Brent Rises As Trump Reinstates Blockade

In the news, US President Trump has announced that the US will reinstate a naval blockade on Iran after Tehran claimed it had closed the Strait of Hormuz. Posting on Truth Social, Trump said the Strait would remain open "with or without Iran" and that the US would charge a 20% fee on all cargo transiting the waterway to cover the cost of providing security. He added that the process would begin immediately, though no further details were provided. In Nigeria, crude oil production rose to 1.56mb/d in June, the highest level in more than six years, as improved pipeline reliability and stable operations supported output, according to the country's upstream regulator. Production exceeded Nigeria's OPEC quota of 1.5mb/d by around 4%, while total liquids output, including condensates, increased to 1.735mb/d from 1.700mb/d in May, marking a fourth consecutive monthly increase. Elsewhere, OPEC has lowered its 2026 global oil demand growth forecast to 780kb/d, marking its third consecutive downward revision. The group also raised its 2027 demand growth outlook, citing expectations for stronger global economic performance next year. In South Africa, the nation has proposed a major overhaul of its strategic fuel storage policy, introducing mandatory stockholding requirements for both the state and private sector to strengthen energy security. Under the draft proposal, fuel wholesalers and importers would be required to hold 21 days of fuel stocks, while the state would maintain a 60-day strategic reserve, with 70% crude and 30% refined products. If approved, it would mark the country's first major expansion of strategic fuel reserves since the 1970s. In other news, Sinopec has completed the restructuring of China National Aviation Fuel (CNAF), creating a more integrated aviation fuel business as jet fuel demand continues to grow. The move is expected to strengthen China's aviation fuel supply security, while reflecting a broader shift in refined product demand as gasoline and diesel consumption declines amid slower economic growth, EV adoption, and higher oil prices following the Iran war. Finally, at the time of writing, the front-month (Sep/Oct) and 6-month (Sep/Mar’27) Brent futures spreads are at $0.22/bbl and $3.00/bbl, respectively.

Weaker this afternoon in Dated with the window well offered and Aug DFL trading down to -$0.05/bbl. In the physical window we saw a major offering 3 Brent cargos, pushing down the implied phys diff to around -145c. In the paper window we saw trades and majors selling 20-24 Jul CFD down to -$1.10/bbl, 27-31 Jul CFD down to -$0.70/bbl and 3-7 Aug CFD down to -$0.36/bbl. We saw a buyer of 27-31 Jul vs Cal Aug down to -$0.25/bbl in the window and 26-2 Sep vs Cal Sep at $0.24/bbl. Further down the curve we saw some buying of Q4 DFL up to $0.70/bbl and Q1 DFL up to $0.58/bbl from a refiner.

A tale of two regions in VLSFO today. Sing 0.5 was largely rangebound this afternoon with the Aug Sing cracks trading a touch higher up to $18.20/bbl while Aug/Sep Sing closed the afternoon around $29.75/mt. All the action was in Euro 0.5, with the curve going well bid into the European window. This resulted in the Aug Euro crack trading up to $8.20/bbl from $7.30/bbl while Aug/Sep Euro closed the day at $24.00/mt.

A largely uneventful afternoon on HSFO with regards to price action. Chinese arbers were buyers of Nov 380 cracks to begin the afternoon, however it was not in large size and was taken out fairly quickly. Post this liquidity dried up on the curve. The barge crack continued to trade around -$8.00/bbl while Aug/Sep barges traded up to $4.00/mt. It was largely similar on 380, with Aug 380 crack closing the afternoon around -$4.50/bbl while Aug/Sep 380 finished up around $7.00/mt.

This afternoon in distillates, Sing gasoil spreads were bid on higher ICE gasoil, with Sep/Oct trading from $5/bbl up to $5.55/bbl. E/W was well bid in Aug, lifted from -$62/mt up to -$59/mt last, while regrade was also bid in Q4, rallying to $1.75/bbl post window.

Prompt ICE gasoil spreads firmed throughout, with Sep/Dec trading from $117/mt up to $121.50/mt, while cracks rallied to $58.85/bbl in Sep futures. European jet diffs firmed to $80/mt in Sep, while Q4 traded at $83/mt. Heating oil spreads and HOGOs rallied into the end window, with the Aug HOGO swap firming to 30.7c/gal.

A choppy afternoon in gasoline with RBBRs coming off at US open before recovering into the window, as arbs saw mixed interest, trading between 26.50c/gal and 27c/gal. EBOB cracks were weaker, coming off from $31.90/bbl to $31.30/bbl with Q4 firming form $13.40/bbl to $13.60/bbl on stronger brent spreads. E/W strengthened from -$14.70/bbl to -$14.35/bbl before softening during the window on higher RBBRs, with Aug 92 cracks trading at $16.95/bbl.

This afternoon in naphtha, European crack sells off on higher crude with Aug naphtha crack trading down to lows of -$3.25/bbl this afternoon, with deferred cracks also pricing lower seeing Q4'26 and Q1'27 trading -$6.30/bbl and -$7.20/bbl respectively, with Cal getting hit -$8.10/bbl. Crack rolls pricing lower seeing sell side interest in Q4/Q1 at $0.90/bbl. Outright buying in Q4 E/W up to $37/mt this afternoon, with Aug E/W trading $48/mt.

This afternoon in NGLs, prompt FEI spreads found some strength, seeing Aug/Sep trade up to $17/mt, and Sep/Oct get lifted at $7.50/mt, both up from the morning’s trading levels. As FEI was stronger, LST/FEI came off slightly, with the Aug arb trading down to -$248/mt, before printing -$252/mt end window. Sep LST/FEI was trading at -$234/mt, and there was also buying in Q4 at -$216/mt. The C3 ENT/NWE buying in August returned, trading at -$143/mt and -$145/mt. LST spreads found some buying out of Aug/Nov and Q4'26/Q1'27 at -0.875c/gal and 0.25c/gal. Quieter afternoon in butane, but there was some Aug/Q4 selling at -1c/gal, where it eventually settled post window. C4/C3LST was lifted in Q4 at 22c/gal, up from last week’s close of 20.875c/gal.