Oil Market: Geopolitical Easing Has Crashed Prices
World oil prices are experiencing the most significant re-evaluation since the beginning of the year. Brent is trading around $79–80 per barrel, while the American WTI is around $75–76. Back in late July, the international benchmark was above $90 amid attacks on tankers in the Persian Gulf, but Washington's decision to postpone military action against Iran and initiate direct talks has turned the market downward. The weekly decline in prices has approached 10% — traders are swiftly removing the "war premium" that has been in place since spring.
Volatility remains extreme: on Wednesday, oil prices briefly rose following reports of a Houthi attack on a Saudi vessel in the Red Sea, reminding us that risks to maritime logistics extend beyond just the Strait of Hormuz. However, the dominant trend is the expectation of de-escalation. Analysts warn that if negotiations fall through, a return to $90 and above could occur within hours.
Strait of Hormuz: Parameters of the Historic Agreement
A key event for the global oil and gas market is the interim agreement between the USA, Iran, and Oman regarding the opening of the Strait of Hormuz, through which approximately 20 million barrels of oil and petroleum products flowed daily before the crisis. The announcement of the deal was anticipated on Wednesday, August 5. The main parameters of the discussed scheme are as follows:
- Duration — 60 days with the possibility of extension; the regime is intended to cement the ceasefire and open the path for negotiations regarding Iran's nuclear programme.
- Separate Shipping Routes: Vessels entering the Persian Gulf will travel through the northern corridor via Iranian territorial waters, while those exiting will use the southern route via Omani waters.
- No Transit Fees: Duties and fees for passage will not be levied.
- Clearing the Main Fairway within 30 Days, after which a transition to permanent bilateral navigation may occur.
For Bahrain, Iraq, Kuwait, and Qatar — countries without alternative export routes — the opening of the strait signifies the restoration of critically important flows of oil and LNG. At the same time, Washington emphasises that if negotiations fail, a forceful scenario will return to the negotiating table.
OPEC+: The Alliance Completes the Return of Voluntary Cuts
At a virtual meeting on August 2, the OPEC+ "group of seven" — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — agreed to increase oil production in September by 188,000 barrels per day. This step brings the alliance to the conclusion of returning 1.65 million barrels per day to the market, cut during the second phase of voluntary restraints since April 2023. Quotas approved for participants will remain in effect without additional cuts until the end of 2026; the next monitoring meeting is scheduled for September 6.
The paradox of the current moment is that the Gulf countries physically could not take advantage of their quotas due to the blockade of the Hormuz Strait. The opening of this key artery could quickly restore significant volumes to the market, which would increase price pressures in the second half of the year — a factor that investors should incorporate into their models now.
Gas Market: Europe in a Race for LNG Before Winter
The European gas market remains the most strained segment of the global energy sector. The crisis in the Strait of Hormuz has taken approximately one-fifth of the global LNG supply, primarily from Qatar, out of circulation, intensifying competition between European and Asian buyers. The implications are notable:
- TTF hub prices are holding in the range of €56–59 per MWh — approximately 30% higher than levels at the end of June;
- EU underground gas storage (UGS) facilities are filled to only 55–56% — the lowest level for this time of year in nearly two decades;
- Brussels has reduced the mandatory target level for UGS fill levels by 1 November from 90% to 80%, acknowledging supply constraints.
A hopeful signal was the first passage of a Qatari LNG tanker through Hormuz at the end of July since early July. If the agreement regarding the strait comes into effect, the resumption of Qatari shipments could significantly bring down gas prices and accelerate filling of European storage ahead of winter. Otherwise, the market will start pricing in a winter deficit well in advance.
Refining: Global Shortage of Capacity and Fuel
The global oil refining sector is operating under multiple shocks. Damage to refineries in the Middle East, strikes against refining infrastructure amid the Russia-Ukraine conflict, China's export restrictions on petroleum products, and Russia's ban on diesel exports have collectively tightened global motor fuel supply. Crack spreads remain elevated, supporting margins for surviving facilities, while European refiners are diversifying their raw material purchases, increasing notably oil supplies from Guyana to bypass traditional Middle Eastern routes.
Russian Fuel Market: Export Restrictions Until 2027
The Russian government has extended the full ban on the export of automotive gasoline until January 31, 2027 — an unprecedentedly long horizon for restrictions, reflecting the depth of imbalances in the domestic market. The embargo on diesel fuel exports is in place at least until the end of August. Reasons for the tightening include:
- Increasing drone attacks on Russian refineries since March have reduced motor fuel production;
- High seasonal demand during the holiday and harvesting season;
- The need to curb rising exchange and retail prices at petrol stations.
The effect has already manifested in the diesel segment: exchange sales of summer diesel fuel at the SPbMTSB have doubled in a week, and the market is discussing the risk of oversupply that could force refineries to reduce output — with a secondary reduction in gasoline production. Regulators will need to balance between saturating the domestic market and maintaining the processing economy.
Electricity and Renewables: Renewable Generation Solidifies Leadership
The global energy transition continues to break records. By the end of 2025, renewable energy sources will for the first time in a century outpace coal in the global electricity balance — 33.8% compared to 33.0% of generation. In 2026, the trend is set to strengthen: in the United States, in the first quarter, solar plants and storage systems accounted for 91% of all new capacity, and the renewables sector could attract up to $120 billion in investment over the year. California's energy system recorded solar generation covering up to 72% of demand in the summer, while Texas set records for solar output and battery contribution during evening peaks. It is also noteworthy that in China and India — the largest coal-powered energy systems in the world — fossil generation fell synchronously for the first time in 2025: clean energy is growing faster than demand. Additional pressure on oil demand arises from electric transport: the Chinese electric vehicle fleet alone displaced approximately 34 million tonnes of oil in the first half of 2026.
Coal: Correction Following Geopolitical Rally
The coal market is moving in the wake of Middle Eastern geopolitics. Newcastle thermal coal, which soared to multi-year highs in the second quarter amid the US-Iran conflict and Indonesia's export restrictions, has corrected to $127–130 per tonne — still approximately 16% higher than last year's level but significantly lower than May's peaks. Coking coal, which reached around $240 per tonne, has also decreased amid de-escalation. Demand in Asia remains a structural support for the market: the energy needs of India, China, and ASEAN countries sustain robust imports, while underinvestment in new export capacities limits supply elasticity.
Key Milestones for Investors on August 6
The agenda for the upcoming trading sessions will focus on several factors:
- Official announcement of the agreement regarding the Strait of Hormuz — the main trigger for oil, gas, and freight rates; confirmation of the deal will intensify pressure on Brent, while a breakdown will push prices back to $90.
- Rate of recovery of Qatari LNG exports — a defining factor for European gas prices and the pace of filling UGS ahead of winter.
- Data on oil and petroleum product stocks in the USA — an indicator of supply and demand balance amid peak driving season.
- Dynamics of exchange prices for fuel in Russia following the extension of export bans.
- September OPEC+ production increase and Gulf countries' ability to utilise quotas with an open strait.
For participants in the energy sector, the coming weeks will serve as a test of the durability of the diplomatic easing in the Middle East. The combination of rising OPEC+ supply, potential return of Gulf barrels, and record expansion of renewables sets a bearish backdrop for oil prices in the second half of 2026 — however, the fragility of the ceasefire and vulnerability of logistics from the Red Sea to Suez leave the market with a wide corridor for new price shocks.
