Key facts
- Oil prices are approaching $100 per barrel amid escalating attacks in the Strait of Hormuz.
- US-Iran tensions have intensified with retaliatory strikes and a maritime blockade.
- OPEC has further reduced its global oil demand growth forecast for 2026.
- The International Energy Agency anticipates a significant global oil supply deficit in 2026.
- Disruptions in key shipping lanes are impacting oil and LNG trade flows.
- A major refinery in Russia has shut down following a Ukrainian drone strike.
Oil prices are surging towards the $100 per barrel mark, with Brent crude futures on track for a 5% weekly gain, driven by escalating attacks in the Strait of Hormuz and stalled US-Iran negotiations. Tehran has intensified its strikes on vessels transiting the crucial waterway, while the White House continues its blockade of Iranian crude.
Despite a significant 17-million-barrel build in US crude inventories, geopolitical tensions are outweighing demand concerns. The International Energy Agency (IEA) forecasts a deepening global oil supply deficit of 1.8 million barrels per day in the third quarter of 2026, with overall supply expected to fall by 4.3 million barrels per day. This contrasts with OPEC's more conservative outlook, which has slashed its 2026 global oil demand growth forecast to 580,000 barrels per day, marking the fourth consecutive month of downward revision.
Shipping disruptions are impacting various energy markets. Saudi Aramco is individually negotiating September oil supplies with Asian buyers as shipowners avoid the Hormuz and Red Sea. QatarEnergy has extended its force majeure to India for LNG deliveries, with 56 term shipments now missed. Ukraine has proposed a truce on attacks against civilian vessels and ports to mitigate the crippling impact on its agricultural exports, which have seen a 76% year-on-year decline in August.
In Russia, the Orsk refinery, with a capacity of 115,000 barrels per day, has completely shut down following a Ukrainian drone strike, potentially taking six months to repair. The country's seaborne refined product exports also plunged by a third in July. Meanwhile, a slick from the sanctioned tanker Caroline Bezengi, following a drone attack, has spread across more than 2,000 km2, threatening Oman's coastline.
In other energy news, the US Department of the Interior's latest lease sale in the Gulf of Mexico generated $82.7 million in bids. Argentina has doubled its estimate of recoverable shale oil in the Vaca Muerta play to 30.1 billion barrels. Saudi Aramco increased its July output by over 1 million barrels per day, but only 200,000 barrels per day reached the market due to disruptions forcing domestic inventory build-ups. In Europe, a blast at Gunvor's Rotterdam terminal killed one person and injured several others, while a power failure halted ExxonMobil's 200,000 barrels per day refinery.