Oil Market: Brent Stabilizes at $90 After Best Month Since Spring
The global oil market concluded July on a positive note. As a result of Friday's trading, Brent crude rose by 1.3% to $90.12, while American WTI added 1.5%, reaching $84.67. Over the month, the North Sea benchmark has increased by approximately 24%, with WTI up by 21%: the best performance since March when escalation around Iran first drove prices into triple-digit territory. Russian Urals are priced around $85 per barrel, with the discount to Brent narrowing amid supply shortages in the global market.
Key drivers for oil prices at the beginning of the week include:
- Geopolitical Premium: The blockade of the Hormuz Strait and ongoing military tensions around Iran keep a risk premium of tens of dollars in the quotes;
- Reduction in Actual Supply: Exports from the Persian Gulf are rerouted with limited capacity, with some Iranian volumes effectively removed from the market;
- Sustained Demand: Abnormal heat in the Northern Hemisphere supports energy and fuel consumption, with refineries operating at high utilization during the peak driving season.
The consensus among analysts from leading investment banks has raised the average Brent price forecast for 2026 to $85 per barrel. The range of weekly fluctuations remains broad, as quotes varied from $84 to $100 at the end of July, reflecting the oil market's sensitivity to every news item from the Middle East.
OPEC+: Final Quota Increase and Strategic Pause
The central event of the weekend was the OPEC+ "Seven" meeting on August 2. Key decisions made by the alliance include:
- From September, oil production quotas will increase by another 188,000 barrels per day, completing the phased elimination of the voluntary cut of 1.65 million b/d that had been in place since 2023;
- After the September increase, the alliance will pause further production increases to assess the balance between supply and demand;
- Restrictions of around 2 million b/d, imposed in 2022, remain in place, with decisions on their allocation postponed.
From February to August 2026, the alliance's overall quota increased by approximately 940,000 b/d—a volume comparable to Oman's production. The format of the coalition has changed; following the UAE's departure from OPEC and OPEC+ on May 1, decisions are now made by the "Seven"—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. The cautious strategy of the alliance is understandable: with the Hormuz Strait blocked, the physical ability of several members to increase exports is limited, and any theoretical increase in quotas does not lead to a proportional rise in supply.
Hormuz Strait: Tehran Rejects Unlocking, Talks with Oman at Final Stages
The geopolitical backdrop remains a defining factor for the entire energy sector. On Sunday, Tehran officially denied reports of resuming shipping through the Hormuz Strait, labeling them as unreliable. Meanwhile, the Iranian Foreign Minister stated that consultations with Oman on creating a joint maritime management mechanism in the area are nearing completion—this is the first tangible signal of possible de-escalation in recent weeks.
The stakes for the global market are exceptionally high: prior to the crisis, about one-fifth of global oil supplies passed through the Strait, with Europe receiving up to 12-14% of its imported LNG from Qatar via this route. Investors are also monitoring discussions in Washington regarding the proposed land blockade of Iran—its implementation could trigger a new spike in oil and gas prices. Conversely, any progress in diplomatic negotiations could quickly deflate part of the geopolitical premium: experts estimate that upon signing a peace agreement, Brent could return to the $70 range.
European Gas Market: Stocks at Five-Year Low Before Winter
The European gas market remains the most vulnerable segment of the global energy sector. Prices at the TTF hub rose by approximately 55% in July, consistently maintaining levels above $500 per thousand cubic meters. The reasons for this tension are structural:
- The filling of underground gas storage in the EU was just slightly above 56% by early August—its lowest for this time of year since 2021, and 18 percentage points below the five-year average;
- After the cold winter of 2025-2026, the draw season ended with storage levels below 28%, and compensating lost volumes has proven difficult;
- To meet targets for the heating season, net injections need to total at least 68 billion cubic meters, but less than half of this plan has been met to date;
- Europe is losing the price competition for available LNG shipments to Asia, while the July heat has increased gas consumption for electricity generation used in air conditioning systems.
The rates of gas injections in July were among the lowest recorded. If this trend does not reverse in August-September, the winter of 2026-2027 could become the most challenging for European energy since the crisis of 2022—leading to significant implications for industry, electricity generation, and inflation in the eurozone.
LNG and Asia: $1 Billion in Additional Costs and a Shift Toward Coal
Five months of conflict in the Middle East have cost South Asian countries over $1 billion in additional LNG import expenses. Rising logistics costs and rerouted supplies have severely impacted Pakistan and Bangladesh, where power outages and interruptions in gas supply to industries are being reported. Spot prices for liquefied gas in Asia have more than doubled since the onset of the crisis, forcing importers to reassess their fuel balance in favor of coal. Meanwhile, China is reducing the re-export of Arctic LNG volumes, directing them toward replenishing its own stocks in anticipation of the heating season amid unusual heat and record electricity demand.
Coal: The Silent Beneficiary of the Gas Crisis
The coal market has emerged as a clear beneficiary of expensive gas. Major Asian economies are increasing coal generation: South Korea has ramped up production at coal-fired plants nearly 40% to a peak not seen since 2019, while Japan has increased production by 11%. Imports of thermal coal are rising in all directions: South Korea nearly doubled its purchases of Russian coal from January to May, with significant increases also noted from Australia. Prices at the European ARA hub are holding in the range of $118-124 per ton, while the index for Australian metallurgical coal has surpassed $215. For exporters such as Indonesia, Australia, Russia, and South Africa, the conditions remain favorable: steady demand from Asia ensures stable sales and supports prices.
Power Generation and Renewables: Renewable Generation Surpasses Coal Globally
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