Brent strengthens to $105.50/bbl as Middle Eastern conflicts escalate

Last week’s highs are providing near-term resistance. The weekend’s deadly attacks on Riyadh’s main airport by the Houthis have raised the geopolitical risk premium, putting mounting pressure on Saudi Arabia to escalate, and risking a wider war that might draw in the US and Saudi Arabia’s defence partners. Iran continues to ramp up its attacks on Hormuz shipping, with the IRGC navy announcing that any ship with navigation or identification turned off will be deemed hostile. In a Truth Social post, President Trump claimed that an energy ceasefire was agreed between Russia and Ukraine, “effective immediately”, but it is unclear that either side has agreed to a truce. Russia struck multiple Ukrainian power stations on Sunday, while Ukraine hit the loading terminal at Russia's Novoshakhtinsk Oil Refinery. Speaking at the WPC Energy Congress in Riyadh on Monday, Saudi Energy Minister Prince Abdulaziz bin Salman was looking at ways to expand its oil pipeline capacity to destinations outside the Persian Gulf to 10mb a day within two to three years. Finally, the Dec/Jan’27 and Dec/Jun’27 Brent futures spreads are at $3.267/bbl and $13.50/bbl respectively.

Slow morning for Dated. Balmo DFL saw a touch better buying, moving up from $15.30/bbl to $15.45/bbl, whilst Nov DFL traded rangeound around $5.65/bbl. Good size printed on Nov/Dec DFL, driven from the buyside and printing $1.79/bbl, whilst buyside interest emerged in rolls, with 9-13/11 v Cal Nov bid at $0.75/bbl.

This morning in Brent/Dubai we opened lower, with Dub spreads firming down the curve. Nov B/D opened down $0.5/bbl at -$3/bbl, but on open there was Chinese buying of Jan Ice vs Nov dub. We rallied up to -$2.65/bbl in the Nov, coming off into the end of the window. There was bank selling of Nov/Dec Dub spread, which traded rangebound between $3.65/bbl to $3.9/bbl. The boxes opened lower, but there was only interest to buy them on open. Little traded but they drifted higher all morning.

This morning in distillates, Sing gasoil spreads were bid in the deferred, with Dec/Apr trading up at $28.15/bbl. Prompt EW saw selling initially from -$130/mt down to -$132.5/mt, before firming to -$129/mt, then selling back to -$133/mt post window. Regrade was quiet, with buying in Q2 at $1.70/bbl, while Dec/Apr kero saw buying sub $16.0/bbl. Prompt ICE gasoil spreads sold off into the window, then rallied, Nov/Dec trading from $43/mt down to $38/mt, now back at $42.5/mt, while Dec cracks were rangebound around $75.3/bbl.

This morning the East opened up better bid before softening during the window. Nov cracks traded down from $24.20/bbl to $23.55/bbl before recovering slightly post window. Front spreads were better offered, as Nov/Dec got sold down from $7.25/bbl to $6.70/bbl. EW weakened as well, with Nov coming off from -$5.75/bbl to -$6.60/bbl as EBOB went bid. Nov EBOB cracks firmed from $30/bbl to $30.60/bbl and Nov/Dec traded up from $75.75/mt to highs of $77/mt during the window.

This morning MOPJ MOC opened up better bid trading +5. Initially the East saw better flat price sellside interest off the back of petchems but spreads went bid with Nov/Dec tdding from $42/mt up to $44/mt with phys interest both sides. Spreads softened into end window with Nov/Dec getting hit $42/mt end window. EW was better bid trading from $83/mt up to $87/mt in Nov through the window and there was Q1 E/W buying from $63/mt to $65/mt post window. In Europe there was more sellside interest on front cracks from -$2.3/bbl to -$2.45/bbl but still opened stronger vs close on Fri but volumes still lower. There was Q1 and Q2 crack buying up to -$5.5/bbl and -$7.85/bbl respectively by trade houses.

This morning in NGLs, FEI was stronger off higher crude however, structure was slightly weaker as Nov/Dec FEI traded down to $43/mt from opening at $45/mt. Dec/Jan FEI was firm at $37/mt trading at $37.5/mt pre window. FEI/MOPJs were illiquid with Q1 FEI/MOPJ trading at -$50/mt. Nov LST/FEI traded at -$402/mt this morning. This was a recovery against the lows of -$415/mt at the US close last Friday as the arb struggled to find a bid post news of the Panama Canal earthquake. The H2 LST/FEI also traded at -$213/mt. FEI/CP was also stronger trading at $237/mt after opening at $230/mt. CP spreads also printed slightly weaker at $22/mt in Nov/Dec versus $23/mt pre window. End window, Nov FEI was trading around $933/mt on screen.

* Oil supply disruptions tend to weigh on bond and equity prices.( Source: Bloomberg, Goldman Sachs)
-Negative correlation between S&P500 and Brent prices
-Positive correlation between U.S. 10-year yields and brent oil prices
* Economic activity has remained resilient despite headwinds from the dollar, oil prices, and bond yields. (@augurInfinity)

* US market breadth is among the weakest in history, with only ~29% of S&P 500 companies outperforming the index over the last 3 years, near the ~25% low reached at the 2000 Dot-Com peak. The average S&P 500 stock is now at its lowest level relative to the cap-weighted index since November 2002, erasing over 23 years of relative outperformance as a handful of mega-caps continue to dominate.
Some 84% of S&P 500 stocks trade at least 10% below their all-time highs, led by Real Estate (97%), Materials (96%), Utilities (94%) and Consumer Discretionary (92%), while Energy (62%), Healthcare (70%) and Information Technology (72%) have held up relatively better. Yet with 59% of stocks down at least 20% from their highs, 41% down more than 30% and 17% down more than 50%, the S&P 500 sits just 0.2% from the all-time high it set on Tuesday, meaning a few names are carrying the entire market.

* Global bank stocks are selling off, with rising bond yields adding to the pressure: the KBW Bank Index is down 12% in two months, led by Goldman Sachs (-22%) and Bank of America (-17%), while Wells Fargo, JPMorgan and Citigroup are each down 9-10%. In Europe, the STOXX Europe Banks Index fell 3.5% on October 7 as Deutsche Bank, UniCredit and Société Générale each dropped more than 4%, and in Asia, Singapore’s DBS, OCBC and UOB fell by as much as 9% last week.
Chile's (world’s largest producer) copper production fell 12.8% year-on-year to 369.5 metric tons in August 2026, reaching its lowest level of output since February 2011.

* Shocking stat of the day: $241 billion worth of French corporate bonds are now trading at lower yields than French government bonds. This figure is up +1,621% from just $14 billion at the start of 2026. This means ~38% of French high-grade corporate debt is now trading at lower yields than government bonds of similar maturity.