Trade with Conviction

Oil markets were driven by geopolitics this week, with Iran-related headlines triggering sharp swings in price. In this episode of Trade with Conviction, the team unpacks what the latest moves mean for the oil risk premium, before turning to crude markets and India’s buying patterns, Russian supply, and Middle East replacement flows.

Chapters

(00:31) Geopolitics and the oil risk premium

Iran de-escalation headlines versus military incidents, India’s strategic role, and why crude remains headline-led into the weekend.

(09:57) Gasoline: contango, storage, and curve signals

US inventory builds, Europe’s extreme carry, and how contango is supporting the prompt while pushing risk into Q2.

(20:16) Crude: India buying, Russian supply, and Middle East barrels

Replacement economics, Saudi OSP expectations, Lunar New Year liquidity, and why AG grades are best positioned near term.

(28:23) Trade box: AG differentials bull case vs bear case

Why spot diffs could firm, what caps the upside, and how China stockbuilding complicates the outlook.

(30:30) Fuel oil and middle distillates quickfire

Venezuela’s impact on heavy molecules, Russian HSSA outlets, diesel arbs, and freight steering flows into Europe.

This week’s episode breaks down a market being pulled in two directions: geopolitical risk is driving flat price higher, while physical balances and inventories still point to a long market. The team covers escalating Iran risk, renewed Venezuela uncertainty, and how shifting global politics (including India’s positioning and a weaker dollar) are shaping sentiment. From there, they dive into key product moves across gasoline, naphtha, crude, and middle distillates, highlighting where physical markets are diverging from paper, how arbitrage windows are opening and closing, and what traders should watch as weather, outages, and refinery turnarounds reshape the near-term picture.

Chapters: 

(00:35) Geopolitical macro corner: Iran, Venezuela, and the risk premium
The team unpacks the latest flashpoints driving flat price, and why traders are once again at the mercy of headlines.

(04:53) Dollar weakness and the “floor” under crude
A softer dollar supports prices, but the debate is whether it’s driven by growth optimism or loss of confidence.

(07:50) Gasoline: USGC tightness, Europe vs paper, and East-West pressure
Gasoline spreads and cracks diverge across regions, with weather, blending economics, and Asian exports reshaping the map.

(14:39) Trade box: gasoline and naphtha positioning into Q2
Jorge shares two tactical ideas, plus the key risks that could challenge the setup.

(19:07) Crude: outages ease, physical weakens, and Brent looks stretched
CPC returns, differentials soften, and the team discusses why the physical market isn’t fully confirming the flat price rally.

(26:08) Middle distillates: weather-driven spike and the short HOGO debate
Heating demand and refinery constraints push cracks higher, but the trade hinges on timing, ARBs, and the next cold snap.

(31:18) Fuel oil quick fire: firmer tone but not a full bull case yet
Some clearing flows support the market, but cracks and arb signals still suggest caution.

This episode steps back from day to day price noise to examine how geopolitics is increasingly shaping oil markets across crude and products. The team unpacks the easing but unresolved US EU trade tensions, Venezuela’s uncertain return to market, and why Iran remains a background risk. From there, the discussion moves into how these geopolitical risks are keeping crude structures tight despite looser balances, before diving into physical crude flows, Indian buying behaviour, blending economics, and the knock on effects for freight and refining margins. The episode rounds out with a detailed look at distillates, gasoline, and light ends, highlighting where recent price strength is weather driven, structural, or potentially vulnerable.

Chapters:

(00:40) Geopolitical headlines and market relief
The team discusses Greenland, US EU tariff risks, and why markets are calmer but far from settled.

(07:59) Europe, alliances, and the return of great power competition
A deeper look at shifting alliances, defence spending, and why security now matters more than efficiency.

(11:51) Crude structure, outages, and balance contradictions
Why backwardation persists despite stock builds, with CPC outages and geopolitics in focus.

(16:43) Physical crude markets and Indian buying behaviour
Indian refinery strategies, blending economics, and implications for AG and Atlantic Basin flows.

(23:33) Distillates outlook: diesel and jet regain momentum
Cold weather, stock tightness, and why cracks and spreads are responding.

(28:08) Gasoline and light ends: contango and spring signals
Gasoline storage economics, Dangote delays, and early warnings from Asia.

In this episode, the team breaks down how a fragile, two sided oil market is being shaped by geopolitics rather than fundamentals. With Venezuela, Iran and Russia all back in focus, they explore how sanctions risk, shifting trade flows and political uncertainty are keeping crude exposed to sharp risk rallies even as the broader balance points back towards oversupply. The conversation moves through crude and product markets, questioning whether current pricing truly reflects downside supply risk, and where traders should be most alert as seasonal and geopolitical forces collide.

The team kicks off 2026 by unpacking why flat price looks deceptively calm while physical markets are quietly shifting underneath. The discussion spans Venezuelan crude disruptions and heavy sour dislocations, Saudi OSPs and a softening Asian crude complex, tumbling freight reopening arbitrage routes, and tightening signals in gasoline and light ends. Across crude, gasoline, fuel oil and distillates, the episode focuses on how barrels are being displaced rather than lost, and why geography, logistics and benchmark behaviour matter more than headline noise right now.

Key Takeaways:

Heavy sour barrels are being reshuffled globally, not removed, and the price signals reflect that

Saudi OSP cuts and Chinese quota control are weighing on Asian crude benchmarks

Freight has quietly flipped arbitrage economics across basins

Gasoline structures have gone from no outlet to every outlet in a matter of weeks

Fuel oil reacted fast to Venezuela headlines, but the fundamentals may not back it up

Diesel looks weatherproof for now, despite cold snaps and low stocks

Chapters: 

(01:10) Headlines check: Venezuela and geopolitical noise
The team assesses why dramatic headlines have barely moved flat price and what really matters for physical flows.

(05:30) Heavy sour crude and displacement risks
How Venezuelan barrels, Canadian crude and China’s teapots are reshaping the heavy sour balance without creating shortages.

(07:58) Asian crude under pressure: OSPs, Dubai and China quotas
Saudi OSP cuts, a heavy Dubai structure, and why Beijing is tightening control over independent refiners.

(14:05) Gasoline and light ends: from nowhere to everywhere
Why EBOB found a floor, how storage and blending economics flipped, and where the next support could come from.

(18:28) Fuel oil reaction versus reality
High sulfur fuel oil cracks jump on headlines, but mass balance tells a different story.

(19:31) US diesel and heating oil signals
Strong runs, warm weather and resupply flows keep distillates grounded despite tight regional stocks.

(21:02) What the desk is watching next
Key benchmarks, spreads and regions to watch as geopolitics continues to test market conviction.