Brent sits above $90/bbl on continued supply risk

China exported 6.7% more fuel m/m (12.9% lower y/y), according to Chinese customs data. Notably, diesel exports were up 88% m/m, putting them just below July 2025 levels and 50% above the YTD monthly average. Exports of other refined products remain much lower relative to pre-war levels. In other news,  COSCO Shipping Energy Transportation and China Merchants Energy Shipping have stopped sending oil tankers through the Strait of Hormuz and the Bab al-Mandeb Strait since late July, according to data by Vortexa. Meanwhile, Saudi Arabia has resumed its oil loadings from inside the Strait of Hormuz, offering Asian refiners Arab Medium and Arab Heavy Crude for loading via ship-to-ship transfers off Fujairah in the UAE. Three VLCCs, Malaysia Prosperity, Algeria Prosperity and Singapore Prosperity, loaded 2mb of crude each from the Juaymah and Ras Tanura terminals between 12 and 16 Aug. Libya has said it needs between $30-40 billion in investment to develop its oil and gas resources and raise production to 2mb/d by 2030, as per Masoud Suleman, Chairman of the country's NOC. Finally, at the time of writing, the Oct/Nov'26 and Oct/Apr'27 Brent futures contracts stand at $1.65/bbl and $9.30/bbl, respectively.

Quiet morning in Dated Brent. Balmo Aug DFL continued to get offered down to $0.25/bbl, and Bal Aug/Sep Dated offered down to $0.10/bbl. Sep DFL also saw selling, trading down to $1.73/bbl. We saw 14-18 1w offered at $0.38/bbl and 3-9 Sep vs 14-18 Sep trading down to $0.17/bbl, then offered down to $0.16/bbl. 5-9 Oct 3w was also offered at $1.6/bbl, and Oct Nov DFL offered down $0.05/bbl.

This morning in Brent/Dubai, we gapped lower, with the Sep bd opening $0.5/bbl lower at $4.1/bbl. There was small fund selling of Nov Brent/Dubai and Q4 Brent/Dubai, but there was no larger follow-through by the previous day's trade sellers. During the window, we rallied, up to $4.30/bbl, with some buying by Chinese of Full Aug Brent swap vs Sep Dub. The Dubai spreads were very quiet, with smalls Major sell-side interest in Sep/Oct and Oct/Nov Dub spreads. The Sep/Oct Dub spread traded between $3.15/bbl to $3.14/bbl. The Sep/Oct Brent/Dubai box gapped lower overnight, down from -$0.80/bbl to -$1.03/bbl, and traded range-bound this morning.

VLSFO was quieter than HSFO this morning; Sep/Oct Sing 0.5 traded up from $35.00/mt to $36.00/mt during the window and then sold back down to $35.00/mt. Sep Sing crack traded up to $18.45/bbl in decent volume on screen during the window; it then sold back down to $18.10/bbl post-window. Euro 0.5 cracks were offered on screen this morning; Sep consistently sold off from $6.20/bbl to $5.70/bbl. Sep/Oct Euro sold off 50c during the window to $21.00/mt and then continued in a similar vein to the crack selling down to $20.00/mt post window. 0.5 E/W is therefore implied higher around $80.25/mt.

In HSFO, the Sing 380 complex opened much stronger this morning on the back of higher crude. Sep/Oct traded up to $41.00/mt pre-window before selling back down to $39.50/mt during the window and then bouncing up and finding support at $40.00/mt post-window. Oct/Nov 380 also saw real buying traded up from $22.50/mt to $24.25/mt. Sep 380 crack was choppy, opening higher at -$0.05/bbl, then trading all the way up to $0.45/bbl before closing out the window at $0.25/bbl. Sep Barge crack traded in small volume around -$8.80/bbl straight after the window before sharply selling off down to -$9.35/bbl. It was a similar story with Sep/Oct Barge trading in small volume and then selling off a dollar post-window to $17.00/mt; 380 E/W was therefore implied higher post-window, getting all the way up to $61.50/mt where it traded on screen.

