Oil Market: Brent Stabilizes at $90 After Best Month Since Spring
The global oil market wrapped up July on a high note. In Friday's trading, Brent crude rose by 1.3% to $90.12 a barrel, while American WTI added 1.5%, reaching $84.67. Over the month, the North Sea benchmark saw an increase of around 24%, while WTI rose by 21%: this marks the best performance since March, when tensions surrounding 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.
The key drivers of oil prices at the beginning of the week are:
- Geopolitical Premium: The blockade of the Strait of Hormuz and ongoing military confrontations around Iran maintain a risk premium of several dollars in the pricing;
- Reduction in Actual Supply: Exports from the Persian Gulf are taking alternative routes with limited capacities, while a portion of Iranian volumes has effectively dropped out of the market;
- Steady Demand: Anomalous heat in the Northern Hemisphere sustains electricity and fuel consumption, and refineries are operating at high capacities amid peak driving season.
Analysts' consensus from leading investment banks regarding the average Brent price for 2026 has been raised to $85 per barrel. The range of weekly fluctuations remains wide: at the end of July, quotes moved between $84 and $100, reflecting the oil 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+ “Group of Seven” meeting on August 2. The key decisions made by the alliance include:
- Starting in September, oil production quotas will increase by an additional 188,000 barrels per day, concluding the phased rollback of voluntary cuts of 1.65 million b/d that had been in effect since 2023;
- Following the September adjustment, the alliance will pause production increases to assess the balance of supply and demand;
- Restrictions of approximately 2 million b/d, instituted in 2022, remain in place, with decisions regarding their allocation postponed.
From February to August 2026, the aggregate quota of the alliance has increased by around 940,000 b/d — a volume comparable to Oman's production. The format of the group has changed: following the UAE’s exit from OPEC and OPEC+ on May 1, decisions are now made by the “Group of 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 for some participants is limited, and a theoretical increase in quotas does not lead to a proportional rise in supply.
Strait of Hormuz: Tehran Rejects Unblocking, Talks with Oman Nearing Conclusion
The geopolitical backdrop remains a defining factor for the entire energy sector. On Sunday, Tehran officially denied reports of the resumption of shipping through the Strait of Hormuz, calling them inaccurate. However, the Iranian Foreign Minister stated that consultations with Oman regarding the creation of a joint navigation management mechanism in the waterways are nearing completion — this represents the first tangible signal of possible de-escalation in recent weeks.
The stakes for the global market are exceptionally high: prior to the crisis, approximately one-fifth of the world's oil supplies passed through the strait, while Europe received up to 12-14% of its imported LNG from Qatar via this route. Investors are also monitoring discussions in Washington regarding the idea of a land blockade against Iran — its implementation could provoke a new round of price hikes for oil and gas. Conversely, any progress in diplomatic negotiations may quickly deflate part of the geopolitical premium: experts estimate that if a peace agreement is signed, Brent could return to around $70.
European Gas Market: Stocks at Five-Year Low Ahead of Winter
The European gas market remains the most vulnerable segment of the global energy sector. TTF hub prices rose by approximately 55% in July, consistently hovering above $500 per thousand cubic meters. The reasons for this tension are structural:
- Gas storage levels in the EU at the beginning of August slightly exceeded 56% — the lowest for this time of year since 2021 and 18 percentage points below the five-year average;
- Following the cold winter of 2025-2026, the withdrawal season ended with storage levels below 28%, and compensating for the lost volumes has proven difficult;
- To meet target levels ahead of the heating season, net injections must reach at least 68 billion cubic meters, yet less than half of this target has been achieved so far;
- Europe is losing the price competition for spot LNG cargoes to Asia, and July's heat increased gas consumption for electricity generation to power air conditioning systems.
The gas injection rates in July were among the lowest on record. If the trend does not reverse in August-September, the winter of 2026-2027 could prove to be the most challenging for European energy since the crisis of 2022 — with significant repercussions for industry, power generation, and inflation in the Eurozone.
LNG and Asia: A 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 rising logistics and re-routing costs have hit Pakistan and Bangladesh the hardest, where interruptions in gas supply to industries and rolling blackouts are being reported. Spot prices for liquefied gas in Asia have more than doubled during the crisis, prompting importers to revise their energy mix in favor of coal. Meanwhile, China is reducing the re-export of Arctic LNG volumes, redirecting them to replenish its own stocks ahead of the heating season amid exceptional heat and record electricity demand.
Coal: The Quiet Beneficiary of the Gas Crisis
The coal market has emerged as a clear beneficiary of high gas prices. Major Asian economies are ramping up coal generation: South Korea has increased production from coal-fired power plants by nearly 40% — reaching its highest level since 2019, while Japan has seen an 11% rise. Imports of thermal coal are on the rise across the board: South Korea nearly doubled its purchases of Russian coal from January to May, significantly increasing supplies from Australia. Prices on the European ARA hub are holding steady in the range of $118-124 per ton, while the price index for Australian coking coal has surpassed $215. For exporters — Indonesia, Australia, Russia, and South Africa — the market conditions remain favorable: strong demand from Asia ensures stable sales and supports prices.
Electricity and Renewables: Renewable Generation Surpassing Coal Globally
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