Oil Market: Brent Surpasses $85 per Barrel Again
Oil prices are starting the week with a confident upward trend. On Monday, the October Brent futures on the ICE exchange rose above $85 per barrel (+3.2% for the session), while the U.S. WTI traded around $79.5–79.8, and the Russian Urals was near $79. The driving force behind this increase is the heightened uncertainty regarding the timeline for reopening the Strait of Hormuz: a market that just a week ago was factoring in a quick de-escalation and price decline is now compelled to reinstate the "geopolitical premium" in prices.
The key factors influencing oil pricing in the market currently are:
- Hormuz Factor: Under normal conditions, about one-fifth of global oil supplies and significant volumes of liquefied natural gas (LNG) pass through the strait. The partial blockade that has been in place since late February remains the primary source of volatility.
- OPEC+ Supply: The alliance is set to conclude the return of voluntary cuts in September, adding an additional 188,000 barrels per day to the market.
- Macroeconomics: Weak employment data from the U.S. has intensified expectations for easing Fed policies, which supports raw material assets while also signaling risks for fuel demand.
Analysts note that a complete agreement regarding the strait could quickly see Brent prices correct to the $70–75 range, while a breakdown in negotiations could return prices to spring highs above $90.
Strait of Hormuz: Agreement Near, but Tehran Raises Stakes
The diplomatic process surrounding the world’s main oil artery has reached a decisive stage. Iran and Oman have agreed to a unified median corridor for vessel movement and, according to statements from the Iranian Foreign Ministry, are at the final stage of establishing a joint shipping management mechanism. Washington, for its part, is prepared to lift the blockade on Iranian ports following a deal, and President Biden previously canceled military strikes to facilitate negotiations.
However, over the past weekend, Tehran substantially hardened its position, conditioning the opening of the strait on the fulfillment of several demands:
- lifting of sanctions against the Iranian economy;
- payment of compensation for damage caused during the conflict;
- U.S. withdrawal from interference in regional negotiation formats.
The outcome of these negotiations is a central event for the global oil and gas market in the coming weeks: it will affect freight rates, insurance premiums, supply routes for Middle Eastern oil and LNG to Asia and Europe, as well as the trajectory of energy prices until the end of the year.
OPEC+: Final Step in the Production Increase Cycle
Seven OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have agreed to increase quotas for September by 188,000 barrels per day, mirroring the parameters of the previous three months. This decision effectively concludes the return of voluntary production cuts of 1.65 million barrels per day that were in effect since 2023. After September, further production increases are expected to be paused until the end of 2026; restrictions of about 2 million barrels per day from 2022 will remain in place. The next ministerial meeting is scheduled for September 6. For the market, this means that OPEC+ supply factors are becoming predictable in the coming months, shifting the focus to geopolitics and demand dynamics.
Gas Market: Europe Enters Heating Season with Record Low Inventories
The situation in the European gas market remains the most alarming it has been in recent years. According to the association Gas Infrastructure Europe, the fill level of EU underground gas storage facilities is about 58.8%—the lowest for the beginning of August in 15 years of observation and 16.5 percentage points below the five-year average. Approximately 62–64 billion cubic meters of gas are stored, nearly 14 billion cubic meters less than a year ago.
The reasons for the current shortage are:
- Abnormal Heat: In July, Europe withdrew about 1 billion cubic meters of gas from storage for air conditioning and electricity generation for the first time in four years—a record summer withdrawal since 2022;
- Decreased LNG Imports: August LNG supplies are estimated at approximately 6.4 million tons—14% lower than last year, partly due to supply restrictions from the Middle East;
- High Prices: Prices at the TTF hub remain near multi-month highs (approximately $690 per thousand cubic meters), making re-injection economically painful.
The EU has already lowered its target fill level for storage facilities ahead of the heating season from 90% to 80%, but achieving even this target will require a significant increase in re-injection rates. Europe’s gas balance during the winter of 2026–2027 will critically depend on the weather, competition with Asia for LNG, and the situation in the Strait of Hormuz, through which Qatari LNG flows.
