WTI–Brent spread narrows to $6.24 — below the $7.61 arbitrage breakeven derived from freight ($2.85/bbl), insurance ($0.15), handling ($0.30), FX drag ($0.40), and quality discount ($0.50). Physical passage ≠ trade activation: Panama Canal (11 vessels/day) and Yucatan Strait (29 vessels/day) remain open, but economics are broken. Supply: U.S. output at 13,850 kb/d vs. refinery input at 17,400 kb/d → 3,550 kb/d deficit. JODI reports crude imports at 6,709 kb/d — nearly double the gap — confirming long-term contracts and geopolitical inventory top-ups, not price-responsive buying. Canada produces 4,461 kb/d but refines only 1,286 kb/d; export capacity exists but no Asia-facing infrastructure. Demand: Asia’s fuel oil futures up +0.55% to ¥4,002/t, asphalt +1.33% to ¥4,282/t — no crack-driven import surge. USD/JPY at 159.70 lifts Japan’s landed cost by 2.3% (validated last report), eroding bid power for USGC high-sulfur barrels. Stocks: U.S. fuel oil inventory stands at 22,389 kb (2026-08), just 3.8% of total refined products (591,678 kb). Low stocks should support exports — but fuel oil’s CNY gain (+0.55%) lags WTI’s USD loss (-0.78%), signaling weak domestic demand, not foreign pull. Regional focus: USGC exporters face three pressures — (1) WTI deepening discount pushes Asian buyers to SOMO’s December OSP (Basrah Medium at -$8.80/bbl); (2) USD/CAD at 1.4249 improves CAD-denominated Canadian offers; (3) Mexico refines 1,217 kb/d but produces 1,674 kb/d — its 3,009 kb fuel oil stock (2026-07) within 18,032 kb total opens Central American reverse-flow risk, diverting traditional USGC southbound flow. Upside trigger: WTI–Brent ≥ $7.80 for 3 consecutive days, or Hormuz AIS visibility recovers to >40 vessels/day (historical norm: 49). Downside trigger: spread < $5.50, or U.S. crude imports drop below 6,200 kb/d in one month. Stance: bearish. Shift to neutral if spread holds >$7.65 for two days. Action for SNSUC clients: ① Halt new WTI pricing; prioritize Dubai/Oman under existing contracts. ② USD/CNY at 6.6676 is a 3-month high — lock FX now for imports. ③ Delay USGC–Singapore vessel scheduling to early December, pending spread rebound. ④ Monitor Mexico’s fuel oil stock: if MoM rise >5% from 3,009 kb, regional dumping risk escalates.