Sep Brent supported to $74, mixed messages from Iran and the US

The Sep’26 Brent crude futures found support around $73.00/bbl this morning and rose to $74.00/bbl at 10:40 BST (time of writing). Despite President Donald Trump claiming on Truth Social that Iran requested a meeting in Doha and that Jared Kushner and Steve Witkoff were being sent, Iranian officials insist no US-Iran talks are scheduled, saying their technical delegation is only holding parallel consultations with Oman on the Strait of Hormuz and the unfreezing of Iranian assets. Iran also held its first Joint Hormuz Committee meeting with Oman on Monday, reinforcing its position that management of the Strait of Hormuz is a regional responsibility rather than a US-led arrangement, and has reportedly asked both Oman and France to halt plans to de-mine the waterway. Meanwhile, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said negotiations on a final agreement, including Iran's nuclear programme, have not yet begun and that the process is roughly halfway through the agreed 60-day negotiation window. He added that talks on a final deal will only begin once key conditions are met, including an end to hostilities, the lifting of the US naval blockade and withdrawal of nearby forces, the reopening of the Strait of Hormuz, the removal of sanctions on Iranian oil exports, and the release of Iran's frozen assets. Morgan Stanley has cut its oil price forecasts again, citing a faster-than-expected recovery in flows through the Strait of Hormuz, strong US oil production, and weak demand from China. The bank now expects Dated Brent crude to average $75/bbl in the second half of 2026 and warns that the global oil market could face a supply glut, putting further downward pressure on prices. PETRONAS has made new oil and gas discoveries in Suriname's offshore Block 52, lifting estimated recoverable resources to over one billion barrels of oil equivalent. Kazakhstan said oil and gas condensate production at the Karachaganak field remains below normal following last week's drone attack on Russia's Orenburg gas processing plant, with output recovering to around 28,000 mtpd from a pre-attack level of 31,000 mtpd. Because Karachaganak relies on the Orenburg facility to process its raw gas, reduced gas processing capacity has also constrained oil production, highlighting the field's dependence on cross-border infrastructure. A massive fire broke out this morning in a naphtha pipeline at Haldia Petrochemicals Ltd's petrochemical plant in eastern India, injuring several workers, with the cause of the incident still under investigation. The plant uses naphtha to produce petrochemical products such as ethylene, propylene, polyethene and polypropylene. Finally, the Sep/Oct’26 and Sep/Mar’27 Brent futures spreads are at $0.15 and $1.82/bbl respectively.

This morning was very quiet in Brent/Dubai. The July bd opened lower at $5.8/bbl and traded rangebound between $5.7/bbl to $5.93/bbl. There was some buying of Sep B/D around $3.68/bbl, and the Q4 was well offered around $2.5/bbl. The Dubai spreads were very quiet, up a touch over the weekend. The Jul/Aug traded between -$1.05/bbl to -$0.99/bbl. The boxes were very quiet, some sellside interest in Aug/Sep around $1.12/bbl with nothing trading.

Strength on Sing 0.5% that characterised the complex on Monday continued into today. The buying was localised to spreads, with cracks largely remaining around $17.00/bbl for the majority of the morning. Mostly due to 0.5 E/W coming in better offered. Spreads were well bid from Sing trade houses down the curve into Q1. Jul/Aug Sing bought up to $23.50/mt from $21.75/mt. 0.5 E/W and 0.5 spread strength resulted in Euro 0.5 being strong in both cracks and spreads. The Euro crack was up to $9.40/bbl by close of morning while Jul/Aug Euro was implied as high as $27.50/mt.

380 weakness continued this morning with both spreads and E/W being well offered. Jul/Aug 380 hit bottoms of -$1.00/mt from $0.75/mt. The 380 E/W traded down to $13.50/mt from $19.00/mt. Consequently, the 380 crack closed the morning at -$7.70/bbl from -$6.70/bbl. The weakness was mostly in 380 this morning, with some spillover into barge crack, which traded down to -$9.80/bbl from overnight levels of -$9.60/bbl. Barge spreads were in fact a touch stronger, with Jul/Aug up to -$0.50/mt from -$1.25/mt.

