Brent supported at $111/bbl as geopolitical tensions escalate

Brent continues to reprice higher as supply disruptions and escalating geopolitical tensions weigh on sentiment. Iranian navy officials said American forces fired two light projectiles at the Konarak naval base, wounding two personnel, which would be the first strike on Iranian soil in nearly seven weeks. However, this allegation was denied by a US official. The Trump administration is authorising the sale of sanctioned oil tankers to allow the vessels to start legitimately shipping crude, according to US Energy Secretary Chris Wright. Citgo Petroleum Corp, the Venezuelan-owned, US based refiner, has raised its 2026 operating profit outlook by $2 billion because of surging fuel margins. UK-listed Gulf Keystone Petroleum said on Tuesday it will merge with Norway's ShaMaran Petroleum in a $601 million all-share deal, creating one of the largest oil producers in Iraq's Kurdistan region. Ryanair CEO Michael O’Leary predicted a record increase in European air fares next year, adding that most European airlines, including his own, lack significant hedging next year to protect against higher oil prices. France said it secured commitments from three Middle Eastern producers, Bahrain, the UAE, and Saudi Arabia, to supply the country with more diesel in the coming months. Finally, the Dec/Jan’27 and Dec/Jun’27 Brent futures spreads are at $3.83/bbl and $15.55/bbl respectively.

Busy morning, with the Dated complex extending yesterday’s rally. Nov DFL firmed from $6.10 to $6.60 despite real selling, dipped to $6.45 and is back at $6.55/bbl, where buyers stepped in. Dec DFL followed from $4.68 to $4.85/bbl, where a refiner bought it, and the Nov/Dec DFL roll firmed from $1.57 to $1.75/bbl. Nov/Dec Dated was bid from $4.88 to $5.10 before being sold at $5.00/bbl, and has firmed since. Dubai rallied harder, seeing Dec Dated/Dubai trading $2.24/bbl, around 50c under last night’s close.

In the days market, we saw buying 16-20 v 23-27 Nov at $1.50/bbl, 23-27 Nov v 30 Nov-04 Dec traded $1.20/bbl, Cal Nov v 16-20 Nov traded $0.59/bbl, and Oct balmo v Nov Dated traded $3.61/bbl.

380 complex was bid to start the day but this interest quickly turned sell side and it sold off aggressively, Barge crack also weakened. Nov/Dec 380 opened a dollar higher at $59.00/mt, it then sold off OTC to $56.25/mt by window start, slipping to $55.25/mt post window but has rebounded to $56.00/mt, Dec/Jan sold off from $40.00/mt to $37.50/mt. Nov 380 crack sold off from $12.50/bbl to $10.60/bbl by window start, it then continued to weaken to $9.75/bbl post window and has since rebounded to $10.00/bbl. Barge spreads traded higher this morning with Nov/Dec and Dec/Jan both trading a dollar higher to $20.00/mt and $19.50/mt respectively, contrastingly Nov Barge crack sold off -$9.75/bbl to -$10.25/bbl in the window before rebounding to -$10.00/bbl post window.

Sing 0.5 spreads traded at similar levels to yesterday evening while cracks opened slightly higher and then came off as the morning progressed, Euro 0.5 was resilient. Nov/Dec Sing opened at $31.00/mt and then traded between this level and $30.50/mt both during and after the window, Dec/Jan consistently traded at $31.00/mt. Nov Sing crack saw good volume this morning, initially trading up 30c to $26.50/bbl, it was then aggressively offered down on screen and opened the window at $25.45/bbl, it has continued to sell off to $25.15/bbl. Euro 0.5 saw better liquidity this morning but remained thin, Nov/Dec and Dec/Jan Euro consistently traded at $15.00/mt and $13.75/mt respectively, Nov Euro crack opened at $1.50/bbl and was offered down on screen to $1.10/bbl post window.

This morning in distillates, Sing gasoil spreads saw selling in Dec/Jan, trading from $4.40 up to $4.60/bbl on higher ICE. Front EW initially came off, hit down to -$135 on flat price selling, before going bid post window and trading up to -$129/mt. Regrade saw selling at $1.6/bbl in Q3, while kero spreads were sell side, with Dec/Oct trading at $39.5/bbl. Prompt ICE gasoil spreads strengthened slightly, with Nov/Dec trading from $41 up to $42/mt, while Dec cracks traded rangebound between $81.0 and $82.0/bbl.

