Currie Slams ‘Vibe’ Oil Contracts As Trump Admin Halts SPR Drains, IEA Urges Massive Reserve Release

Oil prices are extending gains again this morning as traders weigh a weaker global demand outlook and signs of recovering Middle East crude supplies against persistent shipping risks around the Strait of Hormuz and escalating/spreading violence between the Houthis and Saudis.

An overnight lull in prices (set with hopes for more reserve releases) was upset as Iran showed more clips of tankers/container ships under attack.

The International Energy Agency said Wednesday that Gulf crude shipments rose by 4.4 million barrels a day to 13.9 million barrels a day in September, reaching more than 75% of prewar levels. Global oil supply increased by 2.5 million barrels a day to 102.3 million barrels a day, driven by Gulf producers.

However, the recovery remains vulnerable to renewed attacks on energy infrastructure and shipping, the agency said.

Given the massive crude draw reported by API (likely impacted by shut-ins from the first Atlantic hurricane of the year in the US Gulf), all eyes are on the (Columbus Day-delayed) official data…

API

• Crude -11.1mm

• Cushing +1.8mm

• Gasoline +1.1mm

• Distillates -1.5mm

DOE

• Crude -8.56mm

• Cushing +1.86mm

• Gasoline +3.52mm

• Distillates -2.52mm

HUGE CAVEAT – the shut-ins in the Gulf make this very noisy: Confirming API’s reporting, the official data showed a large crude draw last week (and another sizable draw in distillates inventories) while stocks at Cushing and overall Gasoline inventories saw builds…

For the first time since the Iran war began, the Trump admin did not drain any reserves from the SPR…

US Crude Production tumbled last week (shut-ins in the Gulf, so not comparable)…

Total US Diesel stocks remain at seasonal record lows…

WTI has surged up to $97.50

However, watching futures is misleading as Wall Street veteran Jeff Currie exclaimed this morning that the world’s most important oil benchmark has become little more than a “vibe contract”, blunting its usefulness as a tool to manage price volatility.

Brent’s disconnect from physical markets is creating “unpriceable risk,” deterring hedgers from using the contract to protect themselves, Currie said.

“Everything associated with energy is going up but Brent,” Currie said Thursday in an interview on Bloomberg Television.

“It is not connected to the real world anymore.”

A hit to Brent’s integrity undermines the market’s ability to anticipate supply shocks with “profound consequences for the market and the rest of the world,” Currie said.

The disconnect between paper and physical markets has frustrated traders since the Middle East conflict began, when crude struggled to top $100 despite historic supply shortages. In contrast, Dated Brent, the most important physical oil benchmark, has surged to near $130 a barrel. That dissonance has contributed to traders fleeing the market, with Brent open interest earlier this month hitting its lowest since March 2025 even as oil dominates headlines.

Diesel prices are lower this morning…

Finally, Bloomberg reports that US officials attending an International Energy Agency meeting in Paris earlier today informally lobbied allies to commit an additional 100 million barrels from emergency oil inventories to supply global markets. 

“While US officials attending an IEA gathering in Paris on Thursday have yet to table a proposal about what should be done, they have been informally lobbying for an extra commitment of at least 100 million barrels, the people said, asking not to be identified because the matter is not public.” (BBG)

The report says US officials believe IEA members have not released enough oil from the coordinated 400 million-barrel oil and fuel release announced in March to cushion the impact of the Gulf conflict.

The Group of Seven nations agreed earlier this month to release up to 100 million barrels after President Trump threatened Europeans with a halt to exports of diesel and other petroleum products.

Today’s request follows Trump’s deal with Moscow to supply US and global markets with thousands of tons of diesel fuel.

On top of this, a defiant President Volodymyr Zelenskyy told the Financial Times earlier today that his armed forces will attack Russian refineries once again. This comes after the Trump administration requested that Ukraine stop hitting Russian refineries, as those attacks have been one of the drivers of the global refining crisis.

Last month, IEA head Fatih Birol said about one-third of the 400 million-barrel release announced in March had been delivered to global markets. Meanwhile, US SPR inventories have fallen to levels not seen since the early 1980s.

The Trump administration’s scramble comes as midterm elections are just three weeks away. The latest credit and debit card data from Bank of America show that US consumers are spending more on fuel at the pump, crowding out other purchases and weighing on consumer sentiment.