Brent Slips sub-$80 Despite Cancelled Peace Talks

In the news, scheduled talks between the US and Iran have been cancelled following a wave of Israeli airstrikes in southern Lebanon. The White House has announced that Vice President J.D. Vance will no longer be travelling to Switzerland. Elsewhere, the IEA estimates that global stocks have been drawn down by 4mb/d since February, with US inventories down by over 50mb over the past nine weeks. Despite this, tanker insurance and shipping concerns have kept physical players cautious and reluctant to begin moving product. In Spain, oil major Repsol is expanding in Venezuela, having signed a preliminary deal to add the Horcon oilfield to its portfolio, following earlier agreements covering the Perla gas project, which it shares with Italian major Eni, and the Petroquiriquire joint venture. Repsol aims to raise its current production of 45kb/d by 50% within the first year and to triple it within three years, focusing on the upstream.  In other news, the Philippines is seeking to formalise a long-term oil supply deal with Russia, according to President Marcos Jr. He highlighted that the country is looking to diversify away from its heavy reliance on Middle Eastern crude amid recent disruptions. Marcos further added that the Philippines is now working to put a more permanent system in place, calling it "another assured lifeline" for petroleum supply. Finally, the front-month (Aug/Sep) and 6-month (Aug/Feb) Brent futures spreads are at $0.46/bbl and $3.67/bbl, respectively.

This morning in Brent/Dubai there was more buying of Aug EFS, Dubai spreads were sold aggressively on screen. This saw July Brent/Dubai rally from $5.95/bbl to $7.20/bbl as the Jul/Aug Dubai spread fell from -$0.30/bbl to -$0.90/bbl. OTC we were very quiet, with some bank selling of Q4 Brent/Dubai around $3.10/bbl. There was also some Chinese selling of Oct Brent futures vs Jul Dubai. The boxes rallied as Dubai spreads moved lower, some buyside interest in Aug/Sep box around $1.15/bbl. There was continued sellside interest of Q4/Q1 Brent/Dubai box and sellside interest of Dec/Mar Brent/Dubai box.

Very quiet morning in Dated with the US out. Jul DFL traded down to $0.11/bbl and Aug DFL down to $0.52/bbl. We saw some buying out 27-31 Jul 1w lifted at $0.08/bbl whilst 13-17 Jul vs Cal Jul was bid at $0.06/bbl and 20-24 Jul 1w bid at $0.07/bbl. 6-10 Jul vs Cal Jul was offered down to $0.01/bbl. We also saw buying out of Aug/Sep Dated and Sep DFL. Further down the curve we saw a major buying Q4'26 DTL at $0.61/bbl and a buyer of Cal'27 DFL at $0.31/bbl.

VLSFO enjoyed a strong start to the last day of the week. On higher crude spreads went well bid. Jul/Aug Sing traded up to $24.00/mt from $19.00/mt. The crack was supported as a result getting up to $14.00/bbl pre-window from $13.35/bbl. However, 0.5 did relax post window with spreads down a touch to $23.00/mt and cracks $13.55/bbl. Euro continued to strengthen more than Sing 0.5 implying 0.5 E/W weaker. Euro cracks in the front were up to $7.60/bbl by end of morning. Euro spreads saw similar strength with Jul/Aug trading up to $26.00/mt.

HSFO had a quiet start to the day, particularly with Chinese arbers out. The 380 crack traded up a touch in the window up to -$7.70/bbl, where it then remained for the remainder of the morning. 380 spreads were a touch better bid on higher crude with Jul/Aug trading up to $0.50/mt from last night's close of -$0.75/mt. 380 E/W was largely unmoved and not very liquid this morning, trading around $0.00/mt. It was a similar story on barges, with liquidity fairly low this morning. Barge cracks remained where they closed last night around -$7.80/bbl with Jul/Aug barges implied at $3.25/mt.

This morning in distillates, Sing gasoil was sellside on spreads with Sep/Nov trading for size at $3.95/bbl. E/W was well offered on open, dropping $2.50, then rallying back up to -$31.50/mt and dropping into end window at -$35/mt. Regrade was better bid, rising 20c to trade at $0.70/bbl in the front, while kero spreads were thin but generally buyside in Dec/Jan at $1.25/bbl.

Prompt ICE gasoil traded rangebound through the window at $12/mt before rallying to $13.50/mt afterwards. Aug cracks saw similar flows, rising $1 post window to $38.80/mt. European jet diffs sold off to $64.50/mt in Jul. Heating oil spreads traded rangebound while the M1 HOGO swap dropped to 29.5c/gal.

This morning in gasoline, Sing 92 flat price traded end window at $99.40/bbl with MOC well bid. The East was mixed, with July cracks trading around $20.20/bbl and Jul/Aug saw better buyside interest from $4.70/bbl up to $4.85/bbl. July E/W weakened from -$7.70/bbl to -$8/bbl with 92/MOPJs better offered and EBOB better supported. EBOB cracks traded up from $27.40/bbl to $28.20/bbl and Jul/Aug got bid up from $30.50/mt to $31.50/mt.

This morning in naphtha, MOC initially better offered but flipping to better bid into end of window. MOPJ spreads better offered with real sell side interest in July/Aug, seeing some buying in July/Oct at $28/mt. E/W gets hit down to $30/mt in July, with buyside interest in Q2'27 E/W at $22.25/mt. July naptha crack weakens on the day, trading down from -$6.60/bbl to -$6.80/bbl, with crack rolls selling off also.

This morning in NGLs was relatively quiet with Chinese out for holiday. There was some FEI spread buying in Jul/Aug and Aug/Sep at $5.50/mt and -$2/mt, respectively, with the prior settling at $4/mt end window. FEI/MOPJ interest in Dec and Q4 trading at -$60/mt and -$68/mt, the latter up $6/mt from yesterday’s closing level. Jul FEI/CP was trading at $22/mt before coming off to $19/mt end window. No Jul FEI flat price action on screen end window.