MIDDLE EAST OIL FLOWS: With data for Oct 1-26, Middle Eastern *crude* exports (ex Iran) are on track to be higher in Oct than in Sept (and very close to pre-war levels (>90%) for the monthly average). After weeks of attacks against tankers and infrastructure, Iran and its proxies have failed to stop the flow. But all that recovery could be gone if the war re-starts after Nov. 3. Note I'm referring to **crude** and the flows include SoH plus all the bypass routes. Flows of clean and dirty refined products remain depressed, with little change in flows month-on-month, holding around >60% of pre-war levels (ex Iran).

K Street is very good at mining the taxpayer mine. For that, first the right narrative needs to be shaped, starting by calling stuff “critical.” After that, it’s a lot easier to secure corporate welfare for their clients.

Speaking at the 22nd @IISS_org Manama Dialogue #IISS_MD26#, Dr. Anwar Gargash @AnwarGargash, Diplomatic Adviser to the UAE President @MohamedBinZayed, warned that the Gulf remains trapped in a prolonged state of “no war, no peace,” with Washington and Tehran still far apart. “If these positions are not bridged, then we have to worry about the worst,” he said. Gargash stressed that the UAE opposes another round of confrontation and supports diplomatic efforts, including Qatar’s mediation, but remains “braced for the worst” and prepared to defend its sovereignty, citizens, and economic infrastructure. On Bahrain and Saudi Arabia, Gargash praised Bahrain’s resilience under Iranian attacks, saying the Kingdom had shown “steadfastness,” “courage,” and the ability to protect its population. He expressed solidarity with Saudi Arabia following attacks on civilian airports and infrastructure, declaring, “Nobody can in any way justify an attack on civilian airports and civilian infrastructure.” He emphasized that Gulf security is interconnected and that threats to Bahrain or Saudi Arabia directly affect the UAE and other GCC states. On the GCC’s collective response, Gargash delivered one of his strongest assessments, acknowledging that Gulf states had failed to respond effectively as a bloc. “We have not collectively risen to the challenge,” he said. While individual countries had demonstrated resilience, he warned that confidence in the GCC’s collective ability to confront a crisis of this magnitude “has in many cases proven to be hollow, unfortunately.” He called for “rebuilding Gulf confidence,” acknowledging that the process would take many years. On Iran, Gargash distinguished between restoring diplomatic relations and rebuilding trust. “What really has been broken is the confidence,” he said, stressing that it had been shattered by Iran’s attacks on Gulf countries. While Iran remains an essential neighbor and diplomatic and economic relations will eventually resume, rebuilding trust would take “an extremely long time.” On the Strait of Hormuz, Gargash described restoring the prewar status quo as “important and non-negotiable.” He rejected restrictions on energy exports and international trade, arguing that Gulf countries should not bear the economic consequences of “a crisis that we did not create.” On relations with Washington, Gargash reaffirmed the importance of the UAE’s security partnership with the United States, saying the crisis had “concretized that relationship” and made it “even more important.” He stressed that American cooperation remains central to the UAE’s security calculations, alongside its own political will and military air defense capabilities. Gargash also questioned the effectiveness of regional middle powers, arguing that diplomatic conferences and mediation initiatives had failed to produce meaningful results in a crisis fundamentally driven by Washington and Tehran. He concluded that the UAE continues to seek a political settlement and does not believe a military solution is viable. However, he cautioned that avoiding renewed confrontation cannot be guaranteed if diplomatic efforts fail to bridge the divide between the United States and Iran.

CHART OF THE DAY: High gasoline prices have dented fuel demand in the US. With the exception of 2020 during the pandemic, this year's summer consumption (measured as the July and August average) was the weakest in ~25 years.

Secretary of Iran's Supreme National Security Council, Mohsen Rezaei: I have read Vance’s letter but have not yet replied. Their tone has changed completely, which is a good sign. The Iranian people have consolidated their victory. No new official decision has been made on changing our nuclear doctrine, but the question is being discussed: if war breaks out again, do we want to maintain our previous doctrine?

MIDDLE EAST OIL FLOWS: With data for Oct 1-26, Middle Eastern *crude* exports (ex Iran) are on track to be higher in Oct than in Sept (and very close to pre-war levels (>90%) for the monthly average). After weeks of attacks against tankers and infrastructure, Iran and its proxies have failed to stop the flow. But all that recovery could be gone if the war re-starts after Nov. 3. Note I'm referring to **crude** and the flows include SoH plus all the bypass routes. Flows of clean and dirty refined products remain depressed, with little change in flows month-on-month, holding around >60% of pre-war levels (ex Iran).

Qatari mediators, led by Ali Al-Thawadi, are continuing talks with Iran’s Deputy Foreign Minister in Doha. The Qatari mediators remain in regular contact with the White House, a diplomatic source tells me. At this stage, there is still no agreement to resume direct negotiations between the US and Iran, and no date has been set for the arrival of a US delegation in Doha

Iranian Supreme Leader Mojtaba Khamenei met with military commanders and issued instructions: “.. any level or type of threat must be met with an immediate and effective response, without geographical restrictions….” “… If the enemies once again initiate military or terrorist attacks, it is the Armed Forces of the Islamic Republic and the Iranian nation who will determine the time and conditions of their end…”

CHART OF THE DAY: The US hurricane season is entering its final weeks and it's now abundantly clear it was one of the weakest in recent history. The best way to look at it is via the @ColoradoStateU measure of Accumulated Cyclone Energy for 2026 s the average of 1991-2020.

🇺🇸🇮🇷💰The U.S. naval blockade, sweeping economic sanctions and obstruction of overland export routes have crippled Iran's economy and intensified pressure on the regime, according to a new Treasury Department report. My story on @axios

"... Right now, location really matters..." - Chevron CEO said today about the oil market amid high freight costs. Read my @Opinion column from a few days ago ⤵️ about why now "with oil, as with real estate, it’s all about location, location, location."

En route to become one of my favorite stories to explain how messy the energy transition is proving: Coal mine shifts to EV trucks to save on diesel. 📄:

ExxonMobil CEO Darren Woods describes the clean products shortage (mostly diesel / jet fuel) in thirds: 1/3 is directly Persian Gulf; another 1/3 is China (which is linked to Middle East), and 1/3 is Russia-Ukraine (which he thinks is going to take a "lot longer" to resolve).

The view from @RANDCorporation on Iran war: "... Sticking with the current approach is unlikely to result in a clean and quick end to the war. But sometimes an imperfect option is actually the right one—if only because the others are that much worse ..."

BIG OIL 3Q EARNINGS: ExxonMobil closes the major's reporting seasons with strong results. Same theme: high oil and gas prices, but above, sky-high refining margins. As its rival CVX, Exxon guided investors to expect a similar level of buybacks next year than in 2026. $XOM

BIG OIL 3Q EARNINGS: BP reports its highest profit in 18 years on the back of sky-high refining margins. The company reduces debt sharply (nearly $10 billion in a single quarter), and says it plans to use excess cash to accelerate payments linked to the US Gulf of Mexico spill.

European Commission sounds the alarm (now !!!) about the number of oil refineries closing in the region over the last 20 years. "We need to counter this trend," says EU Energy Commissioner Dan Jørgensen. "This crisis is a wake-up call." Quite.