Key theme of the day: the oil market caught between record deficits and hope for a "Hormuz truce"
Oil prices at the close of the week reflect two opposing factors. On one hand, there has been the most extensive series of attacks on vessels since the start of the war: following the destruction of five Iranian tankers by US forces, Tehran retaliated by attacking ten vessels near the Strait of Hormuz, and the IRGC has promised to escalate responses to any new strikes. On the other hand, the Financial Times reported that regional diplomats are attempting to develop a temporary agreement on shipping management in the strait, which immediately alleviated some of the geopolitical premium.
The physical picture remains grim:
- Transit through Hormuz: On Thursday, only seven vessels passed through the strait, compared to eleven the day before and an average of about 15 over the last ten days; before the war, around 130 vessels passed daily.
- Saudi production: In August, output fell to approximately 6.24 million barrels per day, a reduction of about 1.9 million barrels per day, marking the lowest level since 1990.
- Second front in the Red Sea: Houthi forces took control of the Yemeni port of Mocha on Thursday, and a series of strikes on facilities in Jazan, Najran, and Abha halted several oil operations and injured 73 people.
Oil: price benchmarks and forecasts after a week of growth
Closing prices for the week
- Brent: Approximately $103–104 per barrel on Friday after reaching an intraday high of above $108 on Thursday; the weekly gain exceeds 7%, with the annual peak of $126.41 (30 April) remaining the upper benchmark.
- WTI: Approximately $99 per barrel after a brief period above $100.
- US inventories: Commercial crude oil stocks fell by 0.3 million barrels in the week ending 4 September; the US Energy Department, meanwhile, raised its production forecast for 2027 to 14.3 million barrels per day.
Revisions of bank forecasts
- Commerzbank raised its Brent year-end forecast to $85 (from $75), jet fuel to $1230 per tonne, and diesel to $1200 per tonne.
- Goldman Sachs anticipates $85 for Brent in December 2026 and $80 in 2027, but allows for a rise above $120 if Gulf production remains 4 million barrels per day below pre-war levels.
- Analysts at UBS and KCM Trade see upward risks as maintaining high volatility.
IEA and OPEC: two perspectives on the balance of the global oil market
The IEA's Friday report was the harshest since the conflict began. The agency anticipates a decline in global oil demand by 2.5 million barrels per day in 2026—the largest annual reduction since the 2020 pandemic—and a decrease in global supply by 5.7 million barrels per day, or approximately 6% by 2025. Global reserves fell at a record pace in August—by 3.1 million barrels per day—and the global oil refining system, as characterised by the agency, is "operating at peak capacity." The return to surplus is now deferred to 2027.
OPEC, on Thursday, lowered its demand growth estimate for 2026 for the fifth month in a row—to 380,000 barrels per day with total consumption at 105.84 million barrels per day—but unlike the IEA, it does not foresee an absolute decline. For 2027, the cartel, on the contrary, raised its forecast: an increase of 2.36 million barrels per day to 108.19 million barrels per day, primarily due to China, India, and the rest of Asia. The discrepancy between the two institutions—over 2.8 million barrels per day for the current year—reflects the level of uncertainty in which oil companies and traders are operating.
Oil products and refineries: diesel as the tightest segment of the global energy sector
The market for oil products is outpacing raw crude in terms of price increases. The average retail price of diesel in the US has surpassed $6 per gallon for the first time, while crack spreads for middle distillates are holding at multi-year highs. The reasons stem from a double blow to global refining:
- Restrictions on raw material exports from the Persian Gulf and the shutdown of a 400,000-barrel-per-day refinery in Jazan following attacks from Yemen;
- The Ukrainian campaign of strikes on Russian refineries—over 70 attacks since the beginning of 2026, with processing in Russia falling to its lowest level in two decades.
Russia has extended its ban on diesel exports until 30 September (with discussions ongoing about an extension until the end of the year), while the ban on gasoline exports remains in place until 31 January 2027, and on jet fuel until the end of November. For the first time in decades, Moscow is importing fuel and has arranged for the processing of oil at a private refinery in Kazakhstan. Meanwhile, China is raising retail price ceilings for gasoline and diesel by 260 and 250 yuan per tonne respectively as of 12 September—an indication that the price shock has reached regulated markets in Asia.
