Ukraine strikes last untouched Russian gasoline plant as oil runs 12% above Friday
Crude is 12% higher than it was Friday, with Brent hitting a one-month high in Asian trade Tuesday, after Iranian attacks on three commercial vessels in the Strait of Hormuz drew U.S. military strikes on targets inside Iran and a reinstated U.S. blockade of Iranian oil exports. That move has not fully worked into the rack yet. If you sell on a rack-plus contract, you have already seen it. If you are quoting fixed price out a week, quote it assuming the war premium holds.
Iranian barrels still moving
Iran moved an estimated 12 million barrels out on supertankers between July 7, when the U.S. waiver on Iranian oil sales expired, and July 14, even as Washington announced the renewed blockade of Iranian ports and cargoes. That matters for the price you pay in two ways. Barrels still leaving Iran limit the upside on Brent. A blockade that leaks also invites more enforcement, and more enforcement in the Strait can add risk premium to Brent.
Salavat hit
Ukrainian Special Operations Forces say they struck Gazprom Neftekhim Salavat in Bashkortostan overnight July 14, hitting the AVT-6 primary distillation unit. Salavat was the last major Russian gasoline producer that had not been hit this year. Drones also went after the Afipsky refinery in Krasnodar. Russia is not a direct gasoline supplier to U.S. jobbers, but Russian barrels that stop moving push European buyers into the same Atlantic Basin cargoes that set our Gulf Coast export pull. Fewer Russian products out has tended to firm distillate cracks here.
China backs away
Chinese crude imports fell 41.3% in June from a year earlier, to 7.12 million bpd, a decade low, according to customs data released Tuesday. At least two Chinese refiners did not nominate any Saudi term cargoes for August, and others were not allocated supply. Chinese weakness is one of the few things capping the move. If Chinese refiners stay out, the barrels Saudi Arabia cannot place have to go somewhere, and some of that can land on the U.S. Gulf.
SPR and Canada
The administration continues to draw down the Strategic Petroleum Reserve while Canada now supplies 63% of U.S. crude imports. Both facts cut the same way for a Midwest or Rockies buyer. Heavy Canadian barrels are the backbone of your refiner's slate, and the emergency cushion behind them is thinner than it was.
What to watch
Whether Hormuz transits keep flowing at the rate Iran is managing, whether the Salavat outage lengthens or Russia patches it, and where diesel cracks settle by Friday. If diesel cracks do not follow crude up, the cost lands on your margin.