gasoline to the US during the peak summer driving season as demand increases on the continent, where refinery closures and other disruptions from the war in Iran have reduced supply. European gasoline imports to the US have historically helped balance the market in the world's largest fuel consumer, and Reuters sources noted that the US-Iran deal to end the conflict is unlikely to immediately alleviate the tight gasoline supply-demand balance. Gasoline shipments from Europe averaged 1.63mb/d last month, down from 1.9mb/d last year, the lowest for May since 2020, as per Kpler. Second-quarter exports to the US are expected to average 252kb/d, the lowest since 2020, with about 88% going to East Coast ports. Finally, at the time of writing, the front-month (Aug/Sep) and 6-month (Aug/Feb) Brent futures spreads are at $0.32/bbl and $3.44/bbl, respectively.

This afternoon in Brent/Dubai we traded in a large range, first selling down from $6/bbl to $5/bbl, before some buying came in and we rallied up to $5.60/bbl in July. There was trade selling of Sep Brent/Dubai and buying of Jul/Sep spread. There was continued selling by Chinese players of Oct'26 Brent futures vs Jul Brent/Dubai. Spreads traded higher, Jul/Aug up from -$0.60/bbl to -$0.40/bbl. Cal'27 continued to be offered, trading $1.85/bbl to $1.65/bbl and lower afterwards. The boxes were quiet, with some bank buying of Q1/Q2 box at $0.55/bbl.

VLSFO relaxed into the afternoon after a strong morning. There was a fairly axed Euro crack seller out of the US who sold down to $5.55/bbl at the end of the window, however, we did see a rebound up to $5.75/bbl by the end of the day. Euro spreads saw little movement in the afternoon with the front Euro spreads trading around $19.50/mt. It was a similar story on Sing 0.5, the front crack came off when the Euro crack selling came in prior to the window trading down to $11.30/bbl; however, like the Euro crack, it closed the day at $11.65/bbl. Jul/Aug Sing traded up a touch to $14.00/mt from midday levels of $13.50/mt.

We saw strength return in HSFo as cracks rallied on thin liquidity into the Chinese open to -$8.10/bbl where we saw a real seller offer it back down to -$8.60/bbl. Jul/Aug moved in line with Jul 380 cracks trading up to flat and back down to -$2.50/mt. We saw a scale back buyer on Q3 380 cracks which got sold into with E/W seller in the front stepping down. In the window we saw a seller on screen down to -$8.65/bbl, where we saw mixed interest.

This afternoon in distillates, Sing gasoil was sellside in Dec/Feb while Aug/Sep saw buyside interest for size at $0.75/bbl equivalent on the box. Jul EFS was bid by trade house with Q4s getting lifted up to -$34.25/mt by market makers against this. Cal E/W came in sellside on the headline getting hit down 50c to -$24.25/mt to leg kero cracks. Regrade found selling with Jul being implied back down at $0.40/bbl with selling in Aug and Sep. Kero spreads were thin but screen offers were getting lifted on ICE gasoil moves.

Prompt ICE gasoil was stronger over the afternoon, firming from $11.50/mt to $13.75/mt in Aug/Sep. Aug cracks rallied 1.25 to trade at $40.60/bbl post window. European jet was again better supported, rising another $2 to $70/mt in the front. Heating oil spreads firmed while the M1 HOGO swap came off from morning highs to 30.35c/gal.

This afternoon in gasoline, EBOB flat price traded end window at $870/mt with MOC better offered. RBBRs initially sold off before recovering post stats, as arbs sold off from 34c/gal to 33.50c/gal. EBOB cracks were mixed, trading at $25.10/bbl end window, with Q3 valued at $22.65/bbl. Spreads were better offered but Jul/Aug remained stable around $23.75/mt. E/W interest was thin, but there was some scaleback buying around -$7.20/bbl. 92 cracks and spreads were a touch weaker in the front, as Jul/Aug softened from $4.20/bbl to $4.10/bbl.

This afternoon in naphtha, prompt crack continues to strengthen with July naphtha crack trading up to -$6.15/bbl end of window with the Cal naphtha crack getting lifted -$9.05/bbl for smalls. Spreads stronger across both regions, seeing Balmo June/July naphtha trading up from $8.25/mt to $13/mt, with July/Aug naphtha finding buying up to $12.75/mt (equivalent of 75c on a crack roll basis). July/Aug MOPJ far better bid this afternoon with buyers stepping up, seeing the July E/W trade up to $35/mt with buying in Aug at $36.25/mt.

This afternoon in NGLs, FEI spreads were trading in prompt and deferred with Jul/Oct getting lifted at $22/mt and Nov/Dec trading at $1.50/mt. LST/FEI continued to trade in Jul, lifted at -$227/mt up $5 from the morning’s trading level. The 2H'26 arb was also trading at -$200/mt with buyside interest. FEI/MOPJ buying in the deferred out of Dec and Q4 at -$59/mt and -$63/mt, respectively. Saw some deferred LST spread interest seeing Q1/2'27 trading at 5.125c/gal, down slightly from yesterday’s trading level of 5.25c/gal. Mar/Apr'27 was also lifted at 2.375c/gal. Butane was relatively quiet this afternoon, with July flat price in C4 ENT trading rangebound between 92.5c/gal and 93c/gal.