Brent trades higher amid geopolitical uncertainty

President Trump warned that negotiations are Tehran’s “last chance” to secure a deal, while Tehran denies talks with Washington, saying it is speaking to Oman about the Strait. Saudi Aramco reported a 33% increase in Q2 profit as it benefited from a war-driven surge in oil prices. BP has put its $4bn biogas business up for sale as new chief executive Meg O’Neill reshapes the oil major, which on Tuesday posted its highest quarterly profit ($5.73bn) since 2022. Nigeria's National Economic Council on Monday approved the refinancing of NNPC Limited's $3.3 billion oil-backed pre-export finance facility through a ‌new $4.5 billion arrangement aimed at strengthening the country's external reserves and freeing up funds for infrastructure, the presidency said late on Monday. India's July transport fuel demand remained robust, with diesel and petrol sales rising 10.7% and 9.7% y/y respectively on strong economic activity, while jet fuel demand increased modestly and LPG sales declined due to a shift towards piped natural gas and supply disruptions. Russia's July seaborne oil product exports declined 33% m/m, with diesel exports down 60% and naphtha down 35% amid refinery disruptions and export curbs. Crude loadings at Kazakhstan's CPC export terminal have resumed following recent tanker attacks, with exports recovering to around 730 kb/d despite elevated freight rates and ongoing shipping risks. Finally, the Oct/Nov’26 and Oct/Apr’27 Brent futures spreads are at $2.80/bbl and $8.90/bbl respectively.

Quiet morning in Dated. We saw some balmo Aug DFL buying from refiners up to $5.15/bbl and up to $5.3/bbl on Cal Aug DFL. Also saw some buying of 17-21 Aug 2-week lifted at $2.5/bbl whilst 18-24 Aug vs 8-14 Sep trading $3.1/bbl and offered over. Saw 2 way interest in Sep DFL trading up to highs of $4.1/bbl whilst better selling of Oct DFL. Further down the curve we saw funds on both sides of Q1'26 DFL and some paper buy side interest in Cal27 DFL.

380 was a bit firmer this morning this morning on higher crude. Sep/Oct 380 traded up to $26.25/mt from last nights close of $21.00/mt. The 380 crack was stronger this morning due to spread buying and 380 E/W buying, trading up to -$2.75/bbl from -$4.00/bbl. As mentioned, the E/W was better bid this morning trading up to $43.00/mt in September. The barge crack continued to be rangebound, trading down a touch early to -$9.70/bbl before closing the morning when we finished up last night around -$9.55/bbl. Barge spreads traded up on higher crude with Sep/Oct up to $11.75/mt from $11.00/mt.

Spreads came in better bid this morning particularly Sep/Oct Sing, which traded up to $40.25/mt from overnights close of $37.50/mt. The spread did relax post window finishing up around $39.25/mt. The crack was better bid first thing off the back of spread strength trading up to $20.00/bbl before selling off down to $19.75/bbl. Euro 0.5 was largely quiet. Sep/Oct Euro traded down to $26.50/mt on low liquidity while the Sep Euro crack remained around $8.00/bbl.

This morning in distillates, Sing gasoil spreads opened lower and were offered, with Sep/Oct trading from $7.75/bbl down to $6.6/bbl before turning better bid back to $7.25/bbl last. Front EW opened more buy side, lifted up to -$58/mt, before seeing selling down to -$63/mt last. Regrade saw selling in Q4, hit down to $2.0/bbl on screen.

Prompt ICE gasoil spreads sold off early before firming post window, with Sep/Dec trading from $155/mt down to $130/mt before recovering to $145/mt while Oct crack sold off down to $59.1/bbl. Heating oil spreads weakened while HOGOs firmed, with the Sep HOGO swap up to 28.0c/gal.

