Brent hits $86.73 as Iran ceasefire collapses and US pump prices rise for the first time since May
Brent crude climbed 4.1% to $86.73 a barrel after rising nearly 10% on July 13, when the US-Iran ceasefire fell apart. WTI was up 3.1% at $80.55. The US retail average gasoline price rose for the first time since May. The spring downtrend in rack prices has stalled.
The market has repriced off the glut assumption while the fighting continues. Traders who were positioned for oversupply had to cover, and the paper market did it in two sessions. Jobbers who let contract volumes float on spot are exposed to that repricing.
Hormuz and the pivot to US barrels
Flows through the Strait of Hormuz stopped this month rather than recovering. Asian refiners have gone back to buying US spot cargoes, with at least three executives and traders telling Bloomberg they had restarted talks on volumes.
That matters on the Gulf Coast. Asian buying out of Houston and Corpus pulls barrels away from US refiners and lifts the price of the domestic grades that set your crack.
Saudi allocations to China
Some Chinese refiners did not nominate Saudi term cargoes for August, and others were not allocated any, traders told Bloomberg. Weak Chinese demand and the Hormuz disruptions have cut Saudi supply into China for months.
Normally that would loosen crude. It is not doing that here, because the barrels cannot move reliably anyway.
The 12 million barrels
Iran is estimated to have moved supertankers carrying about 12 million barrels of crude between July 7, when the US waiver on Iranian oil sales ended, and July 14, when the renewed blockade of Iranian ports and cargoes was announced. Treasury pulled the waiver after Iranian attacks on three commercial vessels in the strait prompted US military strikes.
Enforcement so far has not stopped the volume. How much of it keeps moving will shape whether Brent holds near $86.73.
What to watch
Whether Hormuz flows resume at all, and how hard the US enforces the blockade on Iranian cargoes. Watch the export pull before the headline crude number: if US crude keeps getting bid to Asia over the next two weeks, Gulf Coast crack economics could stay squeezed even if Brent eases.