Main Topic of the Day: The Oil Market Between Record Shortages and Hopes for an "Hormuz Truce"
Oil prices at the week's close reflect two opposing factors. On one hand, there has been a significant escalation in attacks on vessels since the onset of the war: after the destruction of five Iranian tankers by U.S. forces, Tehran attacked ten vessels near the Strait of Hormuz, while the IRGC promised to ramp up retaliation against any new strikes. On the other hand, a Financial Times report indicated that regional diplomats are trying to reach a temporary agreement to manage shipping in the strait, which immediately alleviated some geopolitical risk premium.
The physical picture remains challenging:
- Transit through Hormuz: On Thursday, only seven vessels passed through the strait compared to eleven the day before and an average of around 15 over the past ten days; prior to the war, approximately 130 vessels transited daily.
- Saudi Production: In August, output decreased by about 1.9 million barrels/day to 6.24 million barrels/day—the lowest since 1990.
- Second Front in the Red Sea: The Houthis took control of the Yemeni port of Mocha on Thursday, and a series of strikes on facilities in Jazan, Najran, and Abha led to the shutdown of several oil facilities and 73 injuries.
Oil: Price Benchmarks and Forecasts After a Week of Growth
Closing Prices for the Week
- Brent: Approximately $103–104 per barrel on Friday after intraday highs above $108 on Thursday; a weekly gain of over 7%, with the year's peak of $126.41 (April 30) remaining a target.
- WTI: Around $99 per barrel after briefly surpassing $100.
- U.S. Inventories: Commercial oil inventories fell by 0.3 million barrels in the week leading to September 4; the U.S. Department of Energy raised its production forecast for 2027 to 14.3 million barrels/day.
Revised Bank Forecasts
- Commerzbank raised its Brent price forecast for the end of the year to $85 (up from $75), jet fuel to $1,230 per tonne, and diesel to $1,200 per tonne.
- Goldman Sachs anticipates $85 for Brent in December 2026 and $80 in 2027 but allows for prices to rise above $120 if output in the Gulf stays 4 million barrels/day below pre-war levels.
- Analysts at UBS and KCM Trade see the risks tilted upwards amidst sustained high volatility.
IEA and OPEC: Two Perspectives on the Global Oil Market Balance
Friday's IEA report was the most severe since the conflict began. The agency expects global oil demand to fall by 2.5 million barrels/day in 2026—the largest annual decline since the pandemic in 2020—and a reduction in global supply by 5.7 million barrels/day, or about 6%, by 2025. Global stocks shrank at a record pace in August—by 3.1 million barrels/day—with the global refining system, in the agency's words, "operating at capacity." The return to surplus has been postponed until 2027.
OPEC lowered its 2026 demand growth estimate for the fifth consecutive month on Thursday—to 380,000 barrels/day with total consumption at 105.84 million barrels/day—but unlike the IEA, it does not foresee an absolute decline. For 2027, the cartel revised its forecast upward: an increase of 2.36 million barrels/day to 108.19 million barrels/day, primarily driven by China, India, and the rest of Asia. The discrepancy between the two institutions—over 2.8 million barrels/day for the current year—reflects the uncertainty within which oil companies and traders operate.
Refined Products and Refineries: Diesel as the Tightest Segment of Global Energy
The refined products market is outpacing crude oil in terms of price growth. The average retail price for diesel in the U.S. has exceeded $6 per gallon for the first time, while crack spreads for middle distillates remain at multi-year highs. The reasons for this are a double blow to global refining:
- Restrictions on raw material exports from the Persian Gulf and the shutdown of the 400,000-barrel/day refinery in Jazan following attacks from Yemen;
- The Ukrainian campaign of strikes against Russian refineries—over 70 attacks since the beginning of 2026, resulting in Russian refining dropping to the lowest levels in two decades.
Russia has extended its ban on diesel exports until September 30 (discussions are ongoing about extending it until the end of the year), while the gasoline export ban is effective until January 31, 2027, and the ban on jet fuel until the end of November. For the first time in decades, Moscow is importing fuel and has arranged for oil processing at a private refinery in Kazakhstan. China, for its part, will raise retail price ceilings for gasoline and diesel by 260 and 250 yuan per tonne respectively, starting September 12—a signal that the price shock has reached regulated markets in Asia.
