Brent rallies above $97/bbl as Iran retaliates against US military targets

Geopolitical tensions in the Middle East continue to rise, with Iran striking US military targets across the region despite Trump’s threats. Asian refiners are scrambling for Middle Eastern crude amid Hormuz disruptions, with aggressive spot buying from China and India pushing Dubai futures toward $100/bbl and Murban premiums above $30/bbl, while constrained Gulf supply leaves prices vulnerable to further upside. Dangote cut crude imports to a five-month low of 499kb/d in August as high inventories and earlier RFCC-related run cuts weighed on throughput, but imports are expected to rebound in September after securing around 20mb of crude and restoring the crude unit to full capacity. Kalshi plans to seek CFTC approval for a never-expiring WTI futures contract, potentially bringing crypto-style perpetual futures into regulated US oil markets and intensifying the debate over 24/7 oil trading and its impact on benchmark price formation. Chevron, Eni and GE Vernova are committing tens of billions of dollars to revive Venezuela’s energy sector, led by Chevron’s $7bn plan to more than double its Venezuelan oil output to around 600kb/d by 2031, while Eni and GE Vernova target new oil, gas and power infrastructure. The US may swap Venezuela’s heavy, high-sulfur crude for US light/medium barrels to replenish the depleted SPR, since most Venezuelan grades are incompatible with SPR specifications and US refiners have limited capacity to absorb more heavy crude. Finally, the Nov/Dec’26 and Nov/May’27 Brent futures spreads are at $4.67/bbl and $16.49/bbl respectively.

Very well bid this morning in dated with balmo Sep DFL trading up to $4.9/bbl and Oct DFL also trading up to $4.9/bbl. We saw continued buying in the back end Sep into Oct rolls with 21-25 Sep CFD lifted at $4.35/bbl early in the morning, pushing up the balmo DFL, and buying of 5-9 Oct v Cal Oct lifted at $4.8/bbl. Further down the curve we saw buying of Q1'27 DFL and selling of Jan Dated vs Jan ICE against Aug Dated vs Aug ICE.

This morning in Brent/Dubai was again very quiet, as we continued to move higher in a very orderly fashion. We moved up from $2.2/bbl to $2.96/bbl in the Oct bd. There was some trade buying towards the highs, and some fund buying of Q4 around $3.7/bbl. The Dubai spreads initially traded fairly weak into the window but rallied after with the strength in the brent complex. The Oct/Nov spread traded between $4.4/bbl to $4.8/bbl. The boxes all moved up with this weakness in Dubai spreads, the Oct/Nov box up from -$1.5/bbl to -$1.15/bbl.

380 complex was better bid this morning, Oct/Nov was bid up from $14.50/mt to $15.50/mt and the Oct crack was bid up on screen from -$6.20/bbl to -$5.75/bbl. Barges cracks were slightly better bid this morning, Oct/Nov traded up from -$10.80/bbl to -$10.50/bbl, Oct/Nov has not really traded and is currently $16.25/mt value.

This morning Sing 0.5 opened at similar levels to yesterdays close an then seemed to be bid in the early morning, however as the morning progressed into the window spreads and cracks began to sell off. Oct/Nov was offered down from $37.00/mt to $35.75/mt during the window, the Oct crack traded in large volume on screen this morning selling down from $19.95/bbl to $18.80/bbl. Euro 0.5 spreads and cracks also experienced real selling this morning, Oct/Nov sold off from $18.00/mt to $17.00/mt during the window and Oct Euro crack sold off from $5.70/bbl to $4.55/bbl. VLSFO was considerably weaker relative to high sulphur this morning as the Sing and Euro HI5’s were implied $9.50/mt and $11.50/mt lower respectively.

This morning in distillates, Sing gasoil spreads were more buy side, with Oct/Nov trading from $6.25 to $6.35/bbl, while front EW rallied from lows of -$105 up to -$100/mt. Regrade continued bid in Oct at -$1.8/bbl, while kero spreads were mixed, with selling in Oct/Nov and buying in Nov/Dec. Prompt ICE gasoil spreads sold off initially before rebounding, with Sep/Dec trading from $205 down to $195 before recovering to $210/mt, while Nov futures cracks sold down to $75.2/bbl.

This morning in Gasoline, MOC better offered in Sep and Oct. Spreads open better bid in 92, with buying in Sep/Oct 92 balmo spread – seeing $7.8/bbl trading in the morning, up to highs of $8.4/bbl this morning. EW trading -$8/bbl in Sep in the morning but weakens on the back of some EBOB crack buying, with Oct EBOB crack trading $30.5/bbl end of window. Buying in Q4/Q1 Arb roll buying this morning at -18.6c/gal.

This morning in naphtha was mixed, with MOC initially better offered before going bid into the window, as higher crude helped push up spreads, while backend cracks were better offered. Deferred MOPJ cracks were relatively steady, with Q1'27 around -$0.35/bbl and Q2'27 around -$3.35/bbl, while spreads firmed versus last night as Oct/Nov moved from $29.50/mt to $30.75/mt; there was also good deferred spread interest, with Nov/May trading at $126/mt and Dec/Dec around $149/mt. E/W was better offered in the front, with Oct easing from $53.50/mt to $53/mt, while Dec/Jan was around $5.25/mt and Q1'27 held around $42/mt. NWE naphtha was choppy on cracks, with Oct moving from around -$4.20/bbl to -$4.40/bbl before recovering to around -$4.10/bbl and finishing flat. Cal'27 traded around -$7/bbl, while Q1/Q2'27 was around $1.95/bbl and Q2/Q3'27 around $0.80/bbl. Front spreads were initially offered, with Oct/Nov around $27.25/mt and Nov/Dec around $26.50/mt early before drifting higher on little volume, while Dec/Jan saw good sell-side interest at $16.5/mt to $17/mt.

This morning in NGLs, FEI spreads traded at firm levels similar to last night’s close. Oct/Nov was trading at $30/mt, and Nov/Dec at $26/mt into window. There was also some good size Dec/Jan buying at $19/mt, and Q4/Q1 was trading at $70/mt, before strengthening to $71.5/mt by end window. Oct LST/FEI opened the morning getting lifted at -$361/mt, before softening on FEI flat price strength to trade -$363/mt end window. There was interest in Q4/Q1 FEI/MOPJ roll, trading at -$1/mt which was the same level as yesterday’s close. End window on screen, Oct FEI flat price was lifted at $773/mt.

Correlation between the 10Y and oil is the highest since the GFC.

German & Dutch gas storage levels look dangerously low heading towards winter.

The Dutch central bank moved 86 tonnes of gold out of New York and Ottawa to London. More than 1/4 of everything they held in North America. Done quietly between March and August, announced today. New York went from 31.3% of their reserves to 18.5%. London went from 18.1% to 32.1%. Stated reason is “increasing geopolitical unrest” and crisis readiness.

Short interest in the median S&P 500 stock is up to 3.2% of market cap, the highest level since 2009. This is now approaching the 2008 Financial Crisis peak of ~3.8%. By comparison, during the 2022 bear market, this percentage was ~1.7%. Furthermore, short interest among the most heavily shorted 10% of S&P 500 stocks is up to 8.0% of market cap, the highest in 8 years. Even during the 2000 Dot-Com Bubble burst, short interest never surged to these levels. The short trade is starting to look overcrowded.

Snowflake stock, surges over +22% after reporting stronger than expected earnings due to AI demand.