Key facts
- Crude oil prices are on track for their second consecutive weekly increase.
- U.S. is preparing 'Economic Warfare and Isolation' against Iran, with sanctions details to be released Monday.
- Stalled U.S.-Iran negotiations have led to increased attacks on vessels in the Strait of Hormuz.
- OPEC has lowered its global oil demand growth forecast for 2026 to 580,000 b/d.
- The IEA predicts a deepening global oil supply deficit of 4.3 million b/d in 2026.
- Russia's refined product exports have significantly declined due to refinery issues and export bans.
Crude oil prices are on track for their second consecutive weekly gain, driven by escalating geopolitical tensions involving Iran and attacks on shipping lanes, alongside Ukrainian strikes on Russian energy infrastructure. President Trump announced that the U.S. is preparing "Economic Warfare and Isolation on an unprecedented scale" against Iran, with Treasury Secretary Scott Bessent detailing the sanctions as "the toughest sanctions in history." Details of this economic pressure campaign are set to be released on Monday.
Stalled negotiations between the U.S. and Iran have led Tehran to intensify its attacks on vessels transiting the Strait of Hormuz, while the White House maintains a maritime blockade of Iranian crude. Despite a substantial 17-million-barrel build in U.S. crude inventories, the ongoing naval attacks are pushing ICE Brent crude towards the $100 per barrel threshold.
OPEC has reduced its forecast for global oil demand growth in 2026 to 580,000 b/d, contrasting with the IEA's prediction of a 1.6 million b/d decline. The IEA anticipates a deepening global supply deficit of 4.3 million b/d in 2026, with a Q3 deficit of 1.8 million b/d, even as record fuel prices cause significant demand destruction.
Saudi Aramco is individually negotiating September supplies with Asian buyers as shipowners avoid the Hormuz and Red Sea. The company increased its crude output to 8.2 million b/d in July, but only 200,000 b/d reached markets, with domestic inventories rising to their highest since at least 2016 due to disruptions.
In Russia, refined product exports have plummeted due to refinery issues and an export ban. The Orsk refinery has shut down for up to six months following a Ukrainian drone strike, impacting local supplies. Meanwhile, Ukraine has reportedly proposed a truce on attacks against civilian vessels to mitigate agricultural export disruptions.
Other developments include Argentina doubling its estimate for recoverable shale oil in the Vaca Muerta play, a stalled $50 billion Alaska LNG export project, and a blast at Gunvor's Rotterdam terminal that killed one person.