Brent rallies as Trump rejects Iran’s 7-day peace deal offer

President Trump has rejected Iran’s proposal to reopen the strait of Hormuz within a week and resume nuclear talks in return for the lifting of the US naval blockade of Iranian ports. Meanwhile, in an interview with NBC, Iranian Foreign Minister Abbas Araghchi said his country is ‘fully prepared’ for war to resume, but also ‘ready for diplomacy’, stating that ‘it is up to President Trump to choose’. In other news, Libya’s NOC said on Sunday that regular pumping had resumed on the Sharara–Zawiya pipeline after valve No. 7 was reopened. TotalEnergies raised its shareholder-return targets, with dividends set to grow by more than 5% a year through 2030 and boost share buybacks in the next two quarters, supported by higher oil prices and rising production. Socar will cut Italian fuel prices nationwide, following Eni’s move to cap diesel and gasoline prices, easing political pressure on Meloni’s coalition to impose a windfall tax on energy companies ahead of next year’s election. Finally, the Nov/Dec’26 and Nov/May’27 Brent futures spreads are at $7.61/bbl and $19.64/bbl respectively.

This morning in dated we saw Oct DFL trade up to highs of $11.00/bbl with refiner buying of Oct/Nov DFL up to $6.38/bbl. We saw a buyer of 12-16 Oct 2-week, paying $6.4/bbl, and a buyer of 19-23 Oct vs Dec ICE paying $7.6/bbl. However saw selling of 12-16 Oct v Cal Oct at $0.71/bbl, 19-23 Oct v Cal nov at $6.95/bbl and sell side interest in 26-30 Oct 3-week. Further down the curve saw a buyer of Jan DFL and Jan Feb DFL.

This morning in Brent/Dubai we traded in a large range. Initially there was sellside interest in Oct by Middle Eastern refiner around -$3/bbl. We traded lower into the window, down to -$4/bbl, with very little liquidity on both B/D and Dubai spreads. There was some Chinese buying of Oct/Dec, which traded up from $9.8/bbl to $10.4/bbl. Following a very weak window, we proceeded to rally all the way back to -$3/bbl, with Dubai spreads weaker. OTC flows were very quiet, only some fund buying of Oct/Nov B/D box around -$3.2/bbl. There was some products buying of Q1'27 B/D, targeting around $0.6/bbl.

380 spreads were also thin this morning, Oct/Nov traded higher pre window from $43.50/mt to $45.00/mt, Nov/Dec saw better liquidity and traded between $31.50/mt and $32.00/mt. 380 cracks traded higher in the early morning although volume was tiny, Oct crack traded up from $2.80/bbl to $3.50/bbl pre window, it then came off quickly and traded around $3.20/bbl in the window. Barge complex was equally as thin as Euro 0.5, Oct/Nov traded at down from $22.50/mt to $21.75/mt in the window, Oct Barge crack has traded around -$9.10/bbl.

It was a quiet morning in Fuel, Sing 0.5% was weaker overall while Euro 0.5 cracks came off. Oct/Nov Sing sold down from $42.25/mt to $41.50/mt where it traded ruing the window, it slipped to $40.50/mt post window, Nov/Dec has traded down from $36.50/mt to $36.00/mt. Oct Sing crack opened higher and traded up to $24.10/bbl early this morning, it quickly sold down to $23.60/bbl and has traded around this level for the remainder of the morning. Euro 0.5% was very thin this morning, Oct/Nov has traded post window at $12.75/mt while Oct crack has traded at $0.40/bbl.

This morning in distillates, Sing gasoil spreads were better bid, with Oct/Nov trading from $4.45 up to $4.70, then back to $4.45/bbl into the window. EW sold off from -$131 down to -$134, while Dec was hit down to -$100 and is now trading back up to -$97/mt. Oct/Nov kero was mixed, trading at $2.8/bbl, while Nov regrade was hit down to lows of -$1.85/bbl. Prompt ICE gasoil spreads firmed, with Nov/Dec trading from $58 up to $63.25/mt, while Nov cracks firmed from $80.5 up to $83/bbl.

