Brent rises to $106/bbl as US launches limited strikes on Qeshm Island

The US launched limited strikes on Iran’s Qeshm Island, as Iranian media reported five explosions in quick succession. News outlets citing US officials described the attacks as defensive in nature, as to not signal any intention of resuming major combat operations. Saudi Aramco reported on Tuesday a 34.5% increase in Q3 net profit despite attacks on its facilities, mainly due to higher revenue and its exit from a joint venture. India’s BPCL has bought 1mb of US WTI at a $18/bbl premium to Dated. Kazakhstan’s energy ministry said on Tuesday that it had restarted oil transit via the Atyrau-Samara pipeline after drone attacks the previous day forced its operations offline the previous day. Ukraine set fire to a major oil refinery in the Russian city of Yaroslavl in an overnight drone attack, the regional governor said, after the Russian military said it had downed 856 enemy drones across the country. US shale producer Diamondback Energy raised its annual production forecast on Monday after beating expectations for third-quarter profit, aided by elevated oil prices. Finally, the Jan/Feb’27 and Jan/Jul’27 Brent futures spreads are at $3.04/bbl and $13.67/bbl respectively.

This morning in Dated, the prompt was softer but firm further down the curve. Balmo DFL was sold down from $3.50 to $3.40/bbl in size, and Nov DFL followed from $3.60 to $3.40/bbl. Dec DFL traded $4.77, with Dec-Feb DFL at $4.25/bbl earlier. Dec Dated was bid up from $107.60 to $108.45 before sliding back to $107.30/bbl, still around 90c above last night’s close, while the Dec26-Nov28 Dated strip climbed from $88.37 to $89.50, $2.14 over last night’s close, and has eased since. Dec/Jan Dated traded $3.60/bbl in size before slipping. Dubai held up better, with Dec Dated/Dubai trading $4.00/bbl. Further down the curve, the DFLs sat 10-15c above last night’s close: Q1'27 traded $3.57/bbl, Q2'27 held around $2.54/bbl, and Cal'28 was offered back from $1.02 to $1.00/bbl. In the days market, 04-10 Nov v Nov traded -$0.45, dipped to -$0.50 and is back at -$0.45/bbl in size. Also saw 15-19 Mar Dated trading $98.30/bbl and 25 Nov-02 Dec v 14-18 Dec going through at $2.05/bbl.

This morning in Brent/Dubai there was large tradehouse selling of Dec B/D, in size. The Dec B/D opened higher around -$0.25/bbl and traded up to -$0.19/bbl early on, but we came off into MOC to -$0.34/bbl. Post window we continued lower, trading down to -$0.64/bbl. There was also Chinese buying of Dec Dub vs Feb Ice cross month. The Dubai spreads were better bid, with the Dec/Jan Dub spread trading up from $1.94/bbl to $2.13/bbl. The Dec/Jan box sold off, down from $0.76/bbl to $0.46/bbl. In the backend there was tradehouse buying of Q2'27 B/D around -$1.3/bbl and selling of Q3'27 B/D around -$1.2/bbl.

High Sulphur products also saw real selling this morning, 380 spreads sold off aggressively with Dec/Jan trading down from $39.25/mt to $30.00/mt and Jan/Feb selling down to $28.00/mt to $21.00/mt, they have both rebounded around 2 dollars from these levels. Dec 380 crack opened at $4.00/bbl, it was relatively stable in the window trading down to $3.80/bbl however post window it quickly gapped down to $1.65/bbl and has since rebounded to $3.25/bbl, Dec 380 E/W initially sold off 9 dollars $98.00/mt before getting bid back up to $106.50/mt. Barge spreads were very thin this morning, Dec/Jan traded around 3 dollars lower to $10.00/mt while Dec Barge crack saw real sold down from -$12.40/bbl to -$14.00/bbl before getting bid back up to -$13.00/bbl.

Structure continued to see real selling this morning, liquidity also remained very tight thus the market was gapping lower. Sing spreads remained tight and continued to sell off, Bal spread has lacked any support trading down from $37.00/mt to $31.00/mt, Dec/Jan similarly gapped down from $34.00/mt to $29.00/mt. Dec Sing crack opened around $23.40/bbl and had sold off on screen to $21.30/bbl by window open, it was trading a dollar lower at by window close and post window it has sold down to $18.40/bbl, Dec 0.5 E/W has been implied lower from around $148.00/mt to $125.00/mt. Euro complex remained very illiquid this morning, Dec/Jan has traded at $14.00/mt while the rest of the spreads are yet to trade, Dec Euro crack traded down from -$0.80/bbl to -$1.20/bbl in low volume.

