Key facts
- Oil prices surpassed $90 a barrel.
- Vessel traffic in the Strait of Hormuz fell to a two-month low.
- Global diesel demand is rising while supply is hampered.
- European refineries face challenges due to closures and competition for U.S. barrels.
- Indian refiners' LPG losses narrowed threefold in August.
- The UAE's ADNOC issued its eighth spot tender since June.
- Money managers reduced net long positions in WTI and Brent crude futures for two consecutive weeks.
- OPEC's total oil production increased by 1.17 million barrels per day in July.
- OPEC output remains below quota targets.
- Stock markets saw mixed performance.
Oil prices surpassed $90 a barrel, reaching their highest in over a week, primarily driven by disruptions in the Strait of Hormuz and stalled US-Iran negotiations. Vessel traffic through the Strait of Hormuz fell to a two-month low, contributing to jet fuel shortages that impacted airlines. Prices later pared some gains as talks between Oman and Iran showed progress.
A global diesel shortage is intensifying, exacerbated by rising demand, geopolitical tensions, and refinery disruptions. Europe faces significant challenges due to refinery closures and competition for U.S. barrels, with inventories hitting multi-decade lows. The crisis in the Strait of Hormuz has also significantly disrupted global LPG trade, increasing reliance on US exports. In India, refiners saw their LPG losses narrow threefold in August, supported by government compensation and increased imports.
The UAE's Abu Dhabi National Oil Company (ADNOC) has issued its eighth spot tender since June, seeking to sell increased crude volumes. This follows the UAE's departure from OPEC and its efforts to navigate export routes. Meanwhile, money managers have reduced their net long positions in WTI and Brent crude futures for a second consecutive week. This pullback occurred despite ongoing geopolitical supply risks and a lack of progress on reopening the Strait of Hormuz. OPEC's total oil production increased by 1.17 million barrels per day in July, marking the second consecutive monthly rise, though output still falls short of established quota targets due to security concerns in the Middle East impacting supply.
Stock markets showed mixed performance amid these developments, with Nvidia announcing AI infrastructure funding and Intel raising $20 billion.