It was a weak morning overall in gasoline. 92 cracks were offered, with Sep coming off from $19.70/bbl to $18.60/bbl, while Oct was around $16.50/bbl and Q4 softened to $14.20/bbl post-window. Spreads were better offered early, with Sep/Oct at $4.40/bbl Oct/Nov moving from $3.20 to $3.05/bbl before recovering to $4.75/bbl post-window, and Oct/Nov moving from $3.20/bbl to $3.05/bbl. EW was choppy throughout the morning, with Sep moving from around -$8.25/bbl to -$8/bbl. EBOB was also weaker, with Sep cracks coming off from $27.85/bbl to $27.10/bbl, while Q4 was valued around $17.20/bbl. Spreads were mixed, with Sep/Oct around $68.75/mt before firming to $70.25/mt post-window. Arbs were supported, with Sep trading around 11.80c/gal.

This morning in Naphtha, MOC better bid with +5c getting lifted in Sep and Oct MOPJ MOC. Interest on prompt crack heavily sell-side this morning, seeing Sep Nap crack trade down from -$3.25/bbl to -$4.4/bbl with spreads better offered in both regions, seeing Sep/Oct Europe getting hit down from $30/mt to $26/mt despite higher crude. Sellside interest in Q1 and Q4 EW this morning, seeing Q1 EW getting hit at $29/mt.

This morning in NGLs, Chinese came in as good buyers of FEI flat price out of Oct at $635/mt. There was some Dec'27/ Dec'28 FEI spread buying from Asian tradehouses at $35.5/mt, before it strengthened to trade $36.5/mt later in the morning. There was also interest in Dec/Jan and Jan/Feb FEI, trading at $13/mt and $16/mt respectively. Sep/Oct FEI was trading at $22/mt, $1 weaker than yesterday’s closing level. Sep EW had some small buying at the $160/mt level, where it eventually closed the morning. There was also some LST spread selling, seeing Sep/Oct trade at -1.125c/gal. 0.125c/gal weaker than yesterday’s close. End window on screen, Sep FEI flat price was hit at both $657/mt and $656/mt.

* Bond yields dominate markets.
1. Saudi threaten to sell treasuries to prevent Trump from his ‘massive;’ attack on Iran, Brent falls 5.4%.
2. The US Treasury intervened in yen exchange rates on Friday, marking the first time Tokyo and Washington joined forces to support the Japanese currency via outright purchases in nearly 30 years. To prevent Japan’s MOF selling further Treasuries to fund intervention. Yen is 4.5% lower in 3 days. Dollar index trading back below 100.

* US 30-year making new cycle highs at 5.23%, its highest level since 2007 (mortgage rate approach 7%, at 6.75%), UK 30-year now just 6bp from cycle highs.

* Asia today saw manufacturing PMIs and huge divergence. For most of Asia, the news is very positive with Japan, Korea, Taiwan, Southeast Asian economies like Thailand and Vietnam doing well. Meanwhile, China and Indonesia are lagging. The official manufacturing PMI for China is even worse so that means State Owned Enterprises are doing badly. Private sector also weakening too.

* Last week saw the 2nd largest Hedge Fund de-grossing of the last decade.

* Retail investors are selling US tech stocks at a record pace: Retail investors sold -$316 million of US-listed information technology stocks on Wednesday, the largest daily sale on record. Over the 3 days ending Wednesday, retail investors sold -$643 million of tech stocks, the largest such outflow since data began in 2019.

* The Nasdaq just posted its worst July in 22 years. The Nasdaq-100 fell 6.6% in July, while semiconductor stocks led the decline, with SOXX down 22.1%, its worst month since 2002. Unlike previous selloffs driven by a single catalyst, this correction reflects concerns over AI valuations, crowded positioning, and rising Chinese competition.

* The Kospi yo-yo, down -5.1% today after +17.9% on Friday.

* The death of Fed forward guidance has a direct and underappreciated consequence: almost every meeting is now live. Investors can no longer front-run policy decisions with confidence, will repeatedly be caught off-guard, & the resulting uncertainty will drive structurally higher volatility across both bond and equity markets. This isn't a future risk - it is arguably already playing out in the form of a rising term premium, persistently elevated long-term interest rates, & an equity market that lurches rather than trends.

* Sulphur prices continue to rise, affecting global copper, uranium, nickel & agricultural production