Oil Narrative
Market Overview
July saw plenty of bullish supply fundamentals, with Houthis attacking Saudi-linked tankers at Bab el-Mandeb and Saudi Red Sea infrastructure, CPC loadings halted various times due to drone attacks and US crude inventories still draining.
Yet the futures market remained relatively muted as markets reacted more to the promise of a US-Iran deal over Strait of Hormuz, even as traffic remained low.
Effective 1st Nov 2026, Murban OSP will be Platts Dubai + ADNOC-announced diff, and suspends ICE Futures Abu Dhabi (IFAD) trading for all ICE Murban futures contract months with no open interest, closing a 5-year chapter on ICE Murban.
Singapore naphtha, mogas, middle distillates and fuel oil in backwardation.
Product cracks are healthy and still subject to recovery of Middle Eastern refinery product exports.
400 kbd Jizan refinery outage throughout August and PRefChem’s one/off RFCC runs provide additional support to the cracks.
Eastern cracks continue to face more downside risks compared to the West that is now facing low product inventory levels and sustained Russian refining loss.
China increased clean product export quotas of 2.7 mt in August vs 2.5 mt in July, with scope to roll some allowance into September.
These exports must come from fresh runs rather than drawdowns of existing inventory, so the quotas are only a ceiling, not a forecast of actual exports.
China crude buying has been geopolitically and economically sensitive, thus they are unlikely to have bought more for September arrivals.
The incremental product exports are more likely linked to the incremental crude runs from the escaped barrels from the Strait of Hormuz in 2H June.
