Key Moments
- Brent crude moved above $76/bbl as renewed tensions in the Persian Gulf and US strikes on Iran fueled supply concerns.
- The US revoked a temporary licence for Iranian oil sales, adding to market anxiety even though fundamentals remain largely unchanged.
- Falling US product inventories and damage to Russian refineries have supported stronger product cracks and pushed ICE gasoil crack values back above US$50/bbl.
Geopolitical Tensions Drive Brent Above $76
ING analysts Warren Patterson and Ewa Manthey report that Brent crude has risen above $76/bbl, with price gains tied to fresh geopolitical risks in the Persian Gulf and US military action against Iran. These developments have revived concerns about supply security and are providing a clear lift to the oil complex.
According to the analysts, “Oil prices spiked following Iranian attacks on three ships in the Strait of Hormuz, including an LNG carrier and an oil tanker. ICE Brent settled a little more than 3% higher yesterday, and in early trading this morning it’s up another 2.8%, leaving it trading above $76/bbl. The curve structure also strengthened, with the front end returning to backwardation after recently flipping into contango amid the ramp-up of Persian Gulf supply.”
US Policy Shift on Iranian Oil Adds to Market Nerves
Market sentiment has been further unsettled by a change in US policy toward Iranian crude exports. Patterson and Manthey highlight that “In addition to military strikes, the US revoked a temporary licence that it had previously issued to allow for the sale of Iranian oil. While the revocation doesn’t fundamentally change oil market dynamics, it’s important from a sentiment perspective. It heightens the risk of a breakdown in the temporary deal between the US and Iran.”
US Inventory Data Underscore Product Tightness
The latest data from the American Petroleum Institute (API) point to relatively modest draws in US crude stocks but more pronounced declines in refined products. As reported by the analysts, “The API reported overnight that US crude oil inventories fell by 400k barrels over the last week. Stocks at the WTI delivery hub, Cushing, fell by just 100k barrels. Inventory draws on the refined product side were more significant, with gasoline and distillate stocks falling by 2.9m barrels and 1.8m barrels, respectively.”
| Category | Change |
|---|---|
| US crude oil inventories | -400k barrels |
| Cushing crude stocks | -100k barrels |
| Gasoline stocks | -2.9m barrels |
| Distillate stocks | -1.8m barrels |
Russian Refinery Damage and Middle-Distillate Strength
Beyond the Gulf, supply-side tensions are also emerging from Eastern Europe. Patterson and Manthey note that “Ukrainian drone strikes on Russian refineries have intensified, adding fresh support to middle‑distillate markets. The sustained damage is now dragging down diesel exports, further tightening the refined-product balance. This comes at a time when the market is still awaiting a normalisation in refined product flows from the Middle East.”
These dynamics are feeding directly into product cracks. The analysts state that “As a result, the ICE gasoil crack has strengthened, trading back above US$50/bbl. The latest re-escalation in the Middle East will only provide further support.”
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