Brent Trades Within $70/bbl as Talks in Doha Conclude

In the news, Iran has concluded talks in Doha with “positive progress” made, according to a Qatar Foreign Ministry spokesperson’s post on X. The next round of US-Iran negotiations is expected to take place after the 9 July funeral processions for Iran's late Supreme Leader, Ayatollah Ali Khamenei. Elsewhere, at least five VLCCs carrying a combined 10mb of Saudi crude have exited the Strait of Hormuz after loading at Ras Tanura. Saudi Aramco has reportedly switched to spot pricing to accelerate sales into Asia, following the resumption of loadings at Ras Tanura last week after a near four-month suspension. The company is now ramping up crude exports to Asian buyers. In other news, Kyrgyzstan has asked Kazakhstan, Belarus, Azerbaijan, Uzbekistan, and Turkmenistan to help secure stable fuel supplies amid concerns that Ukrainian drone strikes on Russian refineries could disrupt imports. The country sources more than 90% of its gasoline from Russia, where fuel shortages have continued to worsen. In China, Hengli Petrochemical has cancelled purchases of at least 6mb of non-Iranian crude, according to Reuters sources, forcing the refiner to further reduce operating rates as inventories run low. The cancellations come just weeks after Hengli bought West African and Middle Eastern cargoes in an apparent effort to be removed from the US sanctions list. The reason behind the cancellations remains unclear, although one of the Middle Eastern cargoes has reportedly already been resold. Finally, as of the time of writing, the front-month (Sep/Oct’26) and 6-month (Sep/Mar’27) Brent futures spreads are at -$0.52/bbl and -$0.49/bbl, respectively.

A fairly quiet start on VLSFO this morning. Spreads initially came in bid which supported the front Sing crack up to $13.55/bbl. As a result, Aug/Sep briefly touched $16.00/mt before relaxing a touch post window down to $15.50/mt. The Sing crack also came off post window closing the morning around $13.40/bbl. Euro 0.5 was fairly illiquid this morning, the 0.5 E/W saw some buying which implied the Euro crack not as strong as the Sing crack, closing the morning around $5.15/bbl.

HSFO was also fairly quiet to start the day. Chinese arbers were not doing much this morning. The barge crack was where we saw the biggest axe which traded up to -$8.90/bbl from last night levels of -$9.40/bbl. The 380 crack was a touch stronger as a result trading up to -$6.90/bbl. The 380 E/W however implied lower down to $12.75/mt from $14.00/mt. HSFO spreads were largely unmoved, with Aug/Sep trading around $0.25/mt and barges around $1.75/mt.

This morning in distillates, Sing gasoil spreads saw some selling in Sep/Oct as ICE gasoil rallied, trading between $3.55/bbl and $3.60/bbl. E/W was well bid in the front initially, before coming off once Q4 selling stepped down, with Aug E/W trading from -$47/mt up to -$45/mt, then back to -$49/mt last. Regrade was sell side in the front, with Aug screen bids hit down to -$1.15/bbl.

Prompt ICE gasoil spreads rallied pre window before selling off late morning, with Sep/Dec moving from $85/mt up to $91.75/mt, then back to $84.25/mt. Cracks firmed to $49.50/bbl before coming back to $47.50/bbl, with lots of selling seen in Sing cracks. Heating oil spreads were rangebound, while HOGOs weakened, with the Aug HOGO swap moving from 29.7c/gal down to 29.1c/gal.

This morning in gasoline, Sing 92 flat price traded end window at $90.05/bbl with MOC better bid. Gasoline was weaker overall, as 92 cracks sold off from $18.55/bbl to $18/bbl, but 92 spreads were supported with Aug/Sep seeing buyside interest at $3.20/bbl. E/W went better bid, trading up from -$13.20/bbl to -$12.90/bbl as EBOB went offered. Cracks got sold down from $31.70/bbl to $31/bbl as RBBRs sold off as well. Spreads saw mixed interest but were generally weaker on lower RBBRs and crude, as Aug/Sep softened from $48.50/mt to $48/mt.

