Brent retreated sharply and briefly fell below US$90\/bbl after 13 days of strikes, as the US held off further action for the last two days and Iran also paused retaliation. The pullback left Brent down more than 7% at one stage, even as vessel flows through the Strait of Hormuz have yet to show a meaningful pick-up. Positioning is also shifting: speculative net longs in Oil and ICE gasoil have risen, driven mainly by short covering and tightness in middle distillates, while disruption risks in the Red Sea continue to constrain supply.<\/p>\n
Supply-side outages in Russia are mounting. Oil loadings at Russia\u2019s Sheskharis terminal in Novorossiysk have reportedly been halted since 21 July; Bloomberg estimates the facility has shipped roughly 650k b\/d this year. The stoppage coincides with a suspension of oil loadings at the CPC terminal, which had been shipping around 1.7m b\/d in recent months, in a period marked by increased Ukrainian drone attacks on Russian energy infrastructure.<\/p>\n
We believe derivative traders should prepare for heightened volatility in the coming weeks as Brent crude struggles to find a clear direction after briefly slipping below $90 per barrel. While the recent pause in US and Iranian strikes offers temporary relief, this sudden 7% price drop is likely a short-term reaction rather than a permanent trend. We advise against taking aggressive short positions right now, as the underlying geopolitical triggers remain highly unstable.<\/p>\n
On the supply side, serious disruptions in the Black Sea are tightening the physical market and supporting a price floor. The halting of oil loadings at Russia\u2019s Sheskharis terminal since July 21 removes roughly 650,000 barrels per day from the market, alongside the suspension of the 1.7 million barrels per day CPC terminal. Historically, outages of this scale in the Black Sea region have quickly pushed global oil benchmarks up by 3% to 5% within a matter of days. <\/p>\n
Furthermore, shipping risks in the Middle East continue to choke vital trade routes, with Red Sea transit volumes remaining down by nearly 50% compared to their historical averages. Until we see a measurable recovery in tanker flows through the Strait of Hormuz, where about 20% of the world’s liquid petroleum passes daily, transport costs and risk premiums will stay elevated. We recommend that traders utilize call options to hedge against sudden supply-driven price spikes rather than relying on sustained de-escalation.<\/p>\n
We are also tracking a sharp rise in speculative net longs in ICE gasoil and Brent, heavily driven by short covering and tight middle distillate supplies. Historically, when speculative long positions surge alongside refinery bottlenecks, it creates a coiled spring effect for prices. In the coming weeks, we suggest derivative traders maintain a long bias on distillate spreads and prepare for rapid price reversals if drone strikes on energy infrastructure resume.<\/p>\n\n\n\n