Oil Market: Geopolitical De-escalation Crashes Prices
World oil prices are undergoing their most severe reassessment since the beginning of the year. Brent is trading around $79–80 per barrel, while U.S. WTI hovers around $75–76. Just at the end of July, the international benchmark exceeded $90 amid attacks on tankers in the Persian Gulf; however, Washington's decision to postpone military operations against Iran and initiate direct negotiations has turned the market downwards. Weekly price declines approached 10% as traders rapidly removed the "war premium" that had built up since spring.
Volatility remains extreme: on Wednesday, oil prices briefly rose following reports of a Houthi attack on a Saudi ship in the Red Sea, highlighting that maritime logistics risks are not limited to just the Strait of Hormuz. However, the dominant trend is a bet on de-escalation. Analysts warn that if talks break down, prices could bounce back to $90 and above within hours.
The Strait of Hormuz: Parameters of the Historic Agreement
A key event for the global oil and gas market is the interim agreement between the U.S., Iran, and Oman regarding the opening of the Strait of Hormuz, through which approximately 20 million barrels of oil and oil products passed daily before the crisis. The announcement of the deal was anticipated as early as Wednesday, August 5. The main parameters of the discussed scheme are as follows:
- Duration — 60 days with the possibility of extension; the regime aims to solidify the ceasefire and pave the way for negotiations regarding Iran's nuclear program.
- Separate shipping routes: vessels entering the Persian Gulf will take the northern corridor through Iranian territorial waters, while those exiting will use the southern corridor through Omani waters.
- No transit fees: tolls and fees for passage will not be charged.
- Demining of the main shipping channel within 30 days, after which a transition to permanent bilateral traffic is possible.
For Bahrain, Iraq, Kuwait, and Qatar, which lack alternative export routes, the opening of the strait signifies the restoration of critically important oil and LNG flows. At the same time, Washington emphasizes that if the agreements collapse, military action will return to the negotiating table.
OPEC+: Alliance Completes Return of Voluntary Cuts
At a virtual meeting on August 2, the OPEC+ "seven" — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — agreed to increase oil production by 188,000 barrels per day in September. This move concludes the return of 1.65 million bpd to the market, which had been reduced under the second phase of voluntary restrictions since April 2023. Approved quotas will remain in place for participants until the end of 2026, without further cuts; the next monitoring meeting is scheduled for September 6.
A paradox of the current moment is that Gulf countries could not physically draw on their quotas due to the blockade of the Strait of Hormuz. The opening of this key artery could quickly bring significant volumes back to the market, which may increase downward pressure on prices in the second half of the year — a factor that investors should factor into their models now.
Gas Market: Europe in a Race for LNG Ahead of Winter
The European gas market remains the most strained segment of the global energy sector. The crisis in the Strait of Hormuz has removed about a fifth of the global LNG supply, primarily from Qatar, exacerbating competition between European and Asian buyers. The consequences are notable:
- TTF hub prices are holding in the €56–59 per MWh range — approximately 30% higher than levels at the end of June;
- EU gas storage facilities (GSFs) are only filled to 55–56% — the lowest for this time of year in nearly two decades;
- Brussels has lowered the mandatory filling target for GSFs by November 1 from 90% to 80%, acknowledging supply limitations.
A promising sign was the first passage of a Qatari LNG tanker through the Strait of Hormuz at the end of July since early July. If the strait's agreement is operational, the restoration of Qatari shipments could significantly cool gas prices and speed up injections into European storage facilities. Conversely, if not, the market will begin to price in a winter deficit in advance.
Refining Sector: Global Shortage of Capacities and Fuels
The global refining sector is operating under multiple shocks. Damage to refineries in the Middle East, strikes on refining infrastructure amidst the Russia-Ukraine conflict, China's export restrictions on oil products, and Russia's ban on diesel exports have collectively tightened global motor fuel supply. Crack spreads remain elevated, supporting the margins of surviving plants, as European refiners diversify raw material procurement, increasing, in particular, oil supplies from Guyana to bypass traditional Middle Eastern routes.
Russian Fuel Market: Export Restrictions Until 2027
The Russian government has extended the complete ban on gasoline exports until January 31, 2027 — an unprecedentedly long horizon of restrictions that reflects the depth of the imbalance in the domestic market. The embargo on diesel fuel exports is in place at least until the end of August. Reasons for the tightening are as follows:
- Increased drone attacks on Russian refineries since March, reducing motor fuel output;
- High seasonal demand during holiday and harvesting periods;
- The need to curb rising exchange and retail prices at gas stations.
The effect is already apparent in the diesel sector: exchange sales of summer diesel on the SPbMTSB doubled within a week, and the market is discussing the risk of oversaturation, which could force plants to reduce throughput — consequently cutting gasoline output. Regulators will need to balance between saturating the domestic market and maintaining the refining economy.
Electric Power and Renewable Energy: Renewables Secure Leadership
The global energy transition continues to break records. By the end of 2025, renewable energy sources will surpass coal in the global electricity balance for the first time in a century — 33.8% versus 33.0% of generation. In 2026, this trend is expected to strengthen: in the U.S., during the first quarter, solar stations and storage systems accounted for 91% of all new capacities, and the renewable energy sector could attract up to $120 billion in investments over the year. California’s energy system recorded solar generation covering up to 72% of demand during the summer, while Texas set records for solar output and battery contributions during evening peaks. Notably, in China and India — the world's largest coal power systems — fossil generation fell simultaneously for the first time in 2025: clean energy is growing faster than demand. Additionally, electric transportation is putting extra pressure on oil demand: the Chinese electric vehicle fleet alone displaced about 34 million tonnes of oil in the first half of 2026.
Coal: Correction Following Geopolitical Rally
The coal market is moving in line with Middle Eastern geopolitics. Newcastle thermal coal, which surged to multi-year highs in the second quarter amid the U.S.-Iran conflict and Indonesian export restrictions, has corrected to $127–130 per tonne — still about 16% above last year's level, but significantly lower than the peaks in May. Coking coal, which reached about $240 per tonne, has also seen a decrease as tensions have eased. Demand in Asia remains a structural support for the market: the energy needs of India, China, and ASEAN countries sustain steady imports, while under-investment in new export capacities limits supply flexibility.
Key Milestones for Investors on August 6
The agenda for the upcoming trading sessions is concentrated around several factors:
- Official announcement of the agreement regarding the Strait of Hormuz — the main trigger for oil, gas, and freight rates; the confirmation of the deal will increase pressure on Brent, while a breakdown will revert prices back to $90.
- Rate of recovery of Qatari LNG exports — a determining factor for European gas prices and the speed of filling GSFs ahead of winter.
- Data on oil and petroleum product inventories in the U.S. — an indicator of the supply-demand balance during the peak driving season.
- Trends in fuel prices on exchanges in Russia following the extension of export bans.
- September production increase by OPEC+ and the ability of Gulf countries to effectively draw on their quotas once the strait opens.
For participants in the energy market, the coming weeks will serve as a test of the durability of diplomatic de-escalation in the Middle East. The combination of rising OPEC+ supply, potential return of Gulf barrels, and record expansion of renewables forms a bearish backdrop for oil prices in the second half of 2026 — yet the fragility of the ceasefire and the vulnerability of logistics from the Red Sea to Suez leave the market with a wide corridor for new price shocks.
