Oil Market: Brent Stabilises at $90 After Best Month Since Spring
The global oil market concluded July on a positive note. On the last trading day, the price of Brent crude rose by 1.3% to $90.12 per barrel, while US WTI saw an increase of 1.5%, reaching $84.67. Over the month, the North Sea benchmark surged approximately 24%, and WTI gained 21%: this marks the best performance since March, when tensions surrounding Iran first propelled prices into triple-digit territory. Russian Urals crude is currently valued at around $85 per barrel, with the discount to Brent narrowing amid a supply shortage in the global market.
Key drivers of oil prices at the start of the week include:
- Geopolitical Premium: The blockade of the Strait of Hormuz and ongoing military tensions surrounding Iran maintain a risk premium of several dollars in the prices;
- Actual Supply Reductions: Exports from the Persian Gulf are following alternative routes with limited capacity, and a portion of Iranian volumes has effectively left the market;
- Sustained Demand: The abnormal heat in the Northern Hemisphere supports electricity and fuel consumption, while refineries are operating at high capacity during the peak automotive season.
The consensus among analysts from leading investment banks regarding the average Brent price for 2026 has been raised to $85 per barrel. The range of weekly fluctuations remains broad: at the end of July, prices fluctuated from $84 to $100, reflecting the sensitivity of the oil market to every piece of news from the Middle East.
OPEC+: Final Quota Increase and Strategic Pause
The central event of the weekend was the OPEC+ “seven” meeting on 2 August. Key decisions made by the alliance include:
- From September, oil production quotas will increase by an additional 188,000 barrels per day, completing the phased removal of voluntary cuts of 1.65 million b/d that have been in place since 2023;
- After the September adjustment, the alliance will pause in increasing production to assess supply and demand balances;
- Restrictions of approximately 2 million b/d, introduced in 2022, remain in place — a decision on their distribution has been postponed.
From February to August 2026, the total quota of the alliance has increased by approximately 940,000 b/d — a volume comparable to Omani production. The format of the alliance has shifted: following the UAE's exit from OPEC and OPEC+ on 1 May, decisions are now made by the “seven” — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. The cautious strategy of the alliance is understandable: with the Strait of Hormuz blocked, the physical ability of several participants to increase exports is limited, and a paper increase in quotas does not result in a proportional rise in supply.
Strait of Hormuz: Tehran Rejects Unblockade, Negotiations with Oman Nearing Conclusion
The geopolitical backdrop remains a determining factor for the entire energy sector. On Sunday, Tehran officially denied reports about the resumption of navigation through the Strait of Hormuz, describing them as misleading. At the same time, Iran's Foreign Minister stated that consultations with Oman regarding the establishment of a joint maritime management mechanism in the area are nearing completion — a tangible signal of possible de-escalation following recent weeks.
The stakes for the global market are exceptionally high: prior to the crisis, around one-fifth of global oil supplies passed through the strait, with Europe receiving up to 12-14% of its imported LNG from Qatar via this route. Investors are also monitoring the proposed land blockade of Iran being discussed in Washington — such a move could provoke a new surge in oil and gas prices. Conversely, any progress in the negotiation track could rapidly diminish a portion of the geopolitical premium: experts estimate that a peace agreement could lead Brent to return to the vicinity of $70.
European Gas Market: Stocks at Five-Year Low Ahead of Winter
The European gas market remains the most vulnerable segment of the global energy landscape. TTF hub prices rose by approximately 55% in July, consistently holding above $500 per thousand cubic metres. The reasons for this tension are structural:
- Storage levels in the EU stood at just over 56% at the beginning of August — the lowest for this time of year since 2021, and 18 percentage points below the five-year average;
- After a cold winter of 2025-2026, the withdrawal season concluded with storage levels below 28%, and compensating for the lost volumes has proven challenging;
- To meet target levels ahead of the heating season, net injections must total at least 68 billion cubic metres; however, less than half of the plan has been executed so far;
- Europe is losing its price competition with Asia for available LNG cargoes, and the July heatwave has increased gas consumption for electricity generation to support air conditioning systems.
The pace of gas injections in July was among the lowest recorded in history. Should this trend not reverse in August and September, the winter of 2026-2027 could prove to be the most challenging for European energy since the crisis of 2022 — with corresponding repercussions for industry, power generation, and inflation in the Eurozone.
LNG and Asia: One Billion Dollars in Extra Costs and a Shift Towards Coal
Five months of Middle Eastern conflict have cost South Asian countries over $1 billion in additional LNG import expenditures. The rising logistics costs and re-routing of shipments have hit Pakistan and Bangladesh particularly hard, where supply disruptions and rolling blackouts are reported. Spot prices for liquefied gas in Asia have more than doubled during the crisis, forcing importers to reconsider their fuel mix in favour of coal. Meanwhile, China is decreasing the re-export of Arctic LNG volumes, redirecting them to replenish its own stocks ahead of the heating season while grappling with unusual heat and record electricity demand.
Coal: The Quiet Beneficiary of the Gas Crisis
The coal market has emerged as a clear beneficiary of expensive gas. Major Asian economies are ramping up coal generation: South Korea has increased its output from coal-fired power plants by nearly 40% — reaching a peak not seen since 2019, while Japan's output rose by 11%. The import of thermal coal is surging in all directions: South Korea nearly doubled its purchases of Russian coal between January and May, while Australia significantly increased its shipments. Prices at the European ARA hub are holding in the range of $118-124 per tonne, with the index for Australian metallurgical coal exceeding $215. For exporters — Indonesia, Australia, Russia, and South Africa — the market conditions remain favourable: sustained demand from Asia ensures stable sales and supports prices.
Electricity and Renewables: Renewable Generation Surpasses Coal Globally
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