Oil Market: Hormuz Diplomacy Crashes Prices
The oil market has experienced one of the sharpest corrections of the year. Following a July rally when Brent crude soared above $90 per barrel due to the blockade of the Hormuz Strait, news of an imminent temporary agreement between Iran, Oman, and the USA reversed the trend. The parties are discussing a 60-day plan to allocate shipping routes: tankers heading to the Persian Gulf will follow Iranian routes, while vessels departing the Gulf will take routes near Oman, without toll charges. Against this backdrop:
- Brent was trading in the range of $78.5–79.7 per barrel by the morning of August 6, after falling more than 5% in the previous session;
- WTI dipped to $74.8–75.2 per barrel;
- price consolidation is occurring in a narrow corridor of $78.6–81.3 following a sharp decline on August 3–4;
- analysts’ average forecast for the Brent price for the entirety of 2026 remains above $85 per barrel as the market anticipates maintaining a premium for geopolitical risks.
The President of the USA has publicly stated there has been "significant progress" in negotiations, expressing willingness to ease some sanctions on Iranian oil exports and reposition the military fleet away from Iranian shores, contingent upon a deal. Meanwhile, Tehran officially insists that it is only discussing shipping regimes with Oman, not directly with Washington, leaving room for new twists in the situation. For the oil and petroleum products market, a key question remains: will the de-escalation take hold, or will tensions in the Persian Gulf resume in September?
OPEC+: Ending the Production Increase Cycle
The OPEC+ alliance has confirmed that from September, seven member countries, including Russia and Saudi Arabia, will raise oil production quotas by an additional 188,000 barrels per day. This decision concludes the phased return to the market of 1.65 million barrels per day in voluntary cuts that began earlier this year. Key details include:
- the cumulative permitted production level of the alliance will reach 36.206 million barrels per day;
- Saudi Arabia and Russia will receive equal increases of 62,000 barrels per day, raising their totals to 10.478 million and 9.949 million barrels per day, respectively;
- there are no plans for further quota increases until the end of 2026, according to sources within the organization;
- actual production in several countries is lagging behind quotas due to disruptions in export infrastructure — attacks on facilities in Russia and heightened tensions in the Persian Gulf are hindering a full recovery in supply.
The next OPEC+ ministerial meeting is scheduled for early September, and the market will be closely monitoring the alliance's rhetoric regarding 2027, especially in light of a potential normalization of the situation surrounding the Hormuz Strait.
European Gas Market: Record Low Stocks Before Winter
Unlike oil, the situation in the European gas market remains tense. According to Gas Infrastructure Europe, as of early August, underground gas storage facilities (UGS) in the EU are only 57% full, which is below the previous record low of 2021 and significantly trails the European Commission’s target of 90% by the start of the heating season. The main factors behind the shortage include:
- a reduction in LNG supplies through the Hormuz Strait — estimates suggest that up to 20% of global liquefied gas volumes have temporarily dropped out of logistics;
- a 7% year-on-year decline in LNG imports to Europe in August;
- spot prices at the TTF hub have stabilized around $696 per thousand cubic meters, compared to an average of $626 for July — an almost 50% increase compared to August of last year;
- the contribution of wind generation to Europe’s energy balance fell to 10% in early August from 14% a year earlier, further increasing the load on gas generation.
Analysts warn that if the current injection dynamics persist, Europe risks entering the heating season with storage levels no higher than 75%. For industrial gas consumers and energy companies, this means increased price volatility and the risk of spikes in electricity costs during the winter of 2026–2027.
Sanctions and Geopolitics: Between Hormuz and Ukraine
The sanctions backdrop remains a defining factor for the oil and gas sector. Washington links any potential easing of restrictions on Iranian oil exports directly to progress concerning the Hormuz Strait, while the sanctions regime against Russian energy resources remains unchanged. At the same time, attacks on refining and export infrastructure continue to affect actual oil and petroleum products supplies from Russia and Persian Gulf countries, which Kpler analysts cite as one reason for postponing the forecast for recovery in Middle Eastern production from September 2026 to early 2027. For global traders and energy market participants, the scenario remains bipolar: a stable de-escalation could bring oil prices back into the $70–75 range, while a breakdown in negotiations or another attack on infrastructure could again push Brent above $90.
Russian Fuel Market: Export Restrictions Persist
Within Russia, authorities continue to manage fuel shortages through a complex of administrative measures. Key decisions in recent weeks include:
- full bans on the export of gasoline, diesel fuel, marine fuel, and gasoil for all producers have been extended until the end of September, and for gasoline, essentially until the end of 2026;
- from September 1, partial easing of restrictions on diesel and gasoil from direct producers is planned;
- retail prices for automotive gasoline have risen by almost 14% since the beginning of the year, and for diesel fuel — by almost 15%, significantly outpacing overall inflation;
- import of petroleum products has been initiated to stabilize the internal balance, and special pricing rules for state fuel procurement have been suspended until the end of the year.
Experts note that the Russian export ban has the most significant impact on external markets — primarily Europe and the USA, where the diesel deficit has already affected exchange prices, while Asia, with its own refining capacities, feels the impact less acutely.
Asian Demand: China and India Increase Purchases
The largest Asian importers continue to shape the balance of the global oil and gas market. China maintains its position as the leading buyer of Russian and Middle Eastern oil while simultaneously ramping up its own production and investments in exploration. India enjoys preferential purchasing terms for Urals crude while concurrently developing deep-water exploration programs to reduce long-term import dependence. Both countries remain key factors supporting demand amid cooling consumption in developed economies.
Energy Transition: Renewables Set to Surpass Coal
According to the International Energy Agency (IEA), by 2026 renewable energy sources (RES) will for the first time surpass coal in the global electricity production structure. Solar generation is expected to add around 600 TWh of capacity over the year, becoming the second most significant source of "green" electricity after hydropower. At the same time:
- the gas crisis triggered by disruptions in the Hormuz Strait has accelerated the transition for several countries to solar generation as a means to reduce dependence on imported fuels;
- global rates of new solar capacity installations in 2026 may slow for the first time in 25 years due to market saturation and changes in regulatory policy;
- CO2 emissions from energy are forecasted to increase by 1% in 2026 due to a temporary rise in coal generation amid expensive gas, but stabilization is expected by 2027.
Coal: Temporary Comeback Amid High Gas Prices
The rise in natural gas prices has rekindled interest among energy companies in coal generation as a backup source of electricity. In the Asia-Pacific region, where demand for thermal coal is concentrated, consumption remains near record levels. Despite long-term decarbonization strategies, in the short term, coal continues to function as a safeguard for energy systems against gas supply disruptions, especially during peak demand periods.
Summary: What to Expect for Energy Sector Investors
The fuel and energy complex enters the weekend with a conflicting set of signals. The oil market shows signs of de-escalation amid Hormuz diplomacy, but geopolitical risks remain high and can reemerge at any moment. Conversely, the European gas market is entering a phase of structural tension before winter, which sets the stage for increased volatility in electricity prices. The Russian fuel market maintains administrative control while the global energy transition accelerates, despite a temporary renaissance in coal generation. For participants in the energy market — oil and gas companies, refineries, renewable energy investors, and petroleum traders — key benchmarks for the upcoming weeks will be the outcome of negotiations regarding the Hormuz Strait, the pace of gas injections into European storage, and OPEC+ decisions at the September alliance meeting.
