Good morning, nice people. This morning's issue is about hedging against a strait that isn't reopening on anyone's schedule but Iran's.

Fertiglobe is the latest to build the workaround before it needs it. CEO Ahmed El Hoshy told Bloomberg the company still expects to export through Hormuz, but wants the flexibility to keep producing and moving product if the strait shuts. Trucks and alternative ports are already part of the plan; rail could be next.

Adnoc isn't waiting either — it's just not telling anyone. An empty Adnoc L&S LNG carrier crossed the strait with its AIS switched off and turned up inside the Arabian Gulf on Wednesday, Bloomberg reports. Satellite imagery shows a tanker berthed at Adnoc Gas' Das Island export terminal earlier this week, also without broadcasting its position

That instinct explains why yesterday's diplomatic optimism didn't survive 24 hours. We wrote yesterday about Oman's push for a Malacca-style regional management mechanism for Hormuz — a real sign of progress, we said. But, Iran said the plan has “no chance of success,” killing off the path to reopening the strait to commercial shipping.

Meanwhile, one consortium isn't hedging around Hormuz — it's building outside it entirely. A US-Saudi group is in the final stage of picking a site for a USD 5 bn refinery and export complex beyond the strait.

BEFORE WE DIVE IN- A fire in Damietta Port yesterday spread to two regasification and storage vessels, the Oil Ministry confirmed. On-site emergency personnel including firefighters contained the blaze, which impacted a total of two ships, the ministry said, adding that there were no injuries. The statement did not address widely circulating claims in the international press of a drone strike on the US-owned gas storage tanker. The ministry called on the press and social media users to “obtain information from official statements issued by the ministry.”

A source in the petroleum industry told us there had been no damage to natural gas export or import infrastructure — and said the incident posed no threat to the nation’s electricity-generation sector. The incident began when a blaze broke out in the engine room of an old, stationary ship, the source added.

US President Donald Trump said he had been “briefed” on the fire, adding, “it’s a little ​more of the same. But it's going to be straightening out,” Reuters reported. Trump did not elaborate further.

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Hormuz’s middle path hits a wall

Iran rejected Oman’s proposal for regional joint management of Hormuz, closing off a path to reopening the strait to commercial shipping, Reuters reports, citing an unnamed senior Iranian source. Tehran said that the Gulf-backed plan had “no chance of success,” one day after Muscat had presented Tehran with a regional mechanism modeled on cooperation in the Strait of Malacca.

A zero-sum game: Iran said it would only accept an arrangement under which Tehran and Muscat manage their respective areas of control, without other powers taking part. But Iran's proposed split is far from equal, wanting control over the entire inbound route and part of the outbound route, leaving Oman to oversee only the section corresponding to its waters. A joint arrangement giving the two countries equal control would not serve Iran's interest, the source said.

The clock is ticking: Every week without an agreement strengthens the case for Gulf producers and logistics companies to route around Hormuz altogether. Pipelines to export terminals outside the strait, trucking to alternative ports, and other bypass infrastructure will be viewed more as the base case for protecting trade flows rather than emergency hedges. The shift will not eliminate the strait’s importance — bypass capacity remains limited relative to the volumes normally crossing the chokepoint— but it could permanently redirect investment toward infrastructure that reduces exposure to Iranian control.

And the workarounds keep coming

A consortium of US and Saudi firms is advancing plans for a USD 5 bn refinery and export complex outside Hormuz, Reuters reports. The Mera Oil consortium — made up of Texas-based developer MWG Enterprises, the Patel Family Office, and PWS, an associate of Saudi industrial conglomerate AHQ Group — has entered the final stage of picking a host site.

The plan is built to route around the strait entirely: The planned facility would process 200k bbl / d and connect to deepwater port infrastructure, large-scale storage, and marine export facilities with direct access to international shipping routes, with plans to produce ultra-low-sulfur diesel and jet fuel for the US, Gulf, Atlantic Basin, and other markets.

A lot still needs to fall into place: The consortium has narrowed its search to three undisclosed locations across the GCC and expects to select a host by the end of the year. The partners are still negotiating with potential feedstock providers, with definitive arrangements expected to advance alongside the final site decision. Its commercial and strategic value will depend on where the refinery is built, where its crude comes from, and whether the consortium secures financing and buyers.

DAE seals Macquarie takeover

DAE joins the mega-lessor tier: Dubai Aerospace Enterprise (DAE) has completed its full acquisition of Macquarie AirFinance (MAF) at an enterprise value of around USD 9 bn, according to a press release. The combined business now holds roughly 1k owned, managed, and committed aircraft worth USD 35 bn, making DAE the world’s third-largest aircraft lessor by fleet value and by number of owned and managed jets.

BACKGROUND- DAE initially agreed to acquire the Dublin-based lessor in February in an allcash transaction carrying a USD 7 bn enterprise value. The transaction follows its USD 2 bn acquisition of Nordic Aviation Capital, which added 252 aircraft and helped DAE more than double its leasing franchise in around 18 months.

Doubling down: The lessor is pairing large-scale acquisitions with institutional-capital platforms that allow it to buy and manage more aircraft without funding every asset itself. Its Mustang Aerospace platform with Neuberger Speciality Finance is targeting around USD 6 bn across multiple investment vehicles following the launch of its Equator platform with Blackstone, which targets around USD 1.6 bn in annual aircraft investment.

Market watch

Oil prices eased this morning as supply flows outweighed escalating Gulf attacks, Reuters reports. Brent crude futures dipped USD 0.96 to USD 89.78 / bbl by 04.18 GMT, while West Texas Intermediate (WTI) slipped USD 0.64 to USD 83.32 / bbl.

MEANWHILE- Opec+ will likely hold oil production steady for the final three months of the year after completing the return of 1.65 mn bbl / d of previously withheld supply in September, Reuters reports, citing four sources familiar with the matter. No final decision has been made.

One last hike: The now-seven core members participating in the cut are expected to approve a roughly 188k bbl / d increase for September when they meet next week. The hike, matching the monthly increases approved for June through August, would complete the phased rollback of voluntary cuts agreed in 2023.

Why this matters: The extra barrels exist largely on paper, as the quota hikes have not translated into equivalent supply growth, with the conflict forcing several Gulf producers to cut exports and the disruption eroding the group's spare capacity. The bigger shift is from restoring cuts to managing a potentially messy redistribution of market share.

What’s next? The group is reviewing members’ maximum sustainable production capacity to set 2027 baselines, and any decision to release more barrels will have to balance members’ demands for larger quotas against weakened spare capacity, disrupted Middle East exports, and forecasts of a surplus if Hormuz flows normalize.

The Baltic Index is on a downwards spiral: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — dipped 1.2% to 2,632 points on Wednesday. The capesize index slipped 1.8% to 4,067 points, while the panamax increased 0.4% to 1,995 points. The smaller supramax eased 1.2% at 1,628 points.

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