Core View: The price range for Brent is projected between $80 and $95 per barrel. Negotiations between the US and Iran have shown no progress, shifting the focus toward economic sanctions as leverage following the de facto blockade of strategic shipping channels.

Regarding the two key waterways, the daily transit volume through the Strait of Hormuz has been revised upward again, now estimated in the 300-400 thousand barrels per day range, while transit through the Bab el-Mandeb Strait is holding steady at around 220 thousand barrels per day.

Saudi Arabia is actively resuming ship-to-ship (STS) transfer operations to mitigate the risk of storage tank oversupply. Tracking data from the past two weeks indicates an average STS volume of 700 thousand barrels per day. The Yanbu port continues to operate within a 1-1.5 million barrels per day loading range, though the average loading rate remains on a downward trajectory, requiring more proactive measures from Riyadh to improve transfer efficiency.

From the demand perspective, concentrated arrivals at major Asian consuming nations have secured feedstock supply for July and August. However, with the renewed blockade of both straits, South Korea is emerging as a particularly vulnerable party. Signs of strain are already visible, with Korean refiners pivoting toward US crude purchases and potentially reducing refinery run rates.

Market attention now turns to the new round of US economic sanctions on Iran expected to be announced on the evening of the 24th. While some of this has been priced in ahead of time, the key focus will be on the direct impact these measures will have on trade activities.

Hormuz Transit Volumes Revised Higher; Saudi STS Operations Ease Storage Pressure

Compared to last week, the volume of tanker traffic through the Strait of Hormuz has been further revised upward, now standing in the 300-400 thousand barrels per day range. The tonnage passing through the Bab el-Mandeb Strait has also been adjusted up to approximately 220 thousand barrels per day.

In recent weeks, Saudi Arabia has resumed its attempts to ship crude out of the Strait of Hormuz via STS transfers in an effort to alleviate congestion at the Bab el-Mandeb. Since August, trackable STS volumes have averaged around 700 thousand barrels per day.

Export flows through Egypt remain stable. Over the past two weeks, loading volumes at the Yanbu port have ranged between 1-1.5 million barrels per day, with over 90% being re-exported through Egypt's Sidi port. Less than 300 thousand barrels per day are routed through the Suez Canal via reduced volumes or transfers to smaller vessels.

The aggressive loading schedule has temporarily eased Saudi storage pressure. Over the past two weeks, STS loading has totaled approximately 10 million barrels, which roughly corresponds to the observed decline in inventories. However, the four-week average of loading volumes is still trending downward, and Saudi Arabia will need to implement additional measures to boost transfer efficiency.

Inventory data note: Chinese inventory figures currently face data source issues and are pending revision.

Domestic Refiners Still Have Room to Increase Throughput

Domestic gasoline and diesel inventories remain at low levels, leaving room for further recovery in refinery run rates. Meanwhile, refining margins have climbed back above the historical average, and August oil product exports have exceeded prior expectations. Both state-owned and independent refiners have the potential to increase throughput further, with the primary constraint being feedstock availability.

The alignment of spot market purchases and healthy refining margins is providing mutual support for forward prices and the market structure.

Market Structure Data Update

As of August 21st, the WTI prompt spread settled at $1.90, with the second-to-third month spread at $2.14. Brent's prompt spread closed at $1.72, with the second-to-third spread at $2.68. The SC prompt spread settled at 24.7.

Product cracks remain elevated.

Brent net long positioning continues to recover. For the week ending August 18th, Brent fund longs decreased by 1,189 contracts while shorts fell by 2,339 contracts, resulting in a net long increase of 1,150 contracts.

WTI net long positions remain subdued. For the same week, WTI fund longs increased by 4,984 contracts and shorts declined by 2,579 contracts, pushing net longs up by 7,563 contracts.