This morning in distillates, Sing gasoil spreads saw selling in the front, with Sep/Oct trading from $6.80/bbl down to $6.70/bbl last. Front gasoil E/W was mixed, trading between -$72/mt and -$70.50/mt, last lifted at -$71.25/mt. Kero spreads remained offered, with Sep regrade hit down to -$4.00/bbl in the window.

Prompt ICE gasoil spreads sold off, with Sep/Dec trading from $180/mt down to $176/mt, while Oct cracks weakened to $75.15/bbl.

This morning, gasoline was strong. There was buy-side interest on Singapore 92 cracks as they traded up to $20.50/bbl and Sep/Oct firmed from $5.30/bbl to $5.45/bbl. The gasoline E/W opened lower at -$12.75/bbl in Sep and was offered down to -$1.95/bbl in Q1'27. EBOB was well supported, with cracks bid up from $33/bbl to $33.50/bbl in Sep, and Q1'27 was bid at $15.40/bbl. EBOB spreads were choppy but were strong as well, with Sep/Oct trading up from 93.50/mt to highs of $96.50/mt.

This morning in naphtha was weaker overall, led by heavy early MOPJ flat-price selling despite low MOC volume. MOPJ cracks sold off from around -$0.30/bbl to -$0.90/bbl before recovering slightly in the window. Prompt spreads were generally better offered but on limited volume, with Sep/Oct opening at $22.50/mt but valued closer to $21.25/mt post-window, with Sep/Nov trading at $44.50/mt. E/W was softer with the east under pressure, as Sep moved down to $36.50/mt before recovering to around $37.75/mt. NWE naphtha followed the weaker tone, with Sep cracks selling off to around -$5.10/bbl before recovering to -$4.85/bbl, while spreads were also illiquid, with Sep/Nov trading at $47/mt and Dec/Jan around $10.50/mt.

This morning in NGLs, Chinese were early FEI flat price buyers out of Oct and Apr 27 at $687/mt and $576/mt, respectively. Sep LST/FEI opened the morning trading at $323/mt, before weakening to close the morning at -$330/mt. There was also good deferred LST/FEI interest, with Cal arb getting lifted at -$192/mt, and the Q4 was trading at -$282/mt, down $5 from yesterday’s closing level. Euro trade was also on the buyside of the Dec/Dec LST/FEI roll at -$86/mt. Saw importer buying of the LST/NWE Bal Aug/Sep and Oct/Nov at -$150/mt on both, and Sep ENT/NWE was lifted at -$170/mt. FEI spreads were better bid on the morning, with Sep/Oct trading up to $25.50/mt, and Oct/Nov to $15.50/mt, having closed yesterday at $14/mt. There was also Dec/Dec FEI selling at both $98/mt and $99/mt. The close of the morning was characterised by a physical offer getting lifted, and on screen, Sep FEI flat price was getting lifted at $710/mt.

Ten-year JGB yields pushed to roughly 2.95%, a new three-decade high, with markets pricing an imminent BoJ hike as soon as September. Higher JGB yields should, in isolation, support the currency, but US Treasury yields rose in lockstep, so the rate differential barely budged. As such, the currency continues to come under pressure: the yen slid past 159.5 per dollar. The Nikkei 225 also fell 2.54% to 67,461, unwinding the prior session's gains. The biggest losers were Taiyo Yuden -11.5%, Murata -9.6%, Kioxia -7.6%.

In the US, fears over heavy government spending and sticky inflation pushed the 10-year Treasury yield toward 4.75% - its highest since January 2025. The 30-year has also reached levels not seen since 2007. Yesterday, ten of eleven S&P sectors closed red, led by communication services, staples and financials. US equity futures continued to fall today, extending Monday's losses: Dow and S&P down 0.5%, Nasdaq down 0.3%.

UK unemployment remained at 4.9% in June, steady from May but above the expected drop to 4.8%. Wage growth, however, was stronger than expected at 3.5% and the number of people claiming benefits dropped 11k.

Data today: US ADP employment change, Housing starts, manufacturing and industrial production. ZEW economic sentiment