Oil Market: Brent between $84 and $87 Amid Tanker Attacks
Oil prices are exhibiting heightened volatility. Following a nearly 5% drop at the start of the week—to $84 per barrel for Brent—the market rebounded on Wednesday, with September Brent futures climbing above $87, while WTI was trading around $82. Several events contributed to this upward momentum:
- Tanker Attacks in the Strait of Hormuz: The Iranian Revolutionary Guard Corps reported strikes on three oil tankers that were following an "unapproved" route. Transit between the Persian Gulf and the Gulf of Oman remains severely restricted, with parts of the route being mined.
- Military Strikes: Iran launched missile attacks on American bases in the region, while the US and Saudi Arabia conducted joint operations in Iraq. Iraqi oil exports are shrinking due to shipping disruptions.
- Logistics Restructuring: Saudi Arabia is redirecting some supplies to bypass hotspot regions—shipments via the Suez Canal have significantly increased, while the Houthis threaten shipping in the Bab-el-Mandeb Strait.
A number of analysts do not rule out Brent moving towards $100 per barrel if escalation continues. Factors limiting growth include a slowdown in global oil demand, a strong dollar, and sell-offs on Asian stock markets.
OPEC+: The "Seven" Completes Recovery of Production
The OPEC+ alliance, now comprising members after the departure of the UAE in May, continues its strategy of mild supply increases. For August, the quotas for the "seven" (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, Oman) have been raised by 188,000 barrels per day, bringing the total target level to 36 million b/d. The meeting on 2 August is expected to approve the final step—an additional 188,000 b/d for September, which would entirely roll back the package of voluntary restrictions of 1.65 million b/d. From February to August, the total quota has increased by approximately 940,000 b/d. However, the actual production of several participants significantly lags behind permissible levels due to the Middle Eastern conflict, mitigating the impact of quota increases on market balance.
Gas Market: TTF Near March Highs, Europe's Gas Storage Only 55% Full
The European gas market is entering a period of heightened risk ahead of the heating season. TTF hub prices reached €64/MWh (approximately $750 per thousand cubic meters) at the end of July—the highest since mid-March. Key issues for the EU are:
- Record Low Stocks: The filling level of EU gas storage stands at around 55.3%—the lowest for this date since 2021 (compared to 76.2% last year and 83.7% in 2024).
- Slow Injection Rates: Daily storage injection rates are 20% lower than last year; to meet the norm of 90% by winter, a net injection of at least 68 billion cubic meters is required.
- LNG Shortage: Daily liquefied natural gas imports fell to a 22-month low in July, as Asia is re-purchasing available volumes amidst the Middle Eastern crisis and supply risks from the Persian Gulf.
- Heat and Power Demand: Extreme temperatures in Europe are increasing output at gas-fired power plants to meet air conditioning needs.
Projections indicate that by the beginning of winter, stocks may not even reach 75%, creating the foundation for high price volatility in the fourth quarter. Meanwhile, on the eastern front, a new daily record for pipeline gas supplies from Russia to China has been set.