This morning in distillates, Sing gasoil spreads saw mainly sell side interest in the Q1/Q2 region, with Mar/Apr well offered at $4.1/bbl as ICE rallied. EW was better bid initially, with Dec lifted up to -$98/mt before turning offered, trading back down to -$103/mt. Regrade traded lower across the curve, with Dec hit down to $0.7/bbl, while Jan/Feb kero saw selling at $3.8/bbl. Prompt ICE gasoil spreads rallied early on before trading back down, Dec/Jan moving from $38 up to $41.5/mt, then back to $40.5/mt, while Jan futures cracks rallied from $69.0 up to $71bbl.

Weak morning for Gasoline. 92 MOC better offered in Nov with spreads and cracks opening sellside, seeing Dec cracks get hit $10.45/bbl and gets sold down to $9.3/bbl but recovering slightly post window back to $10 handles. Selling in Q1'92 crack stepping down to $13/bbl. EW continues to weaken this morning, seeing Dec E/W getting hit -$1/bbl to -$1.75/bbl end of window. Gasnap boxes remaining better bid today, seeing Dec/Jan gasnap box getting lifted -$17/mt.

This morning in naphtha, MOPJ MOC was better bid trading +5c. MOPJ cracks were better offered this morning with Jan crack selling down to $2.3/bbl. Spreads were more quiet with Dec/Jan trading $35/mt and EW boxes were better offered with Dec/Mar box selling $20.5/mt and Q2/Q3 getting sold $8/mt while the prompt was valued $74/mt end window. Euro cracks were softer with Dec trading -$4.85/bbl and coming off to -$5.25/bbl post window with Q1 getting hit -$5.95/bbl.

This mornio $75.5/bbl.

This mornio $75.5/bbl.

This morning in NGLs, Dec/Jan FEI was stronger during the morning. It opened at $58/mt in the morning before rallying to $60.5/mt by the close. Dec/Dec FEI was actually slightly weaker today trading at $325/mt down from $340/mt yesterday. On screen, Dec FEI was trading at $988/mt to close. The arb remained relatively quiet this morning with Q1 LST/FEI trading -$271/mt and Dec LST/FEI trading at -$355/mt before printing -$353/mt by the end of the morning window. FEI/MOPJs were firm initially with Q1 FEI/MOPJ trading at -$17/mt and Dec FEI/MOPJ trading at $37.5/mt. FEI/CP was weaker this morning with Dec FEI/CP falling from $299/mt to $297/mt whilst Jan FEI/CP traded at $249/mt before weakening to $247/mt. Consistent with this, CP spreads were stronger this morning as Dec/Jan CP traded up to $8/mt up from $7/mt at the open.

The Fed held rates at 3.75% to 4% in a 10-2

Markets enter the week on the back foot following Friday’s broad risk-off move, with equities, commodities and crypto under pressure, although FX remains surprisingly contained.

US Treasuries are broadly unchanged ahead of a pivotal week. Wednesday’s quarterly refunding announcement could deliver the biggest change to issuance guidance since early 2024, while Friday’s NFP is expected to show just 65k jobs, with unemployment steady at 4.2%. Tuesday’s midterms add another layer of event risk, with a potential split Congress historically supportive of Treasuries. Meanwhile, Dallas Fed's Logan believes rates need to be at least 50bp higher to become modestly restrictive.

UK-EU relations are back in focus, with renewed discussion around potential UK re-entry and regulatory alignment. France's fiscal concerns are mounting, with Fitch moving its outlook to negative on weaker growth, higher borrowing costs and a wider deficit.

The BOJ held at 1.25% in a hawkish decision, keeping December as the central case for a 25bp hike. USD/JPY is back near 158.00, with intervention warnings continuing. Australia is firmly in focus ahead of tomorrow's RBA decision, with 32/35 economists expecting a 25bp hike to 4.85% as inflation reaches 4.9% y/y. China delivered mixed signals. RatingDog manufacturing PMI held at 52.0, but official PMI fell to 49.3, back in contraction. Regulatory support helped Chinese equities rebound, while South Korea's KOSPI gained 3.0% on strong exports.

Week Ahead:
Monday: US ISM Manufacturing PMI
Tuesday: US JOLTs Job openings, RBA Interest Rate Decision
Wednesday: US ISM Services PMI
Thursday: BoE Interest Rate Decision
Friday: US Non-Farm Payrolls, US Unemployment Rate, US Michigan Consumer Sentiment
Saturday: China Inflation Rate YoY