Oil Market: Brent Returns Above $85 per Barrel
Oil prices are starting the week with a confident rise. On Monday, the October Brent futures on the ICE exchange surpassed $85 per barrel (+3.2% during the session), while American WTI traded around $79.5–79.8, and Russian Urals was around $79. The driver of this increase has been the heightened uncertainty regarding the reopening of the Strait of Hormuz: the market, which a week ago was anticipating a swift de-escalation and a drop in prices, is now forced to return the "geopolitical premium" to the quotes.
Key pricing factors in the oil market right now include:
- Hormuz Factor: Under normal conditions, about one-fifth of global oil supplies and significant volumes of liquefied natural gas (LNG) pass through the Strait. The partial blockade, in effect since the end of February, remains the main source of volatility.
- OPEC+ Supply: The alliance is set to conclude its voluntary cuts in September, adding another 188,000 barrels per day to the market.
- Macroeconomics: Weak employment data in the US has intensified expectations of an easing of the Federal Reserve's policy, which supports commodity assets but simultaneously signals risks for fuel demand.
Analysts note that in the event of a full deal regarding the strait, Brent could quickly correct to the range of $70–75, whereas a breakdown in negotiations could push prices back to spring highs above $90.
Strait of Hormuz: Deal Nearing, but Tehran Raises the Stakes
The diplomatic process surrounding the world's primary oil artery has reached a crucial stage. Iran and Oman have agreed on a single average corridor for the movement of vessels and, according to the Iranian Foreign Ministry, are in the final stages of establishing a joint shipping management mechanism. Washington is prepared to lift the blockade on Iranian ports upon reaching an agreement, and the US President has previously cancelled military strikes to facilitate resolution.
However, over the past weekend, Tehran sharply hardened its position, conditioning the reopening of the strait on the fulfilment of several demands:
- the cancellation of sanctions against the Iranian economy;
- the payment of compensation for damages inflicted during the conflict;
- the US refraining from interfering in regional negotiation formats.
The outcome of this bargaining is a central event for the global oil and gas market over the coming weeks: it will affect freight rates, insurance premiums, routes for Middle Eastern oil and LNG to Asia and Europe, as well as the trajectory of energy prices for the remainder of the year.
OPEC+: The Final Step in the Production Increase Cycle
Seven OPEC+ countries — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — have agreed to increase quotas for September by 188,000 barrels per day, replicating the parameters of the past three months. This decision effectively concludes the unwinding of voluntary cuts of 1.65 million barrels per day that have been in place since 2023. After September, further production increases are expected to be paused until the end of 2026, with restrictions of approximately 2 million barrels per day from the 2022 baseline remaining in effect. The next ministerial meeting is set for September 6. For the market, this indicates that the supply factor from OPEC+ for the coming months will become predictable, shifting the focus to geopolitics and demand dynamics.
Gas Market: Europe Enters Heating Season with Record Low Stocks
The situation in the European gas market remains the most concerning in recent years. According to the Gas Infrastructure Europe association, the fill rate of EU storage facilities stands at about 58.8% — a record low for early August in 15 years of observation and 16.5 percentage points below the five-year average level. Approximately 62–64 billion cubic meters of gas are currently in storage — nearly 14 billion cubic meters less than a year ago.
The reasons for this deficit include:
- Abnormal Heat: In July, Europe drew approximately 1 billion cubic meters of gas from storage for air conditioning and electricity generation — a record summer extraction since 2022;
- Reduced LNG Imports: August LNG supplies are estimated at about 6.4 million tonnes, which is 14% lower than the previous year, partly due to supply constraints from the Middle East;
- High Prices: Prices at the TTF hub remain near multi-month highs (approximately $690 per thousand cubic meters), making replenishment economically painful.
The EU has already reduced its target fill rate for gas storage ahead of the heating season from 90% to 80%. However, to achieve even this target, injection rates must significantly increase. Europe's gas balance for the winter of 2026–2027 will critically depend on the weather, competition with Asia for LNG, and the situation in the Strait of Hormuz, through which Qatari LNG flows.
