Brent tops $100 after Houthi attacks on two Saudi tankers in the Red Sea
Brent crossed $100 a barrel Thursday for the first time in almost two months, trading at $100.69 for front-month September delivery by mid-morning, up more than 7% on the day after an intraday high of $101.01. The move came after Iran-backed Houthi militants said they hit two Saudi tankers in the Red Sea. WTI rose sharply with it, and the entire Brent forward curve moved higher.
The Red Sea was the escape valve. Saudi exporters have been routing some barrels that way while the Strait of Hormuz stays disrupted, so attacks on that route close off the alternative rather than opening a new one. Add the repeated strikes on the Caspian Pipeline and the supply picture gets thinner.
Racks follow crude with a lag of a day or two, so jobbers should expect the cost side to keep climbing into next week. Diesel buyers are already feeling it; farmers in the upper Midwest are absorbing higher fuel costs mid-planting.
The September target
OPEC+ is expected to approve another increase when eight producers meet August 2. Reuters reported Thursday that the group would lift its combined September target by 188,000 barrels a day, the same step size used in each of the three prior months. The producers named include Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman.
The catch is that these cuts have existed mostly on paper since the Iran war scrambled Gulf exports. Raising a target while the cuts stay on paper does not by itself put more barrels on the water. Don't build your buying plan around the August 2 headline until the loadings show up.
Meanwhile India looks set to ship as much as 1.55 million bpd of light and middle distillates in July, per Kpler data cited by Reuters, nearly double the 866,000 bpd it exported in May when Hormuz first bit. Refining margins there jumped with the conflict. Some of that product competes for the same Atlantic Basin cargoes that set East Coast diesel.
E15 in the Senate
Renewable Fuels Association CEO Geoff Cooper is pushing a new voter poll showing record, bipartisan support for year-round E15, and he wants it to move Senate legislation. Cooper ties the support to high pump prices and Middle East instability. E15 is at roughly 5,000 stations today, a small slice of the US retail base.
The House sent a $12 billion farm aid bill to the Senate this week with year-round E15 still unresolved. Separately, Senators Merkley and Bentz introduced a bill to widen the RFS definition of renewable biomass. Nothing here changes summer sales for the current season, so retailers outside the reformulated areas should plan on the same waiver-by-waiver routine.
Two propane explosions
An employee died in a propane explosion inside a trailer at Bellemere Winds Golf Resort near Peterborough, Ontario, according to the OPP. A separate propane leak blew up a house in Bridgton, Maine. Strongsville, Ohio fire officials warned residents against using propane torches on weeds after two house fires.
On the fleet side, Allegany County, New York became the state's first public transit system to run propane autogas buses, covering more than 50,000 trips a year, and Newport News schools report savings after switching buses from diesel. Suburban Propane held its quarterly distribution at $0.325, payable August 11 to holders of record August 4.
What to watch
Whether the Houthi attacks continue and force Saudi barrels off the Red Sea route entirely. The August 2 OPEC+ decision and, more usefully, actual September loadings. And whether E15 gets attached to anything moving in the Senate before recess.