BRTBZBrent Crude OilNeutralBrent Crude OilWTICLWTI Crude OilNeutralWTI Crude OilCVXChevronBearishChevronXLEEnergy Select Sector SPDR FundBearishEnergy Select Sector SPDR FundXOMExxon MobilBearishExxon Mobil

Today on

Oil fell 22% in less than 2 weeks. Energy stocks fell about half as much. Since 30 October: 🔹 Brent: -22%. WTI: -17%. 🔹 S&P 500 Energy: -11%. World energy: -11%. 🔹 🇨🇦 Canadian energy: -13%. Oil services: -13%. 🔹 🇪🇺 Europe’s oil and gas: -7%. 🔹 ExxonMobil -12%, Chevron -10%, bp -10%, Shell -9%, TotalEnergies -7%. It looks like a bargain. 3 numbers stopped me from calling it one. 1️⃣ The stocks aren’t cheap against where they started. Every one of these indices is still 10% to 17% above its level on 27 February, the last day before the war. 2️⃣ The cash flows that make them look cheap assume $95 Brent. Oil for delivery in December 2027 trades at $78. 3️⃣ Every forecaster I read sees a surplus of 3.7m to 4.9m b/d next year if the Gulf comes back. And the war isn’t over. 37 ships were attacked in October, the most of any month. Iran says 2 more tankers were hit in the strait on Monday night. I won’t tell you to buy a price that depends on a signature in Doha. The opportunity I see doesn’t need oil to go up: “Oil Fell 22%. The Opportunity Is Where Its $92 Billion Goes.” https://t.co/6qRRz7LZBJ

🇧🇷 Petrobras just pumped more oil than ever. Investors aren’t impressed. 3rd quarter, in US dollars: 🔹 Net profit: $ 7.7bn, up 21.5% 🔹 Excluding one-offs: $ 9.3bn, up 68% 🔹 Adjusted EBITDA: $ 16.7bn, up 34%, below estimates 🔹 Output: a record 3.51m boe/d, the 3rd record quarter in a row 🔹 Refineries: 99% utilised, with record diesel output of 769,000 b/d So why the disappointment? 🔹 Payouts: $ 2.7bn, against the $ 3.8bn analysts expected 🔹 Capex: the 2026 ceiling raised to $24–25.5bn, from $ 19.4bn More money goes into projects, and less comes back to shareholders. That’s the Lula question. On 25 October Lula won a 4th term, beating Flávio Bolsonaro. The next day, Petrobras lost $ 24bn of market value in dollar terms, down 15%. Investors fear 3 things: 🔸 Fuel prices held below market. The finance minister says fuel subsidies could continue into 2027 if Brent stays high. 🔸 Spending on refining, fertilisers and biofuels ahead of dividends 🔸 A weaker real, which cuts the dollar value of every payout The 1st results after the election confirm 2 of the 3. The oil is world class. The question is who gets the cash: shareholders or Brasília.

NeutralBRTBZBrent Crude OilBrent Crude OilLNGCheniere EnergyCheniere EnergyGASNATGASNatural GasNatural Gas

Today on

🇵🇱 Poland’s Orlen has cancelled a long term LNG contract with 🇶🇦 QatarEnergy. It’s the 1st known cancellation of a long term Qatari contract since the war began. 🔹 Volume: 1m tonnes a year, signed in 2009, due to run until 2034 🔹 Value: about €570m this year 🔹 Price: linked to oil, about 16% of Brent 🔹 Cargoes received this year: 4 2 reasons decided it. 🚢 Reliability QatarEnergy has been under force majeure since March, and its latest notice runs to the end of the year. 💶 Price Long term US LNG costs about $6–7 per MMBtu, less than half the Qatari oil linked price. Orlen keeps its 2nd Qatari contract, also 1m tonnes a year and buys from 🇺🇸 Plaquemines and Port Arthur. The timing makes it more striking. Europe started winter with gas storage at 75%, the lowest since 2013, per the IEA. 🇩🇪 Germany is at 61%. Europe is rewriting how it buys gas in the middle of a crisis. The next few months are the real test. that's exactly what I anticipated here: https://t.co/4blOCPPRHW

Trump just poured cold water on the Hormuz deal. After meeting 🇶🇦 Qatar's prime minister, he wrote that Qatar, 🇸🇦 Saudi Arabia, 🇦🇪 the UAE, 🇧🇭 Bahrain and 🇰🇼 Kuwait "would prefer the status quo". In his words, that's "a continuation of the Greatest Naval Blockade in History, and the new Operation Iron Gate. Therefore, Land and Sea." This morning the deal on the table was the reverse: 🇮🇷 Iran reopens Hormuz 🇺🇸 The US lifts the blockade and releases $ 8bn Now Trump says the Gulf wants the blockade kept, by sea and by land. He also said: 🔹 A nuclear weapon for Iran is "non-negotiable" 🔹 The US is "locked and loaded", though new action is "quite unlikely" 🔹 There's "positive momentum" toward ending the conflict Brent fell today on hopes of a deal. Peace talk with the blockade still in place isn't a reopened strait.

🛢️Brent is down to about $94. Last week it fell 16%, its steepest weekly drop since Covid began. The reason is a reported deal brokered by 🇶🇦 Qatar, now on Trump’s desk: 🔹 🇮🇷 Iran reopens Hormuz and stops attacking tankers 🔹 🇺🇸 The US lifts its blockade and releases $ 8bn of Iranian funds frozen in Qatar 🔹 Iran drops its demand to control the strait and charge transit fees 🔹 Iran’s nuclear programme stays off the table Do we believe it this time? We had a US–Iran memorandum in May. It collapsed after Iran attacked tankers in the strait. Neither government has confirmed these terms. Rubio called Iran’s demands “outrageous and ridiculous” yesterday. Ships were attacked in and near Hormuz this weekend. Physical Gulf crude is telling a different story. Murban rose 3.4% to $99.17. Futures are pricing the deal. The barrels in the Gulf are pricing the war. That’s why I sold in October. Hopes of peace have moved this market too many times this year. After the midterms, Vitol said to expect volatility. This is it.