Brent Crude Tops $90 as Geopolitics Drive Gains

Key Moments

Heightened Persian Gulf Risks Push Brent Higher

ING analysts Warren Patterson and Ewa Manthey report that ICE Brent crude futures climbed above US$90/bbl as traders reacted to rising supply risks in the Persian Gulf. They point to a continued escalation between the U.S. and Iran, with both sides engaged in strikes described as deadly.

According to their commentary, the persistence of this confrontation has raised the prospect that, if not contained, conditions could revert to a period of “wide-scale attacks across the Persian Gulf.”

Strait of Hormuz Crude Flows Largely Stalled

The analysts flag a significant disruption in tanker movements through the Strait of Hormuz. They note that vessel traffic has “essentially ground to a halt,” citing LSEG data showing only 2 outbound visible oil tankers crossing the strait, with no inbound tankers reported.

They add that current flows have effectively returned to levels seen before the Memorandum of Understanding (MoU), underscoring the renewed strain on physical supply routes.

End of SPR Releases Increases Market Fragility

Patterson and Manthey emphasize that U.S. SPR releases, which had provided some buffer to the oil market during the war, are expected to end around the close of this month. With that support set to disappear, they argue that the market will be left “relatively more vulnerable” to additional supply disruptions.

They also note that further use of SPR stocks remains a possibility, stating that “there’s always the potential for SPRs to be tapped further.”

Speculative Positioning Builds in Brent and Gasoil

The ING team highlights a notable increase in speculative activity in crude and refined product futures. In ICE Brent, speculators expanded their net long position by 114,752 lots over the most recent reporting week, taking the total net long to 169,839 lots as of last Tuesday. The analysts state that this change was “driven predominantly by fresh longs entering the market.”

In ICE gasoil, speculators increased their net long position by 2,389 lots over the week, bringing it to 71,875 lots. Despite the recent price action in gasoil, the analysts describe it as “surprising” that speculative buying has not been more forceful so far, and they suggest that stronger participation “may be more evident in the next Commitment of Traders report.”