This morning in gasoline, MOC better bid seeing Nov EW trail higher despite 92 cracks being better offered, seeing Nov E/W trading up from -$2.8/bbl to -$1.9/bbl end of window. Selling interest in Q1 92 cracks at $16.75/bbl from trade. Q1 EBOB cracks also better offered this morning seeing selling at $19.5/bbl. Selling in Nov/Feb EBOB from refiner, with selling stepping down from $80/mt to $78.5/mt with front EBOB crack coming off.

This morning in naphtha was choppy, with the Nov/Dec MOC roll bid while front cracks remained under pressure. MOPJ softened on cracks versus last night, with Nov falling from around $3.60/bbl to $3.10/bbl on a flat-price basis, while Q4'27 traded at -$5.45/bbl and the Dec/Jan crack roll at $1.15/bbl; spreads were firmer, as Nov/Dec moved from $34.50/mt to $36.50/mt, while Dec/Jan fell from $31.5/mt highs to being offered at $31/mt; front fly interest was strong, as the Nov/Dec/Jan and Dec/Jan/Feb traded at $5/mt and $2/mt respectively. E/W remained offered in the front, with Nov easing from $74.50/mt to $71/mt after briefly bidding at $73/mt, while Q1 was around $55/mt and the Nov/Q1 box traded at $17/mt early on. NWE naphtha weakened, with Nov cracks down from -$4.65/bbl to -$5.00/bbl, the Nov/Dec crack roll down to $0.5/bbl, and Q1/Q2 down 10c to $1.8/bbl; spreads were firmer in the front, with Nov/Dec around $34.50/mt versus $31.50/mt last night, while Dec/Jan was at $21.25/mt.

A quiet Monday in NGLs, FEI structure slightly soft in the morning before rallying on MOC. Dec/Jan'27 FEI traded at $38.00/mt pre-Asian window, traded at $37.50/mt before recovering to $38.00/mt. Nov/Dec'26 FEI traded at $39.00/mt before trading at $40.00/mt to close. There was MM and Trades buying of flat price FEI on screen to close. Nov'26 FEI traded at $957.00/mt on screen to close. Nov'26 FEI/CP traded at $230.00/mt pre window before trading at $229.00/mt to close. This is slightly up over the weekend as a function of higher FEI flat price. Nov/Dc CP traded at $18.00/mt and Dec/Jan'27 CP traded at $20.00/mt. FEI/MOPJs were firm this morning with the Q1'27 FEI/MOPJ holding its print around -$$42.00/mt, last week’s highs. The Dec/Jan'27 FEI/MOPJ box saw Chinese selling trading at $7.00/mt and $6.50/mt throughout the morning. The Arb was illiquid with Nov'26 LST/FEI trading at -$378.00/mt pre window before trading at -$380.00/mt to close. There was some trading in the C4 CP today with C3/C4 CP going at an implied -$55.00/mt and Nov'26 C4 CP trading at $777.00/mt before printing $783.00/mt to close.

Some surprisingly good UK data this morning, as unemployment fell to 4.7% in August from 4.9% (expected 4.9%). UK average earnings up 3.7% vs expected 3.6%. Chancellor Healey says doesn’t want to raise capital gains tax as would damage growth.

Strong JGB auction, with record bid-to-cover ratio of 5.84 in the 20-year auction. The USD reversed yesterday’s gains today, with DXY dropping towards 101.75.

Risk appetite is fading again due to fresh doubts over the AI investment cycle. South Korea’s Kospi tumbled 3.8%, led by Samsung and SK Hynix, after data-centre operator Elice suffered a disastrous IPO debut despite heavy demand. The setback follows Australia’s Firmus Grid shelving its listing, while rising CoreWeave borrowing costs highlight tighter funding conditions.

Nasdaq futures gave back earlier gains, Treasuries rallied and the US 10-year yield fell to 5.12%. Brent briefly breached $111, adding an inflationary headache. Attention now shifts to whether massive AI infrastructure spending can deliver returns before financing becomes more expensive.

Data today: US Housing Stars, ZEW Economic Sentiment