This morning gasoline was mixed. The East was better supported than EBOB, with Oct E/W trading up from -$8.65/bbl to -$6.50/bbl. 92 cracks opened higher at $32/bbl where they found mixed interest, and spreads were well bid up from $10.50/bbl to to highs of $11/bbl. EBOB was weak, with cracks getting sold down from $39.50/bbl to $38.40/bbl in Oct, and Oct/Nov weakened from $98/mt to $96.50/mt. Oct arbs were better bid from -7.60c/gal to -6.50c/gal which pressured front EBOB on weaker RBBR’s.

This morning in naphtha was weaker overall, with MOC better offered and front cracks coming off. Mar MOPJ cracks traded at -$2.10/bbl early, with Q1 around -$1.20/bbl and Q4/Q1 at $1.80/bbl, pressured from petchem selling; spreads softened helping push crack rolls lower, with Oct/Nov down from $25/mt to $24/mt and Nov/Dec down $1/mt from $25.50/mt to $24.50/mt, while Nov/Mar traded at $99.50/mt. Front E/W + boxes were offered on relative Europe spread weakness, with Oct falling $2/mt from Friday night’s $60/mt close to $58/mt after trading at $59/mt, and the Oct/Nov box down to -$0.50/mt. NWE naphtha weakened, with Oct cracks down from opening around -$5.90/bbl to -$6.75/bbl, and Dec at -$5.85/bbl; crack rolls came off with spreads as Oct/Nov traded at -$0.9/bbl. Spreads wise, Oct/Nov traded down $1.25/mt from $26/mt to $24.75/mt, Nov/Dec down $1/mt to $24.50/mt, and Jan/Feb at $20.75/mt.

This morning in NGLs, there was initially some Chinese FEI flat price buying out of Nov at $813/mt. FEI spreads opened stronger than last week’s closing levels and traded up across the morning. Oct/Nov FEI was bid up to a trading level of $33/mt from an open of $31/mt, and Nov/Dec was trading at $30/mt compared to $28/mt at Friday’s close. FEI/CP had sellside interest in both Oct and Nov trading at $179/mt and $173/mt respectively, with Nov closing the morning at $176.5/mt as FEI was stronger in the front. Very little interest in LST/FEI today, but Oct arb closed the morning printing -$394/mt having closed last week at -$375.5/mt, indicative of FEI flat price strength. On this strength FEI/MOPJs also trading higher, with Nov trading up to -$42/mt from -$49/mt, and Dec was sold at -$51/mt before printing -$48/mt by end window. The Oct/Nov FEI/MOPJ box was also getting sold at $7/mt. End window on screen, Oct FEI flat price was trading at $860/mt.

The Consumer Sentiment Index fell 3.6 points in September to 48.1, its 2nd-lowest level in history and a 7.1-point decline over two consecutive months, as Current Conditions slipped 1.0 point to 50.9 (4th-lowest on record) and Expectations dropped 5.2 points to 46.3 (2nd-lowest since 1980). With higher fuel prices, persistent inflation, rising mortgage rates, and weaker purchasing power driving deterioration across every age, education, geography, political party, and income group this year, consumer sentiment is at crisis levels. … Wall street is not Main street.

Per Bloomberg, the S&P 500 forward earnings yield has fallen below the 10-year Treasury yield just once in the last decade. That was early 2025, and a sharp selloff followed, with the S&P down 5.75% in March. It's happening again.

Gold -2.8% and silver -4.5% support break.

The MOVE Index (bond volatility) has jumped 33% in two days, fastest since Liberation Day…

BofA's Hartnett: Today’s "AI Big 10" (Mag 7 plus Broadcom, AMD and Micron) is 41% of US market cap, which is where all previous major bubbles peaked. Meanwhile S&P remains within 1% of new ATH. Trade the price, not the narrative.

AI is getting cheaper more quickly than any other transformative tech in history. At a given level of performance, cost has fallen ~47%/quarter since 2023. That’s 4× faster than DNA sequencing, 6× faster than compute, 18× faster than lithium batteries, and (up to 1973) 54× faster than electricity.

Oracle continues to trend (the wrong way).

Data this week:
Tuesday – September U.S. consumer confidence
Wednesday – PCE inflation data
Thursday – ISM manufacturing
Friday – U.S. payrolls