Gas and LNG: Europe Enters Winter with TTF Above €80 and Storage at 67%
The European benchmark TTF adjusted to €80.75 per MWh on Friday (down 1.6%), still remaining near the highs last seen in December 2022. Over the past month, the price climbed by 32%, and by 147% year-over-year. The blockade of Hormuz has disrupted about 20% of global LNG flows, primarily from Qatar, while European underground gas storage is only approximately 67% full against a seasonal norm of over 80%. QatarEnergy maintains its goal to restore 50% of capacity within a month after navigation normalizes, but without a safe passage for tankers, this remains a declaration. Against this backdrop, two representatives of the ECB suggested on Friday that further interest rate hikes may be considered if energy inflation continues to spread to other eurozone prices—a factor that could limit speculative demand for commodities.
Coal: Twelve-Week High Amid Shift from Gas
Newcastle thermal coal traded around $148 per tonne on September 10—the highest in twelve weeks—marking a 14.5% increase over the month and nearly 47% year-on-year. The deficit in LNG is pushing coal generation in Northeast Asia and parts of Europe, while global electricity consumption, driven by data centers and air conditioning, is slowing the displacement of coal. In a paradox, China has officially reported that solar energy has overtaken coal for the first time in installed capacity; however, in terms of actual generation, coal remains the largest source of electricity globally.
Electricity and Renewables: Structural Trends vs. Short-Term Chaos
The energy transition remains the only predictable vector in the sector. China leads in investments, patents, and export of clean technologies, India is building renewable capacities faster than it can utilize them, while Europe experiences surpluses in solar and wind generation, coupled with a lack of storage, increasingly resulting in negative electricity prices during daylight hours. Every euro increase in TTF enhances the economics of battery storage, grid investments, and long-term contracts for "green" energy. The corporate sector is reshaping portfolios: Shell sold its gas power plant in the U.S. for $715 million, while Enbridge is acquiring Tallgrass’s pipeline business for $2.55 billion, betting on oil transportation infrastructure.
Logistics and Freight: Tankers as a New Bottleneck
Even with physical volumes available, oil exports from the Gulf are constrained by a shortage of vessels. The VLCC freight rate on the Middle East to China route reached a record high of nearly $800,000 per day, while shipping from the U.S. Gulf to Asia costs $29.5 million per voyage, not accounting for military risks. Redirecting Saudi shipments through the Red Sea and Mediterranean extends voyages by 30 days and strains the fleet, heightening the tonnage deficit for all exporters.
What to Watch for Energy Market Participants This Weekend
- Any confirmations or denials of a temporary shipping agreement in the Strait of Hormuz and Tehran's response.
- Statements from the Yemen coalition following the capture of Mocha and the status of the Yanbu terminal—the last major bypass channel for Saudi oil.
- Trends in injections into European underground gas storage and the JKM–TTF spread as an indicator of competition for spot LNG.
- Signals from the Fed and ECB: a tightening of rhetoric could cool commodity rallies regardless of geopolitics.
- Decisions by Russian regulators on export restrictions and fuel imports ahead of the heating season.
Conclusions and Risks for Investors and Energy Sector Companies
- Oil. The $100 mark has established itself as support; a diplomatic breakthrough regarding Hormuz could quickly push Brent to $85–90, while new attacks on vessels could open the path to $115–120.
- Refined Products and Refineries. Middle distillates remain the most deficit segment; margins for refiners outside conflict zones are at historical highs, and retail prices are a source of political pressure from the U.S. to China.
- Gas. Europe enters the heating season with historically low inventory levels; TTF above €90–100 during a cold winter is the base scenario rather than a stress scenario.
- Coal. Increased demand in Asia and Europe will persist at least until Qatari LNG is restored.
- Renewables and Electricity. The inflow of capital into solar and wind generation, storage, and grids is accelerating, but the short-term stability of energy systems still relies on gas and coal.
The overall outcome of the week for the global oil and gas industry: the market has received a hint of a diplomatic resolution to the Hormuz deadlock for the first time in months, but physical indicators—from record diesel prices to the lowest Saudi production since 1990—suggest that shortages will dictate prices for oil, gas, and electricity for many weeks to come. For energy market participants, scenario planning, logistics diversification, and hedging discipline are critically important.
