Key Insights as of Wednesday Morning, July 29, 2026
- Oil. Nearby Brent futures are trading around $86–87 per barrel, while WTI stands at approximately $81. Both benchmarks lost about 8% on Monday, marking the steepest one-day decline in several months.
- Geopolitics. The US has suspended a series of nighttime strikes on Iran, with Washington citing a "pause for negotiations"; Tehran has not yet confirmed any concessions.
- Logistics. Net exports of oil and petroleum products through the Strait of Hormuz averaged around 2.9 million barrels per day for the week ending July 24, down from 5.9 million bpd the week before.
- Gas. The spot TTF price rose to approximately ~$744 per thousand cubic meters, up from ~$532 on average in June — the highest since December 2022.
- Electricity and Renewables. Solar generation accounted for around 25% of electricity production in the EU for the first time, surpassing nuclear, gas, and wind.
- Russia. The ban on petrol exports has been extended until the end of 2026, with the import damping now applicable to diesel fuel.
Oil: Market Discounts War Premium
The key theme in the oil market is the speed at which geopolitical risk premiums are diminishing. On July 23, Brent reached a six-week high amid the twelfth consecutive US night attack on Iranian targets and escalating tensions in the Red Sea. Following reports of the suspension of strikes, prices plummeted at the beginning of the week: first to $86.8, then below $85 — a level not seen since July 17. By Monday evening, the market had recouped some losses; however, the decline continued on Tuesday, with oil settling near three-week lows from Tuesday to Wednesday.
Fundamentally, the market is being torn by three forces:
- Diplomatic Hope. The pause in strikes is being interpreted by traders as an opportunity for a deal and a sign of potential easing of shipping blockades.
- Physical Shortage. Supplies via the Strait of Hormuz remain half of the norm, while insurance rates for vessels in the risk zone are significantly higher than pre-war levels.
- Returning Supply. The partial return of Iranian barrels to the market intensifies competition for Asian buyers and pressures differentials.
Analysts at investment banks previously raised their Brent price forecasts for 2026 to $85, factoring in prolonged disruptions in the Strait. The current de-escalation suggests that this figure may serve as more of an upper limit than a lower boundary for projections.
Strait of Hormuz and Red Sea: A Bottleneck for Global Energy
Before the conflict, approximately a quarter of maritime oil trade and around 20% of global LNG passed through the Strait of Hormuz. Currently, activity has only partially recovered: tankers mainly transit the northern corridor along the Iranian coast, and pumping rates vary significantly from week to week.
Simultaneously, a second route has become increasingly tense. Yemeni Houthi forces claimed to have struck the East-West pipeline linking Saudi oil fields to the Yanbu port on the Red Sea, as well as infrastructure attacks in the Jazan area. This pipeline serves as the main alternative route in case the Strait of Hormuz is blocked, meaning any prolonged interruptions in its operation quickly translate into risk premiums in oil and freight prices.
OPEC+: Quotas Rise, Actual Production Lags
Formally, the alliance continues its course towards softening production constraints. The combined ceiling for the "seven" key participants was raised to 30.633 million bpd in July, up from 29.548 million bpd in June. However, actual outputs are far from authorized levels:
- Saudi Arabia produced approximately 3.44 million bpd below its quota;
- Iraq — 2.38 million bpd below;
- Kuwait — 1.18 million bpd below;
- Russia's production in June was 8.928 million bpd, falling short of the plan by 834,000 bpd;
- Kazakhstan, on the other hand, exceeded its quota by more than 1.15 million bpd.
The shortfall among Middle Eastern members is attributed not to discipline issues but to the physical inability to export crude. The UAE's exit from OPEC and OPEC+ on May 1 further diminished the manageability of the deal. The practical takeaway for the market: the alliance holds significant "dormant" export potential, which will flood the market with supply immediately after shipping normalizes — posing a significant medium-term bearish factor for oil.
Gas and LNG: Europe Pays for Slow Injection Rates
The European gas market is moving in counterphase to oil. By July 19, EU underground storage facilities were filled to about 54% (approximately 57.7 billion cubic meters) — nearly 16 percentage points below the five-year average. Injection rates have slowed: daily replenishment in June was around 308 million cubic meters, in July approximately 270 million cubic meters, compared to 338 million cubic meters the previous year.
Why Gas Prices are Rising
- July LNG imports may drop to approximately 6.5 million tons — the lowest in two years, representing about a quarter of the year-over-year decline;
- Asia is buying up available cargoes: for the Asia-Pacific region, this is a matter of current consumption, while for the EU, it's about reserves;
- Qatar is gradually restoring shipments from Ras Laffan and promises to return the majority of capacities within two months after the full reopening of the waterway;
- As of January 1, 2027, the EU's ban on the import of Russian LNG under long-term contracts will take effect, with pipeline gas banned from September 30, 2027.
