Brent trades higher as VLCCs struck in the Strait of Hormuz

The Nov’26 Brent crude futures traded higher on Tuesday morning, reaching highs of $92.54/bbl, the highest level since 25 Aug. Prices found support amid escalating tensions in the Strait of Hormuz, where two VLCCs, run by Saudi Arabia’s Bahri and South Korea’s Sinokor, were struck by projectiles while attempting to exit the Strait. Ukraine’s latest drone attack, involving 52 drones, sparked a fire at Russia’s Ust-Luga port that was later extinguished. The White House said North American Blue Energy Partners plans to invest up to $100 billion to expand Venezuelan oil production, while granting the US first refusal on 80% of output and a 35% equity stake to the Pentagon’s Office of Strategic Capital. Meanwhile, Trump said ExxonMobil, Chevron and other major oil companies are preparing to enter or expand in Venezuela, marking a major reversal for Exxon as the US pushes to ramp up Venezuelan oil production following Maduro’s removal. Rystad says Venezuela’s oil output will take decades to return above 3 mb/d, rising from ~1 mb/d today to 2.3 mb/d by 2035 and above 3 mb/d by 2050, requiring $85bn of investment from 2027–2040. Finally, the Nov/Dec’26 and Nov/May’27 Brent futures spreads are at $2.49/bbl and $11.10/bbl respectively.

Fairly quiet morning in Dated with some initial Sep selling down to $2.47/bbl. Also saw selling of 1-7 Sep DBL, hit down to $2.14/bbl, and 3-16 Sep DBL trading at $2.4/bbl. However, there was a buyer of Cal Sep v 5-9 Oct, paying $2.35/bbl and 17-23 Sep v Cal Oct sold at $2.35/bbl. Further down the curve we saw some Dec DFL buy side interest and Q1'27 DFL buy side interest.

This morning in Brent/Dubai we continued to move lower, the Oct B/D gapping lower and opening around $1.65/bbl, down from $3/bbl yesterday. There was some buying of Nov Ice vs Oct dubai by refiner, selling of Oct B/D by producer. There was also a lot of Chinese buying of Sep B/D before the window, but this was well sold into by tradehouse. We priced very strong, and the Sep/Oct Dub spread rallied from $6/bbl to around $9/bbl, pricing around $11.5/bbl. All the boxes behind also opened lower, but OTC were pretty quiet this morning. There was also some Q2 B/D selling by products at $3.4/bbl. Overall a very bullish physical window in Dubai, strong overnight moves, but limited follow through in the morning session.

380 complex was also stronger this morning, particularly in spreads. Oct/Nov traded up $3.00/mt topping out at $17.00/mt during the window, it shed 50c post window and is currently trading at $16.50/mt, Sep/Oct similarly traded up from $29.00/mt to $32.00/mt. Oct crack saw buying during the window, getting bid up from -$5.05/bbl to -$4.40/bbl. Barges were somewhat muted this morning, Little traded on spreads and Oct crack was rangebound trading between -$10.90/bbl and -$10.75/bbl. 380 E/W has therefore been implied higher from $36.50/mt to $40.50/mt.

Sing 0.5 spreads were better bid to the start the month, there was real buying on Oct/Nov which saw it trade up from $30.00/mt in the early morning to $33.00/mt by window end, this upward pressure continued post window as it is currently trading at $34.00/mt. Sing cracks saw similar buying this morning, Oct crack was bid up from $18.40/bbl to $19.20/bbl during the window and then bounced a further 60c to $19.80/bbl post window. Oct E/W has also seen real buying from $74.50/mt to $79.50/mt. There was limited liquidity on Euro 0.5 this morning, spreads saw a little buying with Oct/Nov trading up from $18.75/mt to $19.50/mt and Oct crack last traded at $7.00/bbl. Oct 0.5 E/W has been implied higher and has also seen real buying from $74.50/mt to $79.50/mt.

This morning in distillates, Sing gasoil spreads were offered into Q4, with Oct/Nov trading from $6.55 down to $6.4/bbl. Front EW collapsed, with Oct trading from -$82.5 down to -$92/mt hit post window. Regrade rolls were well offered in Oct/Dec, trading at -$4.5/bbl. Prompt ICE gasoil spreads sold off initially before rallying into the window, with Sep/Dec trading from $186 down to $180 before firming to $194/mt while Nov cracks remained rangebound around $72.5/bbl.

This morning in Gasoline, quiet morning in terms of MOC. EW rallies in the front on the back of Ebob weakness, with Oct EW strengthening from -$13/bbl this morning to -$10.7/bbl end of window. EBOB spreads better offered this morning seeing Oct/Nov EBOB getting hit down from $89/mt to $78/mt, with the Oct Ebob crack selling off down to $30.7/bbl.

This morning in naphtha was mixed, with MOC better bid alongside typical early MOPJ flat-price buying from petchems, while Europe front cracks were weaker and backend cracks held relatively better. MOPJ cracks softened after the early bid, with Nov opening around $2/bbl before easing post-window, as Dec traded around $0.80/bbl, while Q2'27 was around -$3.60/bbl and Cal 27 near -$3.65/bbl; spreads were bid in the front, with Oct/Nov trading at $28/mt, Sep/Oct around $23/mt and Dec/Jan around $19/mt. E/W was weaker in the backend but supported nearby, with Cal'27 around $30/mt, the Q1/Q2 roll easing from $9.50/mt to $9/mt, Nov moving from $50.75/mt to $51/mt and Oct around $52.50/t. NWE naphtha remained weaker in the front, with Oct cracks moving from around -$2.90/bbl to -$3.70/bbl before recovering to -$3.45/bbl, while Q1 was around -$5.30/bbl and Cal 27 improved from -$7.10/bbl to -$7/bbl; spreads were steady, with Sep/Oct around $21/mt, Nov/Dec at $25.50/mt, Dec/Jan at $14/mt and the Q4/Q1 spread around $53.50/mt.

This morning in NGLs it was a quieter start to the month. FEI spreads opened at similar levels to yesterday, with Sep/Oct trading at $39/mt, and Oct/Nov at $29/mt. Oct/Jan FEI traded down across the morning, closing at $70/mt having previously been trading at $73/mt. Oct LST/FEI traded down to -$371/mt, compared to yesterday’s close of -$367/mt, but strengthened to print -$368/mt by end window as FEI flat price began to sell off slightly. There was some FEI/MOPJ selling out of Oct at -$57/mt, the same level as last night’s close. Oct FEI/CP traded at $147/mt before settling at $145/mt end window, and Q4 was sold at $130/mt. End window on screen Oct FEI flat price was lifted at $764/mt.

12 days since US government intervention in the bond markets and US 10-year yields are at 19-months highs, with the 2-year about to break out. Bessent has a problem.

After Warsh’s hawkish Jackson Hole speech, the market is now looking straight at the jobs data.
Tuesday: JOLTS + ISM Manufacturing
Wednesday: ADP + Treasury buybacks
Thursday: ISM Services + Jobless Claims
Friday: NONFARM PAYROLLS + UNEMPLOYMENT

Bloomberg report that GCC members are redirecting more of their own capital generation toward domestic priorities. For international markets, this translates to a tighter capital supply just as demand is rising.

China’s NBS manufacturing PMI remains in contraction, marginally, at 49.8.

Brent in a converging triangle looks set to break out aggressively.

A massive decline for the world's largest copper-producing nation Chile’s copper output declines 9.4% in July hit by severe weather.