Key Updates for the Morning of Wednesday, 29 July 2026
- Oil. Near-term Brent futures are trading around $86–87 per barrel, while WTI is approximately $81. Both benchmarks lost about 8% on Monday, marking the steepest single-day decline in several months.
- Geopolitics. The United States has paused its series of nighttime strikes against Iran; Washington cites a "pause for negotiations," while Tehran has not yet confirmed any concessions.
- Logistics. The net export of oil and petroleum products through the Strait of Hormuz averaged around 2.9 million barrels per day for the week ending 24 July, compared to 5.9 million barrels per day the previous week.
- Gas. The TTF spot price reached approximately ~$744 per thousand cubic metres, up from an average of ~$532 in June, marking the highest level since December 2022.
- Electricity and Renewables. Solar generation has for the first time accounted for around 25% of electricity production in the EU, surpassing nuclear, gas, and wind power.
- Russia. The ban on petrol exports has been extended until the end of 2026, and the import price control has been expanded to diesel fuel.
Oil: Market Eases War Premium
The central theme in the oil market is the rate at which the geopolitical premium is dissipating. On 23 July, Brent hit a six-week high amid the twelfth consecutive night of US attacks on Iranian targets and escalations in the Red Sea. Following news of the strikes being paused, prices opened the week with a plunge: first to $86.8, then below $85 — the first time since 17 July. By Monday evening, the market had recovered some losses, but the decline continued into Tuesday, stabilising near three-week lows between Tuesday and Wednesday.
Fundamentally, the market is influenced by three forces:
- Diplomatic Hope. The pause in strikes is being interpreted by traders as an opening for negotiation and a sign of potential unblocking of shipping lanes.
- Physical Shortages. Supplies through Hormuz remain half of normal levels, while insurance rates for vessels in the risk zone are significantly higher than pre-war rates.
- Return of Supply. The partial return of Iranian barrels to the market intensifies competition for Asian buyers and pressures differentials.
Analysts from investment banks had previously raised their Brent forecast for 2026 to $85, assuming prolonged disruptions in the Strait. The current de-escalation makes this target more of an upper bound than a lower boundary scenario.
Strait of Hormuz and the Red Sea: A Bottleneck for Global Energy
Before the conflict, approximately a quarter of maritime oil trade and around 20% of global LNG passed through the Strait of Hormuz. Currently, movement has only partially resumed: tankers are predominantly taking the northern corridor along the Iranian coast, with pumping rates varying week to week.
Simultaneously, the second route has also seen increased tensions. Yemeni Houthis have claimed attacks on the East-West pipeline, which connects Saudi oil fields to the port of Yanbu on the Red Sea, along with strikes on infrastructure in the Jazan area. This pipeline serves as the main bypass route in the event of a blockage in Hormuz, so any prolonged interruptions in its operation could quickly return risk premiums to oil and freight prices.
OPEC+: Quotas Rise, Actual Production Lags
The alliance is officially maintaining a course towards easing restrictions. The collective cap for the 'seven' key participants has been raised to 30.633 million barrels per day in July, compared to 29.548 million barrels per day in June. However, actual production volumes are far from the permitted levels:
- Saudi Arabia produced approximately 3.44 million barrels per day below quota;
- Iraq — 2.38 million barrels per day below;
- Kuwait — 1.18 million barrels per day below;
- Russia produced 8.928 million barrels per day in June, falling short of the planned level by 834,000 barrels per day;
- Kazakhstan, on the other hand, exceeded its quota by more than 1.15 million barrels per day.
The shortfall among Middle Eastern participants can be attributed not to discipline but to the physical inability to transport crude. The UAE's exit from OPEC and OPEC+ as of 1 May has further diminished the management of the agreement. A practical takeaway for the market is that the alliance has accumulated significant "dormant" export potential, which is likely to flood the market immediately after shipping normalises — this represents a major medium-term bearish factor for oil.
Gas and LNG: Europe Pays the Price for Injection Delays
The European gas market is moving in the opposite direction to oil. As of 19 July, EU underground storage facilities were filled to around 54% (approximately 57.7 billion cubic metres) — nearly 16 percentage points below the five-year average. Injection rates are slowing: daily replenishment in June was about 308 million cubic metres, in July around 270 million cubic metres, compared to 338 million cubic metres a year earlier.