On conservative estimates, by early November, EU underground gas storage might only reach ~75% capacity — nearing historical minimums. This maintains a premium in winter contracts and structurally renders European industry vulnerable for another heating season.
Coal: Correction Following Escalation
The coal market reacts to oil and gas volatility with a lag. In mid-July, European energy coal indices rose above $118 per ton, following oil and gas prices, but last week, quotes corrected downwards in Europe, China, and Australia. Stockpiles at the nine largest ports in China remain around 29 million tons, limiting upside potential.
For Russian exporters, the picture is mixed. Transshipment through the ports of the Black and Azov Seas grew by 21.5% in the first half of the year to 13.9 million tons, supporting total exports. However, sanctions, high rail tariffs, and a strengthening ruble are squeezing margins, while competition for Turkish and Asian markets is intensifying. The long-term outlook is shaped by China's five-year energy development plan for 2026-2030: demand for coal and oil is expected to peak within the next five years, after which they will transition to the status of reserve sources.
Electricity and Renewables: Record Solar and High Evening Prices
In June, solar power plants provided around 25% of electricity generation in the European Union for the first time, surpassing nuclear, gas, and wind; monthly peaks were recorded in 18 EU countries. On certain days, the share of renewables in Germany approached 74%, while solar generation peaked at 37.5%.
The flip side of these records is the rising volatility in electricity prices. The lack of storage systems means that daytime oversupply is lost, while evening peaks are addressed through expensive gas and coal generation. An additional factor is limitations on French nuclear power plants due to high river temperatures during hot spells. For investors, this shifts the focus from adding new renewable capacities to networks, battery storage, and flexible demand.
Russia: Fuel Market, Refineries, and Dampers
The domestic market for oil products remains under tight control. The current measures include:
- A complete ban on gasoline exports, extended until the end of 2026;
- A ban on the export of diesel fuel, marine fuel, jet fuel, and gas oils;
- A reduction in the mandatory exchange sales norm for gasoline from 15% to 10% for the period from July 1 to September 30;
- Maximum refinery utilization, shortening of current maintenance schedules and deferring planned maintenance;
- An import damping mechanism, extended from July to gasoline, and after the amendments to the Tax Code — to diesel fuel and medium distillates (effective until July 2027);
- Waiving import duties and increasing supplies from EAEU countries.
A mechanism to offset direct contracts in calculating exchange norms is also being prepared — authorities hope to mitigate the risk of local shortages in regions.
Export of Russian Oil: Discounts vs. Budget
The physical volumes of Russian oil exports are near annual highs, but the pricing aspect is deteriorating. The Urals discount in early July increased by approximately $3 per barrel compared to June; under FOB conditions at Baltic ports, the spread to Dated Brent was estimated between $25–28 per barrel, against a five-year average of about $19.8. The average price used for calculating mineral extraction tax (MET) in July was around $50.4 per barrel compared to $63.5 in June.
Taking into account that the budget was drafted based on Urals at around $59 per barrel and that the deficit already significantly exceeds the annual target, July's price decline will impact treasury revenues in August. The return of Iranian barrels to the Indian market intensifies competition and increases the likelihood of further discounts.
Key Market Insights for Energy Sector Participants in Upcoming Sessions
- US-Iran Negotiation Format: Confirmation of direct contacts could pull Brent into a $75–80 range.
- Dynamics of Pumping through Hormuz: A return to 5–6 million bpd will signal the end of the supply crisis.
- Houthi Attacks on Saudi Infrastructure: Strikes on Yanbu and the East-West pipeline will instantly reintroduce risk premiums.
- Gas Injection Rates in EU Storage Facilities: Lagging behind the schedule in August indicates an expensive winter and high TTF.
- Restoration of LNG Shipments from Qatar: A key factor for the Europe-Asia balance.
- OPEC+ Decisions on September Quotas and actual ability of participants to fulfill them.
- Russian Exchange Prices for Gasoline and Diesel amid extended export bans and import dampers.
The conclusion for investors and energy market participants: oil is entering a price normalization phase amid ongoing logistical irregularities, gas remains the tightest segment of the global energy landscape, coal is trading sideways, and the electricity sector is increasingly dependent on network flexibility rather than installed capacity. Any of the points listed could change the entire configuration of the commodities and energy market in just one session.
