| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 104.65 | 4.33 | 96.59 | 90.82 | 89.55 |
| US WTI ($/b) | 91.57 | 2.14 | 89.34 | 85.77 | 83.66 |
| ICE Gasoil ($/MT) | 1,416.00 | 33.00 | 1,375.23 | 1,216.64 | 1,110.70 |
| Jet CIF NWE ($/MT) | 1,488.05 | 29.68 | 1,400.65 | 1,256.23 | 1,201.58 |
Brent has remained firm over the past week, trading close to 106 \$/b at times. The biggest surprise came on Friday evening when President Trump announced an agreement with Russia to import diesel into the United States. The news was particularly unexpected given that Washington had only recently introduced sanctions aimed at importers of Russian oil. The announcement follows the G7 reserve release programme unveiled earlier last Friday which was intended to alleviate pressure in diesel markets and appears to have definitively ended speculation about a possible US diesel export ban. However, it also emerged last week that the new IEA-coordinated reserve release will largely draw upon volumes already pledged earlier in the year, suggesting that the programme may be more about altering the mix and timing of releases than introducing substantial additional supply. While there is speculation that a larger proportion of diesel stocks could now be made available, the volumes remain uncertain.
The key question for the market is how much diesel Russia can realistically provide. President Trump said that Russia had agreed to send the United States "millions" of barrels, while Russian officials confirmed that 500,000 tonnes of diesel exports, equivalent to around 3.7 million barrels, would be permitted. Although Russia has historically been one of the world's largest diesel exporters, repeated Ukrainian attacks on refining infrastructure have significantly constrained refining capacity in recent years. Even if the full 3.7 million barrels are delivered, this equates to only around 100,000 barrels per day over a month, compared with global diesel demand of roughly 30 million barrels per day. The additional supply would therefore be helpful, but unlikely to materially alter the broader market balance. This was reflected in the initial market reaction, with diesel crack spreads in both Europe and the United States softening modestly late on Friday but showing no substantial correction. The limited response suggests traders remain sceptical both about the size of the volumes and the certainty of delivery. The test would be whether the crack spreads contracted following this announcement. European and US cracks did fall a bit late on Friday, but there has been no material change. This is consistent with the small size and question marks over delivery.
Meanwhile, developments in the Middle East continue to provide support for crude prices. Attacks against Saudi Arabia have increased in recent weeks, raising concerns that the United States could become more directly involved in military operations against the Houthis. Such a move would risk broadening Houthi threats against shipping in the Bab al-Mandab Strait beyond Saudi linked vessels and potentially disrupt a vital global trade route more generally rather than just Saudi shipping. These concerns helped drive Brent close to 106 \$/b this morning. However, some of the upward pressure has been offset by comments from Iran's security chief, who suggested there had been some progress in discussions with Washington. According to the interview, "Over the past two months, the Americans have approached us through three different channels: Pakistan, Qatar and even Iraq. They asked us to present our proposals to them about two weeks ago." He added that Iran had set seven conditions for reopening the Strait of Hormuz and that "they accepted some of our conditions while others remain unclear. We are not in the process of responding to the Americans. They have responded to us, and we consider their response inadequate." He followed with “They must clarify the issues that remain unclear to us. The question is whether they can resolve these ambiguities, so that the next stages can begin or whether they cannot.” While these comments suggest communication channels remain open, they also underline how much distance still separates the two sides from a meaningful agreement.
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