Brent supported near $92/bbl as Trump threatens economic warfare

In the news, Iran has weighed attacking US military targets in Europe, including bases in Bulgaria Trump has threatened “economic warfare” and unprecedented isolation against Iran, warning of “tremendous economic consequences” for any country providing Tehran a lifeline, including through cash transfers, currency swaps or shipping registries. Chinese refiners have bought at least 8mb of Iraqi Basrah Heavy/Medium for prompt delivery, with final volumes potentially higher. Iraq’s Gulf exports have risen to around 2mb/d in August, despite the Iran war, with some tankers switching off transponders to transit Hormuz; Basrah Medium sold at just under a $10/bbl premium to Dubai delivered. Axios reports that US forces have established a southern Strait of Hormuz shipping corridor along the Omani coast, with 15–20 tankers transiting nightly in organised inbound/outbound convoys. The corridor is apparently moving around 10mb/d of Gulf crude, roughly half pre-conflict flows, with peaks of 15–20mb/d, while also facilitating empty tankers entering the Gulf to load. Tajikistan has asked Iran for 2.55mt of oil/products, including 2mt crude, 150kt gasoline, 300kt diesel and 100kt jet fuel as Russia faces fuel shortages. Tajikistan typically sources up to 80% of petroleum products from Russia, but is now seeking alternatives from Iran, Kazakhstan, Turkmenistan, Iraq and Belarus. Ukraine struck Russia’s TANECO refinery in Tatarstan and Tamanneftegaz oil terminal in Krasnodar, with fires reported at both sites. TANECO processed 17mt of crude in 2024, making it a significant Russian refining target. Equinor has agreed a 3-year deal with Poland’s ORLEN to supply Johan Sverdrup crude from September, at 5–9+mtpa. The crude will supply ORLEN refineries in Poland, Lithuania and the Czech Republic, with the deal also allowing other Norwegian grades. Finally, the Oct/Nov’26 and Oct/Apr’27 Brent futures spreads are at $2.06/bbl and $11.76/bbl, respectively.

This morning in Dated we saw Sep DFL trade up to $2.76/bbl and Sep Oct trade up to $2.88/bbl on the Dated roll. In the front of the curve we saw buy side interest in 20-24 Aug cal Sep but sell side interest in 1-7 Sep cal Sep and cal sep 21-25 Sep. We also saw continued buying of Oct/Nov DFL up to $0.35/bbl and buying of Nov/Dec DFL, as well as Nov DFL and Dec DFL buying. Further down the curve we saw strong Q1'27 DFL buying up to $1.27/bbl but continued Q2'27 DFL selling at $0.74/bbl.

This morning in Brent/Dubai we continued to trade in a tight range. There was both buying and selling of Oct, Nov and Dec Brent/Dubai, refiner and major on the buyside, Trade and Fund on the offer side. There was continued buying of Dubai spreads, Sep through Dec Dubai spreads well bid by trade. The Sep Brent/Dubai therefore traded in a tight range between $3.90/bbl to $4.10/bbl. The boxes continued to move lower, with more selling of Oct/Nov and Nov/Dec box by major and trade house. There was also bank selling of Q1/Q2 and Q3/Q4 box, around $1/bbl and $0.50/bbl.

380 spreads had a lively start to the morning, particularly in Sep/oct and Oct/Nov which traded up to $40.50/mt and $26.75/mt, however during and after the window both spreads then sold off to $39.25/mt and $26.00/mt respectively. Sep 380 crack was choppy again this morning trading up from -$0.20/bbl to $0.15/bbl before selling back down to -$0.30/bbl. Sep/Oct Barges sold off this morning, shedding a dollar post window from $18.50/bbl to $17.50/bbl, Sep Barge crack also sold off from -$9.50/bbl to -$10.20/bbl. 380 e/w traded higher and is currently trading at $62.50/mt.

Everything was a little firmer in Fuel this morning. Sep/Oct Sing 0.5 traded up from $35.00/mt to $36.00/mt, and then sold back down to $35.50/mt during the window. Sep 380 crack traded marginally higher from $18.25/bbl to $18.40/bbl during the window it then encountered real selling and has sold down to $17.85/bbl post window. Euro spreads were slightly better bid this morning trading up to $36.50 on low liquidity. Sep Euro cracks were not really spoken this morning, they traded on screen at $5.75/bbl pre window and then next traded on screen 2 hours later at $5.00/bbl.

This morning in distillates, Sing gasoil spreads were mixed, with Oct/Nov trading from $6.10/bbl down to $5.90/bbl before coming back to $6.10/bbl. Front E/W and EFS were well bid, with Sep E/W trading higher to -$67/mt last. Kero spreads were well offered, with Jan/Mar trading at $8.35/bbl, while Oct regrade was pressured down to -$0.75/bbl. Prompt ICE gasoil spreads sold off initially before firming post-window, with Sep/Dec trading from $155/mt down to $145/mt before recovering to $149.50/mt, while Oct cracks sold off from $74.50/bbl down to $73.00/bbl.

This morning in gasoline, the east was weak. 92 cracks opened lower at $18.50/bbl and got sold down to $17.80/bbl, with Q1 offered at $13.60/bbl. Spreads firmed from $4.40/bbl to $4.70/bbl before getting sold back down to $4.50/bbl post window. E/W first traded at -$15.60/bbl but got bid up to -$15/bbl with EBOB also weakening. EBOB cracks got sold down from $33.10/bbl to $32.45/bbl and Q4s were offered at $19.65/bbl. Spreads were slightly better supported: Sep/Oct opened lower at $97/mt but remained balanced there.

This morning in naphtha was mixed, with MOC better bid while Europe prompt cracks sold off from last night’s close. MOPJ was slightly softer on cracks, with Sep around -$0.25/bbl, and Q4 was varied around -$1.15/bbl; spreads saw real sell-side interest, with Sep/Oct trading at $28/mt and Sep/Nov around $54/mt. E/W strengthened, with Sep moving from $38/mt last night to $41/mt this morning. NWE naphtha was weaker on prompt cracks, with Sep selling off from around -$4.10/bbl to -$4.80/bbl, while Cal'27 was around -$8/bbl; spreads were illiquid but steady, with Oct/Nov around $27/mt and Nov/Dec around $20/mt.

This morning in NGLs, FEI spreads were initially stronger, with Sep/Oct trading up to $28/mt. On this strength, the arb traded to -$330/mt, down from last nights close of -$325/mt. The Q4 LST/FEI also opened trading at -$282/mt, before softening across the morning to -$284/mt. Things then began to soften in FEI and Sep/Oct FEI sold off down to $25/mt, and Sep LSTFEI traded up to -$227/mt. Dec/Dec FEI was also trading at $107/mt, the same level as yesterday’s close. There was a Sep Bunap buyer at -$266/mt, which eventually weakened across the morning to close at -$270/mt. Had some interest in both C3 and C4 CP, with the diff trading at -$21.50/mt real sell side. End window on screen; Sep FEI flat price was getting lifted $732/mt.

US Treasury performed an operation twist, which means it bought back double the longer dated debt (bonds) and then issuing more of the shorter dated debt (T bills). This shortens the duration of the US debt over time but has a caveat. If you move closer to the shorter end, you are betting that the Fed will need to hold or eventually cut but not hike. The 30-year yield naturally fell 9bp but while gold (+4.3%) and silver surged (+5.7%) and Bitcoin (+7.1%), the dollar fell 0.9% to a 3-month low, equities closed largely unchanged.

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