Russian Fuel Market: Export Ban as New Normal
The domestic fuel market in Russia continues to operate under strict regulation. The government has extended the ban on gasoline exports until January 31, 2027—this restriction applies to both producers and traders. The ban on diesel fuel exports is in effect until August 31, 2026, while from September 1, diesel, marine fuel, and gas oils exported by direct producers will be exempt from these restrictions.
Measures to stabilize the fuel market include:
- Prioritizing the saturation of the domestic market against the backdrop of unscheduled refinery shutdowns following drone attacks and repairs;
- A temporary arrangement for guaranteed supplies of gasoline and diesel to agricultural producers during the harvest season—agreements between the Ministry of Energy, the Ministry of Agriculture, regional governments, and oil companies will be in effect until November 1;
- Tax amendments and a damping mechanism to stimulate refining and retention of fuel within the country;
- Allowing the use of straight-run gasoline blends for high-octane fuel production.
For the global oil products market, the exit of Russian gasoline and some diesel volumes from export directions means a tighter balance and support for crack spreads, especially in the Mediterranean, Africa, and Latin America.
Asia: India and China Strengthen Their Role as Anchor Buyers
Asian consumers remain the main center of attraction for raw material flows. Russian oil exports to India grew in July, fueled by price discounts and a restructuring of logistics amidst the Middle Eastern crisis. China is increasing its purchases of pipeline gas and continues to balance between imports and domestic production, boosting its hydrocarbon output. The easing of inflation in China as the oil shock recedes indicates a gradual adaptation of the world's second-largest economy to the new price reality. The competition between Asia and Europe for available LNG volumes will be a key storyline this coming winter.
Electricity Sector: AI and Data Centers Reshape Demand
A structural theme in the global energy sector remains the explosive growth in energy consumption from data centers. Artificial intelligence is turning electricity into a strategic resource: energy companies in the U.S. and Asia are launching new gas plants and extending the lifespan of coal units to meet the base load of data centers. In Russia, the placement of data centers in energy surplus regions with gas, coal, and nuclear generation, as well as near Siberian hydropower plants, is being explored. Investors are increasingly viewing the electricity sector as a "second derivative" of the AI boom—from grid companies to turbine and energy storage system manufacturers.
Renewable Energy and Energy Transition: Growth Continues, but Balance Becomes Complicated
Renewable energy continues to be deployed at a high pace: solar and wind generation are breaking records in China, Europe, and the U.S., while in Central Asia, renewable energy generation has increased by over 20% year-on-year. However, energy systems are increasingly feeling the need for flexible capacities and storage: the hot summer of 2026 demonstrated that peak demand for air conditioning and data center needs cannot yet be met without traditional generation. The investment focus is shifting from merely increasing "green" megawatts to energy storage systems, smart grids, and hybrid projects.
Coal: Eastern Vector and Support from Energy Deficit
The coal market is receiving support from two aspects: stable demand in Asia and a new factor—the energy supply to data centers. Coal loading in the eastern direction has reached record levels—over 10 million tons per month—reflecting a shift in export focus to Asia-Pacific markets. In India and Southeast Asia, coal generation remains the backbone of the energy balance, while high gas prices in Europe support the competitiveness of coal in global electricity markets despite climate concerns.
Forecast: What Market Participants Should Watch on August 11
Key indicators for the day for investors and energy sector companies include:
- Negotiations on the Strait of Hormuz—any statements from Tehran, Muscat, and Washington will be quickly reflected in Brent, WTI, and freight rates;
- Dynamics of gas injection into European underground storage and prices at the TTF hub—indicators of regional readiness for winter;
- Statistics on U.S. oil inventories and signals from the Fed regarding rate trajectories;
- Situation in the Russian fuel market—market prices for gasoline and diesel under the export ban;
- Corporate news from energy companies related to projects under AI infrastructure.
The baseline scenario for the upcoming sessions is a steady Brent range of $80–87 per barrel amid heightened volatility: the oil, gas, and electricity markets continue to operate within the rhythm of diplomacy around the Persian Gulf and preparations in the Northern Hemisphere for an atypical winter.