Why Gas Prices Are Rising
- July LNG imports may drop to about 6.5 million tonnes — the lowest in two years and nearly a quarter of the year-on-year decline;
- Asia is buying up available cargoes: for the Asia-Pacific region, this is a matter of current consumption, while for the EU, it concerns reserves;
- Qatar is slowly restoring shipments from Ras Laffan and promises to return the main portion of its capacity within two months after the full opening of the Strait;
- From 1 January 2027, the EU will ban imports of Russian LNG under long-term contracts, and for pipeline gas from 30 September 2027.
Conservative estimates suggest that by early November, EU underground storage could reach only ~75% capacity — near a historical minimum. This keeps a premium in winter contracts and renders European industry structurally vulnerable for another heating season.
Coal: Correction After Escalation
The coal market has been responding to oil and gas volatility with a lag. In mid-July, European thermal coal indices climbed above $118 per tonne following oil and gas prices, but last week the prices adjusted downward across Europe, China, and Australia. Stockpiles at the nine largest Chinese ports remain around 29 million tonnes, which limits growth potential.
For Russian exporters, the outlook is mixed. Shipments through Black Sea and Sea of Azov ports increased by 21.5% in the first half of the year to 13.9 million tonnes, supporting overall exports. However, sanctions, high railway tariffs, and a strengthening rouble are squeezing margins, while competition for Turkish and Asian markets is intensifying. The long-term guideline is set by China's five-year energy development plan for 2026–2030: demand for coal and oil is expected to peak within the next five years, after which they will transition to the status of backup sources.
Electricity and Renewables: Record Solar Generation and High Evening Prices
In June, solar power plants supplied around 25% of electricity generation in the European Union for the first time, surpassing nuclear generation, gas, and wind; 18 EU countries recorded monthly highs. On certain days, the share of renewables in Germany approached 74%, with solar generation reaching nearly 37.5%.
The flip side of these records is the increasing volatility in electricity prices. A deficit of storage systems means daytime surpluses are lost, while evening peaks are met with expensive gas and coal generation. An additional factor is restrictions on French nuclear power plants due to river water temperatures during heatwaves. For investors, this shifts the focus from adding new renewable capacity to networks, battery storage, and flexible demand.
Russia: Fuel Market, Refineries, and Price Control
The domestic oil products market remains under manual control. The current package of measures includes:
- A total ban on petrol exports, extended until the end of 2026;
- A prohibition on the export of diesel fuel, bunker fuel, jet fuel, and gas oils;
- A reduction in mandatory exchange sales of petrol from 15% to 10% for the period from 1 July to 30 September;
- Maximum utilisation of refineries, shortening of maintenance periods and the postponement of planned ones;
- An import price control extended from July to petrol, and following the amendments to the Tax Code — to diesel fuel and middle distillates (for the period up to July 2027);
- A zero import duty and increased supplies from EAEU member states.
A mechanism is also being prepared to account for direct contracts when calculating exchange norms — the authorities aim to reduce the risk of local shortages in the regions.
Russian Oil Exports: Discounts vs. Budget
Physical volumes of Russian oil exports are near the highs for the year, but the pricing component is deteriorating. The Urals discount increased by about $3 per barrel in the first half of July compared to June; on a FOB basis at Baltic ports, the spread to Dated Brent was evaluated between $25–28 per barrel, against a five-year average of around $19.8. The average price used for calculating the mineral extraction tax was about $50.4 per barrel in July, compared to $63.5 in June.
Taking into account that the budget was drafted assuming Urals at about $59 per barrel, and the deficit exceeding the annual target, the July price declines will impact treasury revenues in August. The return of Iranian barrels to the Indian market intensifies competition and raises the likelihood of further discounts.
What Energy Market Participants Should Monitor in Upcoming Sessions
- US-Iran Negotiation Format: Confirmation of direct talks could drive Brent to the $75–80 range.
- Flow Dynamics Through Hormuz: A return to 5–6 million barrels per day would signal an end to the supply crisis.
- Houthi Attacks on Saudi Infrastructure: Strikes on Yanbu and the East-West pipeline could swiftly return the risk premium.
- Gas Injection Rates in EU Underground Storage: Delays in August could mean an expensive winter and high TTF.
- Resumption of LNG Shipments from Qatar: A key factor for balance between Europe and Asia.
- OPEC+ Decisions on September Quotas and the actual ability of participants to comply.
- Russian Exchange Prices for Petrol and Diesel amidst extended export bans and price controls.
The conclusion for investors and energy market participants is as follows: oil is entering a phase of price normalisation amidst ongoing logistical irregularities, gas remains the most stressed segment of the global energy market, coal is trading sideways, and the electricity sector increasingly relies on grid flexibility rather than installed capacity. Any of these factors could shift the entire configuration of the commodities and energy market in a single session.
