Oil Market: Brent Holds at $90 After Best Month Since Spring
The global oil market finished July on a high note. On Friday, Brent crude rose by 1.3% to $90.12 per barrel, while American WTI gained 1.5%, reaching $84.67. For the month, the North Sea benchmark increased by approximately 24%, with WTI rising by 21%—the best performance since March, when escalating tensions around Iran first pushed prices into triple digits. Russian Urals crude is priced around $85 per barrel, with the discount to Brent narrowing due to supply shortages in the global market.
Key drivers of oil prices at the start of the week include:
- Geopolitical Premium: The blockade of the Strait of Hormuz and ongoing military confrontations around Iran sustain a risk premium of several dollars in the quotes;
- Reduction in Actual Supply: Exports from the Persian Gulf are taking detours with limited capacity, with some Iranian volumes effectively withdrawn from the market;
- Sustained Demand: Anomalous heat in the Northern Hemisphere supports electricity and fuel consumption, with refineries operating at high capacity during the peak automotive season.
The consensus among analysts from leading investment banks for the average price of Brent in 2026 has increased to $85 per barrel. The range of weekly fluctuations remains wide: at the end of July, prices fluctuated between $84 and $100, reflecting the market's sensitivity to every piece of news 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 from the alliance include:
- From September, oil production quotas will increase by another 188,000 barrels per day, completing a phased withdrawal of voluntary cuts of 1.65 million b/d that have been in effect since 2023;
- After the September adjustment, the alliance will take a pause in increasing production to assess the balance of supply and demand;
- Restrictions of around 2 million b/d, imposed in 2022, remain in place—decisions regarding their distribution have been postponed.
From February to August 2026, the alliance's aggregate quota increased by approximately 940,000 b/d—a volume comparable to Oman's production. The group's format has changed: following the UAE's exit from OPEC and OPEC+, decisions are now made by the "Seven"—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. The alliance's cautious strategy is understandable: with the Strait of Hormuz blocked, the physical capacity to increase exports among several participants is limited, and a paper increase in quotas does not translate into a proportional rise in supply.
Strait of Hormuz: Tehran Rejects Unblocking, Negotiations with Oman Near Finalization
The geopolitical backdrop remains a determining factor for the entire energy sector. On Sunday, Tehran officially denied reports of the resumption of shipping through the Strait of Hormuz, calling them unsubstantiated. However, the Iranian Foreign Minister stated that consultations with Oman about establishing a joint maritime management mechanism in the area are nearing completion—this is the first tangible sign of potential de-escalation in recent weeks.
The stakes for the global market are exceptionally high: before the crisis, the strait accounted for around one-fifth of global oil supplies, and Europe received up to 12–14% of its imported LNG from Qatar along this route. Investors are also monitoring the ongoing discussions in Washington regarding a ground blockade of Iran—its implementation could trigger a new surge in oil and gas prices. Conversely, any progress in negotiations could quickly deflate part of the geopolitical premium; experts estimate that with a peace agreement in place, 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. TTF hub prices surged by approximately 55% in July, consistently remaining above $500 per thousand cubic meters. The causes of this tension are structural:
- Gas storage facilities (GSF) in the EU were just above 56% filled at the beginning of August—this is the lowest level for this time of year since 2021 and 18 percentage points below the average five-year level;
- After the cold winter of 2025–2026, the withdrawal season ended with storage facilities less than 28% full, and compensating lost volumes has proven difficult;
- To meet target levels before the heating season, net injections must reach at least 68 billion cubic meters; however, less than half of this plan has been fulfilled to date;
- Europe is losing the price competition for available LNG cargoes to Asia, and the July heatwave has increased gas consumption for power generation for air conditioning systems.
The pace of gas injection in July was among the lowest in history. 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—with corresponding implications for industry, power generation, and inflation in the eurozone.
LNG and Asia: One Billion Dollars in Additional Costs and a Shift to Coal
Five months of conflict in the Middle East have cost South Asian countries over $1 billion in additional LNG import expenses. The escalation in logistics costs and route restructuring have hit Pakistan and Bangladesh hardest, leading to gas supply disruptions for businesses and rolling blackouts. Spot prices for liquefied gas in Asia have more than doubled during the crisis, prompting importers to reconsider their fuel mix in favor of coal. Meanwhile, China is reducing re-exports of Arctic LNG volumes, redirecting them to replenish its own stocks ahead of the heating season amid unusual heat and record demand for electricity.
Coal: A Quiet Beneficiary of the Gas Crisis
The coal market has emerged as an evident beneficiary of expensive gas. Major Asian economies are ramping up coal generation: South Korea has increased production at coal-fired power plants by nearly 40%—to a peak not seen since 2019, while Japan has seen an 11% increase. Imports of thermal coal are rising across all fronts: South Korea nearly doubled its purchase of Russian coal from January to May, while significantly increasing shipments from Australia. Prices at the European ARA hub are holding in the range of $118–124 per ton, with the Australian coking coal index exceeding $215. For exporters—including Indonesia, Australia, Russia, and South Africa—the market conditions remain favorable: sustained demand from Asia ensures steady sales and supports prices.
Electricity and Renewables: Renewable Generation Outpaces Coal Globally
Against the background of rising prices and geopolitics, renewable energy generation is gaining ground globally. Various nations are investing heavily in renewable projects, enhancing their energy independence while competing with traditional coal plants.
