Oil Market: Brent Between $84 and $87 Amid Tanker Attacks
Oil prices are exhibiting increased volatility. Following a nearly 5% drop at the start of the week — settling at $84 per barrel for Brent — the market rebounded on Wednesday, with September futures for Brent climbing above $87, and WTI trading around $82. A number of events have spurred this upward momentum:
- Tanker Attacks in the Strait of Hormuz: Iran's IRGC reported strikes on three oil tankers following an “unauthorized” route. Transit between the Persian and Oman Gulfs remains severely restricted, with parts of the routes reportedly mined.
- Strikes on Military Installations: Iran launched missile attacks on US bases in the region, while the US and Saudi Arabia conducted joint operations in Iraq. Iraq's oil exports are being curtailed due to shipping disruptions.
- Logistical Restructuring: Saudi Arabia is rerouting some shipments to bypass hot spots — shipments through the Suez Canal have significantly increased, although the Houthis threaten maritime traffic in the Bab-el-Mandeb Strait.
Several analysts do not rule out Brent pricing reaching $100 per barrel if further escalation occurs. Counterbalancing factors include a slowdown in global oil demand, a strong dollar, and sell-offs in Asian stock markets.
OPEC+: The "Seven" Completes Recovery Production
The OPEC+ alliance, now without the UAE that left the organization in May, continues its strategy of gradual production increases. For August, the quotas for the “Seven” (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, Oman) have been raised by 188,000 barrels per day, bringing the total target level to 36 million bpd. The meeting on August 2 is expected to approve the final step — an additional +188,000 bpd for September, which will fully roll back the package of voluntary restrictions amounting to 1.65 million bpd. From February to August, the total quota has grown by approximately 940,000 bpd. However, actual production by several participants significantly lags behind permitted levels due to regional conflicts, softening the impact of quota increases on market balance.
Gas Market: TTF Nearing March Highs, EU Storage Only 55% Full
The European gas market is entering a high-risk zone ahead of the heating season. Prices at the TTF hub reached €64/MWh (approximately $750 per thousand cubic meters) at the end of July, marking a peak since mid-March. Key issues faced by the EU include:
- Record Low Storage Levels: The EU's storage capacity is around 55.3% full — the lowest for this date since 2021 (in 2022, it was 76.2%, and in 2024, it was 83.7%).
- Slow Injection Rates: Daily injection rates are 20% below last year's levels; to achieve a target of 90% by winter, net injections of at least 68 billion cubic meters are required.
- LNG Shortages: Daily imports of liquefied natural gas in July fell to a 22-month low — Asia is outbidding for available volumes amid the Middle Eastern crisis and supply risks from the Persian Gulf.
- Heat and Power Demand: Extreme temperatures in Europe are increasing generation at gas-fired power plants for air conditioning systems.
Projections indicate that by the start of winter, storage levels may not even reach 75%, setting the stage for high price volatility in the fourth quarter. Meanwhile, a new daily record for pipeline supplies of Russian gas to China has been achieved in the eastern route.
