Brent tops $111 as Iran's floating storage empties; US propane stocks fall 3.8 million barrels in three weeks

Brent crude is above $111 a barrel this morning, and that is the number feeding into US rack prices this week. The move came after fresh Houthi attacks on Saudi targets and a US order for non-emergency personnel to leave the kingdom, which read to the market as an unstable security situation in a region that still sets the global price.

The supply side is tightening behind the headlines. The Wall Street Journal, citing Kpler, reports that Iran's floating storage has been drained since the US Navy blockade of Iranian ports started in April. Iran held close to 150 million barrels on the water before the blockade. "There's no more oil to discharge to China anymore," said Kpler's Homayoun Falakshahi. With that volume gone, the cushion that had kept Brent in check is gone too.

For US buyers the mechanics are simple. Higher Brent lifts the crude slice of your rack price, and diesel tends to move first and hardest when the risk premium sits in the Middle East. Nothing here says it holds. Brent could ease if the strait stays open and the strikes stop.

The futures-physical split

Crude futures rallied while the price of physical barrels slid, per Bloomberg. That gap matters. It says traders are paying up for the paper on war headlines while actual cargoes are not as tight as the screen suggests. If the physical market is right, some of this premium could come back out once the news cycle cools.

Propane

US propane inventories fell 3.8 million barrels in three weeks, the steepest draw for this period in at least a decade, RBN reports. Strong exports are pulling Gulf Coast stocks lower, and the surplus to last year has shrunk to 2.7 million barrels. RBN says that cushion could disappear as soon as next week. For anyone selling propane into fall heating demand, thinner inventories mean less room before basis starts to bite.

Rubio at Reliance

Secretary Marco Rubio visited Reliance's refinery, a signal on India-US energy ties worth watching only because India is a swing buyer of the barrels the blockade is redirecting. Where those cargoes land affects what is left for other buyers.

What to watch

The Saudi strikes and whether the personnel order widens. The gap between physical barrels and futures, and which side closes it. And next week's propane number, which RBN flags as the point the year-on-year surplus could vanish.