This morning in distillates, Sing gasoil spreads were mixed overall, with July/August sell side interest and July/Dec buying at $12.40/bbl. Front E/W sold off initially, trading down to -$51/mt, before firming to -$48/mt post-window. Regrade saw selling in Q4, trading from $1.40/bbl down to $1.20/bbl, while kero spreads were offered.

Prompt ICE gasoil spreads opened higher before selling off, with Sep/Dec moving from $70.0 down to $66.0/mt, while cracks sold down to $45.6/bbl in August. Heating oil spreads weakened, while HOGOs were rangebound, with the July HOGO swap trading at 31.8c/gal.

This morning in gasoline, flat price traded end window at $95.30/bbl with MOC better bid. The east weakened, with July 92 cracks trading down from $22/bbl to $21.35/bbl, and Jul/Aug got sold down from $4.95/bbl to $4.20/bbl with refiners on the offer. E/W sold off aggressively from where it closed last night, with Aug trading down to lows of -$12.50/bbl. EBOB remained supported, with July cracks firming from $33.80/bbl to $34.30/bbl and Jul/Aug got bid up from $38/mt to $39.50/mt.

This morning in Naphtha initially has mixed interest but turns better bid during the window, with real players lifting +5c in July MOC. Banks buyside of the Aug-Oct MOPJ flat price strip this morning with some pet chem sellers of July flat price throughout the morning. E/W weaker with no buyside interest, seeing Aug E/W selling down to $30/mt with the July E/W trading $22.50/mt end of window with refiners sell side. Europe far better bid, seeing buying in Q4 cracks, up from -$6.85/bbl at the start of the day to -$6.55/bbl end of window with the July Nap crack trading up to -$2/bbl end of window.

This morning in NGLs, the CP settle was released, with Jul C3CP at $580/mt and Jul C4CP at $600/mt. Chinese were early FEI flat price sellers in Sep at $555/mt. FEI spreads opened stronger than last night’s close, with Jul/Aug trading at $18/mt and $19/mt, up from $16.50/mt on the back of some FEI strength. The Jul LST/FEI also weakened across the morning on the same reasoning, trading at both -$202/mt and -$206/mt, where it eventually settled post window. The Jul/Aug LST/FEI roll was also trading at -$18/mt, with buyside interest. Aug FEI/CP lifted at $59/mt, up from yesterday’s level of $53.50/mt. End window there was no FEI flat price action on screen.

Chinese PMIs bounce, manufacturing to 50.3 from 50, and services to 50.2 from 50.1.

The Japanese Yen collapses to its weakest level versus the US Dollar since 1986

Worldwide supply chain pressures are rising: The Global Supply Chain Pressure Index is up to 1.8 points, the highest since July 2022. This index measures how difficult it is for companies to move goods around the world, with positive readings signalling worsening disruptions.

Micron fell -7.77% yesterday, wiping out $100 billion from its market cap. One of three companies, alongside Samsung and SK Hynix, named in a federal class action lawsuit filed in California. The suit accuses all three of working together to keep DRAM prices high, which have risen 500-700% over the past four years.

Super Micro Computer stock, falls over -9% on the day on news that the company's office has been raided as Taiwan expands its "chip smuggling" probe.

Microsoft’s worst month since December 2000, down -20.4%. U.S. margin debt keeps rising. May 2026 reading: 53.7%. A new record high in absolute terms, $1.42 trillion borrowed against portfolios. It’s not a problem, until stock prices fall.

The US can't afford higher rates. About $8T of Treasuries roll over in the next 12 months, with an average coupon near 3.3% versus today's ~4% 1-year rate. Refinancing at current levels adds roughly $49B in annual interest costs - before factoring in an ongoing $2T annual deficit. Volcker could crush inflation with double-digit rates because debt-to-GDP had already fallen from ~100% to ~30%. That cushion doesn't exist today.