Brent Recovers After Israel-Hezbollah Agree to Ceasefire

In the news, Israel and Hezbollah have agreed to a ceasefire, which went into effect at 16:00 EEST (14:00 BST). Amid rumours of the IRGC potentially closing the Strait of Hormuz, foreign ministry spokesperson Esmail Baghaei has refuted this claim, stating that there was “no basis” for these rumours. Elsewhere, crude oil shipments through Hormuz increased on 19 Jun, with tankers resuming AIS broadcasts and crossings reaching 25, though this remains far below the pre-war norm of 120 crossings per day. However, mine-clearance warnings persist, and Iran’s PGSA now claims sole authority to issue transit permits and to set insurance fees, which shippers reject as illegitimate on an international waterway. Iranian forces have reportedly turned back two vessels. Separately, a 10-tanker Iranian flotilla carrying 20mb is sailing to China, no longer constrained by US sanctions. In other news, ADNOC has sold at least 30mb for Jun-Aug loading as buyers rushed in ahead of the agreement. Kuwait Petroleum Corp has also issued a tender to sell crude for July delivery, after similarly lifting force majeure on its own production and signalling plans to ramp up output as confidence in the strait's reopening builds. In India, the first LNG tanker to pass through the Strait of Hormuz since the US-Iran deal has arrived. The Disha, a Malta-flagged LNG carrier, arrived at India’s Dahej Port on the West Coast on Friday, having crossed the Strait earlier this week. The vessel loaded LNG from Qatar’s Ras Laffan in early March and was safely anchored at the Petronet LNG jetty, according to the Bharuch port authority. Finally, at the time of writing, the front-month (Aug/Sep) and 6-month (Aug/Feb) Brent futures spreads are at $0.37/bbl and $3.71/bbl, respectively.

Very quiet again this afternoon in Dated. Jul DFL traded down to $0.04/bbl and Aug DFL down to $0.52/bbl. We saw prompt rolls come off in the window with 22-26 June CFD selling down to -$0.75/bbl, 20-3 Jul CFD down to -$0.40/bbl and 6-10 Jul CFD down to $0.30/bbl with refiners, a major and a trade selling. We also saw 29-3 Jul vs Cal Jul sold down to -$0.19/bbl and 6-10 Jul 1w sold down to -$0.20/bbl. At the end of the window Balmo Jun Next-Day traded -$0.70/bbl in smalls. The physical window was quiet with a major offering Midland above curve but nothing trading.

Very quiet afternoon in Brent/Dubai, July Brent/Dubai traded rangebound between $7.20/bbl to $7.40/bbl. There was some more Aug Brent future vs Jul Dubai cross month buying, and large refiner selling of Jul/Aug Dubai spread at -$1.10/bbl. There was more trade selling of Q4/Q1 box at $0.95/bbl. The Dubai spreads were otherwise quiet, Jul/Aug trading between -$0.90/bbl to -$1.10/bbl. The boxes traded rangebound with no interest OTC.

A quiet end to the week on VLSFO. Sing 0.5 enjoyed a rangebound afternoon with the Sing crack closing the day around $13.50/bbl. Sing spreads were a touch weaker with Jul/Aug trading down to $22.50/mt relative to $23.00/mt we saw around lunchtime. The Euro cracks however came under some pressure going into the window and post window as MOC was quite well offered, with the crack selling down to $6.45/bbl. Euro spreads followed a similar pattern trading up to $24.00/mt before coming off with the crack post window down to $23.00/mt.

Quiet afternoon on HSFO with Chinese and US players out. We saw E/W strengthen in the front to $3.00/mt with scale-back sellers driven by European weakness on thin liquidity. The front barge crack traded down 70c to -$8.70/bbl putting pressure on Jul/Aug which dropped $2.00/mt.

This afternoon in distillates, Sing gasoil spreads were implied higher as ICE gasoil rallied, with some July/August buying also seen, trading from $1.80/bbl up to $1.90/bbl. There was decent size front EFS buying, which supported front E/W, with July trading to -$33/bbl. Regrade was also well supported in Q3, with August lifted to $0.35/bbl.

Prompt ICE gasoil spreads and cracks rallied throughout the afternoon, with the August futures crack moving from $38/mt up to $38.80/mt. European jet diffs again saw decent crack selling, with the July jet crack trading at $40.15/mt. Heating oil spreads firmed, while HOGOs sold off, with the July HOGO swap trading from 29.6c/gal down to 28.6c/gal.

This afternoon in gasoline, EBOB flat price traded end window at $900.25/mt with MOC better bid. RBBRs were choppy but ended stronger this afternoon, with July arb offered around 33.30c/gal end window. EBOB cracks saw mixed interest as July firmed from $27.60/bbl to $28.15/bbl, and Q3 was scaleback offered up to $24.90/bbl. Spreads were better bid with Jul/Aug climbing from $29/mt to $31.25/mt. E/W was thin, remaining balanced around -$8/bbl, with Jul 92 cracks seeing better sellside interest at $20/bbl.

Quiet afternoon in naphtha. Mixed interest in MOC with July naphtha flat price trading $653/mt end of window with the prompt crack trading -$6.60/bbl. Prompt E/W weakens trading down to $29.75/t in July with buyside interest in Cal E/W at $23/mt. Very little interest in Cal'27 crack today, with a -$9.20/bbl bid for smalls. Selling in July/Aug naphtha crack roll at $0.85/bbl.

Very quiet afternoon in NGLs today with US and Chinese holidays. Had some more Dec FEI/MOPJ buying at -$62/mt and -$60/mt which was similar to the morning’s trading level. Some FEI spread buying as well seeing Aug/Sep lifted at -$2/mt and Sep/Dec at -$3/mt, down $2 and $0.50 from last night’s close, respectively. Jul LST/FEI traded at -$194/mt to close out the afternoon where it settled post Europe window.