Russian Oil Products Market: Export Ban as the New Norm
The domestic fuel market in Russia continues to operate under strict regulation. The government has extended the ban on gasoline exports until January 31, 2027 — this restriction applies to both producers and traders. The ban on diesel fuel exports is in effect until August 31, 2026, although from September 1, diesel, marine fuel, and gas oils exported by direct producers will be exempt from restrictions.
Measures to stabilise the fuel market include:
- prioritising domestic market saturation in light of unplanned refinery outages following drone attacks and repairs;
- a temporary system of guaranteed supplies of gasoline and diesel to agricultural producers during the harvest season — agreements between the Ministry of Energy, the Ministry of Agriculture, regions, and oil companies are in force until November 1;
- tax amendments and a damping mechanism to incentivise processing and retain fuel within the country;
- allowing the use of direct distillation gasoline blends for the production of high-octane fuel.
For the global oil products market, the withdrawal of Russian gasoline volumes and a portion of diesel from export channels means a tighter balance and support for crack spreads, particularly in the Mediterranean, Africa, and Latin America.
Asia: India and China Strengthen Their Role as Anchor Buyers
Asian consumers remain the main attraction for commodity flows. Russian oil exports to India surged in July, aided by price discounts and a reshuffling of logistics amid the Middle Eastern crisis. China is increasing its imports of pipeline gas and continues to balance between imports and domestic production, boosting its hydrocarbon output. The slowdown in inflation in China, as oil shocks ease, indicates a gradual adaptation of the world's second-largest economy to the new price reality. The competition between Asia and Europe for available LNG volumes will be a key intrigue this winter.
Electric Power: AI and Data Centres Reshape Demand
A structural theme in the global energy sector remains the explosive growth in energy consumption from data centres. Artificial intelligence is turning electricity into a strategic resource: energy companies in the US and Asia are launching new gas plants and extending the lifespan of coal units to meet the base load for data centres. In Russia, plans are being developed to locate data centres in energy-surplus regions with gas, coal, and nuclear generation, as well as near Siberian hydropower plants. Investors are increasingly viewing the electricity sector as a “second derivative” of the AI boom — from grid companies to turbine and energy storage system manufacturers.
Renewables and Energy Transition: Growth Continues, but Balance Becomes More Complex
Renewable energy maintains high capacity installation rates: solar and wind generation are setting records in China, Europe, and the United States, and in Central Asia, renewable output has increased by over 20% year-on-year. However, energy systems are increasingly feeling the need for flexible capacities and storage: the hot summer of 2026 demonstrated that peak demand for air conditioning and data centre needs cannot yet be met without traditional generation. Investment focus is shifting from simply increasing “green” megawatts to energy storage systems, smart grids, and hybrid projects.
Coal: Eastern Vector and Support from Energy Deficits
The coal market is being supported from two fronts: robust demand in Asia and a new factor — power supply for data centres. The loading of Russian coal in the eastern direction has reached record values — over 10 million tonnes per month, reflecting the reorientation of exports to Asia-Pacific markets. In India and Southeast Asia, coal generation remains the foundation of the energy balance, while high gas prices in Europe sustain coal's competitiveness in the global electricity market, despite the climate agenda.
Outlook: What Market Participants Should Watch on August 11
Key indicators for investors and companies in the fuel and energy sector include:
- Negotiations regarding the Strait of Hormuz — any statements from Tehran, Muscat, and Washington will be instantly reflected in the prices of Brent, WTI, and freight rates;
- Gas injection dynamics in European storage facilities and prices at the TTF hub — an indicator of the region's readiness for winter;
- Statistics on oil stocks in the US and signals from the Fed about the trajectory of rates;
- The situation in the Russian fuel market — exchange prices for gasoline and diesel under the export ban;
- Corporate news from energy companies related to projects under AI infrastructure.
The baseline scenario for the coming sessions is the maintenance of Brent in the $80–87 per barrel range amidst heightened volatility: the oil, gas, and electricity markets continue to operate in the rhythm of diplomacy surrounding the Persian Gulf and preparations in the Northern Hemisphere for an unconventional winter.
