Brent supported above $93/bbl on escalating sanctions threats on Iran

In the news, President Zelenskyy confirmed a drone strike on Russia’s Perm oil refinery (226kb/d) overnight. Saudi crude exports via the northern Red Sea have risen by about a third since the July 20 Houthi blockade, reaching around 1.1mb/d, as Sinokor, Dynacom and DHT tankers shuttle 16.3mb from Yanbu to Ain Sukhna to bypass Bab el-Mandeb risk. Iranian crude availability for Chinese refiners is tightening sharply as the US blockade leaves around 40mb near Singapore with only 10% unsold, while Iranian Light has flipped from a $3.50/bbl discount to a $3.50/bbl premium to ICE Brent, signalling a potential supply squeeze from late September. China’s crude buying is expected to recover by up to 1.2mb/d into Q4, but high prices above $90/bbl and disrupted Middle East supplies are keeping imports below 2025 levels, with even bullish forecasts at just 9.9mb/d versus 12–13mb/d last year. The US EPA will allow winter-grade gasoline sales from Sep 1, two weeks earlier than usual, potentially adding hundreds of thousands of b/d of supply as gasoline prices remain above $4/gal amid the Iran war and supply concerns. Finally, the Oct/Nov’26 and Oct/Apr’27 Brent futures spreads are at $1.68/bbl and $11.00/bbl respectively.

This morning in Dated we saw more selling in the front with 24-28 Aug Dated getting hit down low to -$0.2/bbl and offered over from paper whilst the 24-28 1-week got hit -$1.00/bbl by market maker. However we did see a buyer of 21-27 Aug v Cal Sep at -$0.65/bbl, getting hit by market makers. 3-9 Sep v Cal Sep also got hit down low to $0.23/bbl by market makers. We also saw a seller of 5-9 Oct 2-week roll hitting down to $1.25/bbl. Q1'27 DFL continued to see buy side interest whilst Q2'27 DFL was offered low on screen.

This morning in Brent/Dubai, we saw producers on both the buy side of the Nov B/D, sellside of the Dec B/D. There was also trade selling of the Nov/Dec box around -$0.14/bbl. This meant in the morning we traded fairly rangebound into the window, Sep B/D trading between $3.7/bbl to $3.9/bbl. After the window there was strong selling of Oct B/D by Chinese, and we came off down to $3.3/bbl in the Sep B/D. The Dubai spreads continued to be very strong, the Sep/Oct Dub spread up again from $3.93/bbl to $4.3/bbl.

Once again, 380 opened higher this morning before selling off, Sep/oct 380 opened traded at $39.00/mt in the early morning before selling down to $37.25/mt in the window, it has since been bid back up to $38.00/mt. 380 crack was offered again in the window trading as low as -$0.85/bbl, it found some buying post window and traded up to -$0.55/bbl. There was real selling on Barge spreads this morning with Sep/Oct trading down to $9.50/mt at the end of the window from last nights close of $12.00/mt, it is currently trading at $10.50/mt. Sep Barge crack was offered in the window and sold off quite heavily trading down from -$10.65/bbl to -$11.80/bbl.

VLSFO was rather quiet this morning, Sep/Oct Sing 0.5 was somewhat muted again this morning trading between $34.00/mt and $34.25/mt, Sep Sing crack was choppy trading down from $18.10/bbl to $17.85/bbl during the window, before getting bid back up to $18.15/bbl post window. Sep/Oct Euro 0.5 traded was rangebound trading at $25.00/mt and Sep Euro crack traded at $5.60/bbl, although there was very little liquidity in the Euro complex this morning.

This morning in distillates, Sing gasoil spreads were mixed, with Sep/Oct sell side, trading from $5.4 down to $5.35/bbl, while Oct/Nov saw buying at $5.7/bbl. Front EW sold off into and post window, trading from -$70.25 down to -$72/mt. Kero spreads were well offered in Oct/Dec, pushing Oct regrade down to -$1.6/bbl before finding support and bidding back up to -$1.35/bbl post window. Prompt ICE gasoil spreads weakened initially before rallying post window, with Sep/Dec trading from $148 down to $136 before recovering to $144/mt last, while Oct cracks firmed to $74.8/bbl.

