Oil Market Holds Firm as Gulf Risks Counter Supply Gains

Key Moments

ICE Brent futures traded down toward $97/bbl during the previous session but still settled above $100/bbl amid persistent Persian Gulf supply risks.
Improved crude flows from the Persian Gulf are being offset by continued attacks on ships, keeping geopolitical risk premia embedded in prices.
Weakness has emerged in middle distillates at the front of the curve, with the ICE gasoil crack around $73/bbl versus a little more than $90/bbl in September.

Brent Prices Buoyed by Ongoing Regional Threats

ING analysts Warren Patterson and Ewa Manthey report that crude shipments from the Persian Gulf have been improving, yet ICE Brent continues to find support above $100/bbl. They point to a market caught between stronger physical flows and elevated geopolitical risks, as continued attacks on ships in the region maintain concerns over potential disruptions.

According to the analysts, the market spent much of the last session under downward pressure, with ICE Brent moving toward $97/bbl at one stage. Despite this intraday weakness, the benchmark still closed above $100/bbl, underlining how risk related to the Persian Gulf is preventing a more pronounced correction.

They describe a clear push-and-pull dynamic: on one side, better regional supply; on the other, unresolved threats that keep traders wary. In their view, a durable move to lower price levels would require a meaningful easing of these supply risks.

Market Sentiment and Supply Risk Outlook

The analysts emphasize that, for now, the oil market is highly sensitive to any signs of disruption. Persistent uncertainty around ship attacks in the Persian Gulf continues to shape price action, with participants reluctant to price out the risk premium until there is more clarity on security conditions and flows.

They suggest that, absent a resolution of these risks, the market is likely to stay nervous and reactive to headlines involving regional supply routes.

Middle Distillates Show Front-End Weakness

Patterson and Manthey note that middle distillates have been a softer segment of the oil complex recently. They highlight the performance of ICE gasoil cracks, which are currently trading around $73/bbl compared with a little more than $90/bbl in September.

The analysts attribute some of this easing to expectations of diesel releases from European strategic reserves and a diminished likelihood of a US diesel export ban. Together, these developments have helped alleviate upward pressure on the diesel market in the near term.

Indicator	Current Level	Previous Reference Level
ICE Brent intraday low (previous session)	towards $97/bbl	–
ICE Brent settlement (previous session)	above $100/bbl	–
ICE gasoil crack	around $73/bbl	a little more than $90/bbl in September

Curve Structure Highlights Perceived Temporariness of Relief

Despite the softness in prompt gasoil cracks, the analysts point out that only the front end of the curve has been materially impacted. Cracks further along the curve remain comparatively well supported, which they interpret as evidence that releases from strategic reserves are heavily frontloaded.

The market appears to view these releases as a short-term measure rather than a structural solution to tightness in middle distillates. Longer-dated pricing suggests that participants still expect constrained balances once the temporary additional volumes are absorbed.

Structural Diesel Tightness Hinges on Persian Gulf and Russian Flows

Patterson and Manthey argue that a lasting resolution to the tightness in the middle distillate market would require a normalization of diesel exports from the Persian Gulf and Russia. They stress that the return of these flows in a way that would fully ease the imbalance does not seem likely in the near term.

As a result, while front-end cracks have retreated on the prospect of strategic stock releases and reduced fears of a US export curb, underlying tightness beyond the immediate horizon remains a key feature of the market.