Tariffs threats and trade tensions lift the Asian sour market as gluts emerge in the West of Suez

Market & Trading calls

• Bearish on differentials of heavy Canadian and LatAm grades due to higher Venezuelan crude production and flows to the USGC.
• Bullish on Mideast medium crude as Indian refiners seek alternatives amid uncertainty over US tariffs on Russian oil; solid middle distillate cracks and firm Chinese demand continue to buoy prices.
• Bearish on WAF OSPs with seasonality and ample light supply in the Atlantic Basin, weighing on set prices for the September-loading cargoes.

Trades of the Month:

• Aramco September OSPs: Aramco is likely to raise its August-loading Arab Light and Arab Medium OSP by around $0.50–$0.70/bbl. Arab Heavy and Arab Extra Light could see a softer hike of $0.40–$0.60/bbl and $0.30-$0.40/bbl, respectively. Pricing into Europe and the US is likely to decrease by $0.80/bbl and $1.00/bbl, respectively, reflecting the weaker market structure than in Asia.
• Short Oct-Nov WTI spread with a potential cool down in global macro and Russia-related supply shock talk weighing on structure as end of summer balances come into closer focus.