This morning in gasoline, MOC slightly better bid in 92. EBOB strong this morning with buying in Sep/Oct up to $106/mt, with sell side interest in Sep/Oct/Dec fly at $1/mt. Arbs lower in the front on the back of EBOB strength, seeing Sep Arb trading negative for the first time this month – down to -1c/gal. EW continues to weaken, again driven by EBOB strength, seeing Sep EW sell of to -$17/bbl with some buying from a trade in Dec EW up to -$2.55/bbl.

This morning in naphtha opened strong, with MOC better bid versus last night’s quieter tone. MOPJ was firmer, with Sep cracks bid up to around $0.80/bbl pre-window before easing slightly, while Sep/Oct spreads moved from $25.50/mt to $27/mt before finishing around $26/mt bid, and Oct/Nov at $26.50/mt. E/W strengthened sharply, as Sep bid up from around $41/mt at close to $48/mt before coming off to $46.50/mt, and prompt boxes followed suit, with the Sep/Oct box trading at $3.50/mt before easing to around $2.5/mt equivalent, as Oct traded at $44/mt. NWE naphtha was supported early but faded, with Sep cracks opening around -$4.80/bbl, trading up to -$4.45/bbl before returning to -$4.80/bbl, while Sep/Oct spreads were around $24/mt and the rest of the curve was relatively illiquid.

This morning in NGLs was characterised by recent news of Panama Canal cutting traffic by Mid-September. On the back of this FEI flat price gapped up and the Sep LST/FEI tanked by $50, reaching lows of -$390/mt, having closed the day yesterday at -$337/mt. Q4 LST/FEI first traded -$300/mt before getting sold down to -$315/mt. FEI spreads also gapped up in the front, with Sep/Oct trading up to $41/mt, and Oct/Nov trading at $30/mt, both up around $10 from opening levels. After bottoming out at -$390/mt, the hedging buyside flow returned for Sep LST/FEI, swinging the arb back to a trading level of -$358/mt. Spreads then sold off with this until we eventually found some stability with Sep arb at -$370/mt, and Sep/Oct FEI at $34/mt. Around these moves, Sep FEI/CP traded between $143/mt and $150/mt, up from $199/mt last night, and Sep EW was printing up to $208/mt, from yesterday’s closing level of $178/mt. FEI/MOPJs had some mixed flows which ultimately kept somewhat of a lid on FEI, with Sep trading at -$60/mt and Q1 trading between -$65/mt and -$60/mt, eventually settling at -$63/mt. End window on screen, Sep FEI flat price was lifted at $762.50/mt.

The 30-year bond yield is now back to 5.25% It's erased most of Treasury Secretary Bessent's intervention on Wednesday. This is not good for the bond market and the Bessent has clearly made a line in the sand. Markets don’t like it, precious metals continued to rally, gold up another 1% today, dollar continues to fall, S&P falls -0.8%, Nasdaq falls -0.7% and crypto continues to surge.

30y France close to wides against Bunds. We may worry about US treasuries but how can low growth, massive deficit France cope with yields here within the restrictions of the eurozone?
Walmart stock falls over -8% after posting a rare quarterly sales miss, with US growth falling to a 6-year low.? Walmart is one of the most efficient, well-managed businesses in the US. If it's suffering, just think how its lesser competitors are doing and how it will squeeze its suppliers given its vast buying power? It has been winning market share, gaining higher income customers. In real terms sales (ex auto fuel) are negative. But a sizeable number of the FOMC think that the economy is fine.

This looks like a textbook case of Jevons Paradox. Token prices have dropped, but compute costs have stayed elevated, which suggests cheaper tokens aren't reducing overall spend. Instead, they're driving so much more usage that total demand for inference, and the compute needed to serve it, keeps climbing.