This morning in naphtha, MOC better bid with +5c getting lifted by physical players in both Aug and Sep. E/W continues to rally higher, with July trading up from $33/mt to $35.50/mt end of window with lack of depth on the sell side this morning. E/W boxes pricing higher also, Aug/Sep implied $1.75/mt end of window with Dec/Jan getting lifted at $3/mt , bid on, with buying interest at $5.50/mt in the Q4/Q1 E/W box. Buyside interest in Q4/Q1 MOPJ flat price with buying in Sep/Jan MOPJ from small trade. Cracks strengthen with Aug MOPJ crack rallying from $0.75/bbl in the morning to $1.40/bbl end of window. In Europe, scale back selling of the prompt naphtha crack with Q1'26 trading -$6.90/bbl.

This morning in NGLs, there was some early CP flat price buying out of Aug and Sep at $506/mt and $492/mt, respectively. FEI spreads opened slightly stronger this morning and traded up into window, although following a physical bid getting hit, flat price and spreads came off. Aug/Dec FEI opened at $14/mt, traded up to $17/mt before coming off $2. Similarly, Aug/Sep traded up to $13/mt before eventually settling at $11/mt end window. Aug LST/FEI was initially weaker with the early FEI strength, trading down to $209/mt, but following the physical action it rallied back to -$204/mt by end of window. Aug FEI/CP traded at $73/mt before coming off to $70/mt end window, and there was also a Q4 buyer at $55/mt. End window on screen $575/mt was hit Aug FEI flat price.

THE FED PIVOT IS CLOSER THAN THE MARKET THINKS - AND THE DOLLAR'S RALLY IS ABOUT TO CRACK

Warsh's tone yesterday was telling - inflation risks "have come down in recent weeks," and both inflation data and market pricing back that up. US 2-year inflation expectations have collapsed from 3.4% in March to 1.99%. Gold jumped on the comments, briefly trading above $4,100 after rebounding from an intraday low of $3,960. The 1-year US inflation swap has fallen from a May peak of 3.5% to ~2.1%, reinforcing that inflation concerns are genuinely fading - not noise, but a real disinflation impulse, helped along by easing energy prices.

Yet OIS markets are still pricing ~36bp of hikes by year-end. I think that's simply wrong, and it's a sell.

ISM manufacturing remains comfortably above 50 and new orders are still expanding - resilient growth that would normally argue for hawkish caution. But input prices are easing, and that's the more important signal: inflation pressure is fading even as activity holds up. All eyes now turn to today's payrolls, with consensus at 110k and unemployment at 4.3%.

A few things support the turn:

→ The long-USD trade is crowded. Speculative USD longs hit $34.3bn as of June 23rd - the highest in 18 months, tripling in just 7 weeks. Positioning like this rarely ages well once the narrative turns.

→ Capital flows are already shifting. US investors sent a record amount of capital into foreign stocks and bonds in April - a break from the usual "flight to the US" playbook seen in past shocks. That's not what dollar strength looks like under the hood.

→ US tech leadership isn't the problem - rate pricing is. Korean semiconductor exports remain robust, signalling the global chip cycle - and by extension US AI/tech demand - is far from rolling over. This is a rates and positioning story, not a US-growth-scare story.

→ Global disinflation is broadening. Eurozone June inflation surprised to the downside (2.8% vs 3.0% consensus), core down to 2.4%. BoE's Bailey has signalled no urgency to hike. Several central banks are adopting a more cautious stance.

→ The global backdrop argues for caution too. Japan's 10-year JGB yield sits at 2.77%, just 4bp off cycle highs as debt concerns resurface, while China's real residential property prices have crashed to a 20-year low (112 in 2021 to 85 in Q1 2026), with 35 straight months of year-over-year declines. Global growth is far more fragile than US equity strength suggests.

Conclusion: Put it together and I don't see the Fed hiking this year. The dollar's strength is topping out and starting to reverse, and gold and precious metals - treated as a sell on the back of Fed hawkishness and USD strength - are set up to rally as that repricing plays out. Fading the 36bp of priced hikes, fading USD strength, and buying precious metals on weakness is the trade. Positioning ahead of consensus here feels like the right side of the market.