Gas and LNG: Europe enters winter with TTF above €80 and storage at 67%
The European benchmark TTF adjusted to €80.75 per MWh on Friday (down 1.6%), remaining near peaks since December 2022. Over the past month, the price has increased by 32%, and by 147% year-on-year. The blockade of the Strait of Hormuz has disrupted approximately 20% of global LNG flows, primarily from Qatar, while European storage facilities are only about 67% full compared to the seasonal norm of over 80%. QatarEnergy maintains a target of restoring 50% of capacity within a month after navigation normalisation, but without safe passage for tankers, this remains a declaration. In this context, two members of the ECB suggested on Friday that further rate increases may occur if energy inflation spreads to other prices in the eurozone—a factor that limits speculative demand for commodities.
Coal: twelve-week high amid the switch from gas
Newcastle thermal coal traded around $148 per tonne on 10 September—its highest price in twelve weeks, reflecting a 14.5% increase over the month and nearly 47% year-on-year. The LNG shortfall is pushing coal generation in Northeast Asia and parts of Europe, while global electricity consumption, driven by data centres and air conditioning, slows the displacement of coal. The paradox of the moment is that China has officially reported that solar energy has, for the first time, surpassed coal in installed capacity, yet in actual generation, coal remains the largest source of electricity in the world.
Electricity and renewables: the structural trend against short-term chaos
The energy transition remains the only predictable vector in the sector. China is leading in investments, patents, and exports of clean technologies, India is building renewable capacities faster than it can utilise them, and in Europe, an excess of solar and wind generation combined with a shortage of storage is increasingly leading to negative electricity prices during daylight hours. Each euro increase in TTF enhances the economics of battery storage, grid investments, and long-term contracts for green energy. The corporate sector is reshaping portfolios: Shell sold a gas-fired power plant in the US for $715 million, while Enbridge is acquiring Tallgrass's pipeline business for $2.55 billion, betting on oil transportation infrastructure.
Logistics and freight: tankers as the new bottleneck
Even with physical volumes, oil exports from the Gulf are hampered by a shortage of vessels. The VLCC freight rate on the Middle East to China route has reached a record nearly $800,000 per day, while shipments from the US Gulf to Asia cost $29.5 million per voyage, excluding military risks. The diversion of Saudi shipments through the Red Sea and Mediterranean has extended voyage times by 30 days and tied up the fleet, exacerbating tonnage shortages for all exporters.
What energy market participants should watch out for over the weekend
- Any confirmations or denials regarding a temporary shipping agreement in the Strait of Hormuz and Tehran’s reaction.
- Statements from the coalition regarding Yemen following the capture of Mocha and the status of the Yanbu terminal—the last major bypass channel for Saudi oil.
- The dynamics of injection into European storage facilities and the JKM–TTF spread as an indicator of competition for spot LNG.
- Signals from the Federal Reserve and ECB: a tightening rhetoric could dampen the commodities rally irrespective of geopolitics.
- Decisions by Russian regulators on export restrictions and fuel imports ahead of the heating season.
Conclusions and risks for investors and energy sector companies
- Oil. The $100 mark has solidified as support; a diplomatic breakthrough in Hormuz could quickly push Brent to $85–90, while further attacks on vessels could pave the way to $115–120.
- Oil products and refineries. Middle distillates remain the most constrained segment; processor margins outside conflict zones are at historic highs, and retail prices are a source of political pressure from the US to China.
- Gas. Europe enters the heating season with historically low stock levels; TTF above €90–100 in a cold winter is a basic, not a stress, scenario.
- Coal. Increased demand in Asia and Europe will persist until at least Qatari LNG is restored.
- Renewables and electricity. Capital flow into solar and wind generation, storage, and grids is accelerating, but the short-term stability of energy systems still depends on gas and coal.
The week’s outcome for the global oil and gas sector: the market has, for the first time in months, received a hint of a diplomatic exit from the Hormuz deadlock, yet physical indicators—from record diesel prices to Saudi production at its lowest since 1990—suggest that shortages will continue to dictate prices for oil, gas, and electricity for several weeks to come. For energy market participants, scenario planning, logistics diversification, and hedging discipline are critically important.
