Main Topic of the Day: The Oil Market Between Record Deficit and Hope for the "Hormuz Truce"
Oil prices at the end of the week reflect two opposing factors. On one side, the most extensive series of attacks on vessels since the war began: following the destruction of five Iranian tankers by American forces, Tehran targeted ten vessels near the Strait of Hormuz, while the Iranian Revolutionary Guard Corps promised to escalate its response to any further strikes. On the other side is the Financial Times report indicating that regional diplomats are attempting to formulate a temporary agreement for managing shipping in the Strait, which immediately reduced some of the geopolitical premium.
The physical picture remains challenging:
- Transit through Hormuz: On Thursday, only seven vessels transited the strait, down from eleven the day before and the average of around 15 over the past ten days; before the war, approximately 130 vessels passed through daily.
- Saudi Arabia's Production: In August, production decreased by approximately 1.9 million barrels per day to 6.24 million barrels per day — the lowest level since 1990.
- Second Front in the Red Sea: Houthis seized 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 injuries to 73 people.
Oil: Price Benchmarks and Forecasts After a Week of Growth
Closing Prices for the Week
- Brent: Approximately $103–104 per barrel on Friday after an intraday high above $108 on Thursday; the weekly increase was over 7%, with the annual peak at $126.41 (April 30) remaining a top benchmark.
- WTI: Approximately $99 per barrel after briefly surpassing $100.
- U.S. Stocks: Commercial oil stocks decreased by 0.3 million barrels in the week ending September 4; meanwhile, the U.S. Department of Energy raised its production forecast for 2027 to 14.3 million barrels per day.
Revised Bank Forecasts
- Commerzbank raised its year-end Brent forecast to $85 (from $75), jet fuel to $1230 per ton, and diesel to $1200 per ton.
- Goldman Sachs anticipates $85 for Brent in December 2026 and $80 in 2027, but allows for the possibility of prices exceeding $120 if Gulf production remains 4 million barrels per day below pre-war levels.
- Analysts at UBS and KCM Trade view the risks as tilted upward amid high volatility.
IEA and OPEC: Two Perspectives on the World Oil Market Balance
The IEA’s Friday report was the harshest since the conflict began. The agency forecasts a drop in global oil demand by 2.5 million barrels per day in 2026 — the largest annual decrease since the 2020 pandemic — and a drop in global supply by 5.7 million barrels per day, or about 6% by 2025. Global stocks fell at record rates in August — by 3.1 million barrels per day, and the global refining system, as described by the agency, “is operating at full capacity.” The return to surplus is postponed to 2027.
OPEC, on Thursday, lowered its demand growth estimate for 2026 for the fifth consecutive month — to 380,000 barrels per day with total consumption at 105.84 million barrels per day. However, unlike the IEA, it does not foresee an absolute decrease. For 2027, the cartel raised its forecast: an increase of 2.36 million barrels per day to 108.19 million barrels per day, primarily due to China, India, and the rest of Asia. The divergence between the two institutions — over 2.8 million barrels per day for the current year — reflects the uncertainty within which oil companies and traders are operating.
Oil Products and Refineries: Diesel as the Tightest Segment of the Global Energy Sector
The oil products market is outpacing crude oil in terms of price surges. The average retail diesel price in the U.S. has exceeded $6 per gallon for the first time, and crack spreads for middle distillates are holding at multi-year highs. The reasons are twofold concerning global refining:
- Restrictions on crude exports from the Persian Gulf and the shutdown of the 400,000-barrel-per-day refinery in Jazan after attacks from Yemen;
- The Ukrainian campaign of strikes against Russian refineries — over 70 attacks since the beginning of 2026, with processing in Russia dropping to a two-decade low.
Russia has extended its diesel export ban until September 30 (with discussions on prolongation until the end of the year), and the gasoline export ban is in effect until January 31, 2027, while jet fuel is restricted until the end of November. Moscow is importing fuel for the first time in decades and has arranged for oil processing at a private refinery in Kazakhstan. China, for its part, has increased retail price ceilings for gasoline and diesel by 260 and 250 yuan per ton, respectively, as of September 12 — a sign 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 (a 1.6% decrease), remaining near the highs since December 2022. The price has risen by 32% in a month and 147% over the year. The blockade of Hormuz has disrupted about 20% of global LNG flows, primarily from Qatar, while European gas storage facilities are only about 67% full compared to the seasonal norm exceeding 80%. QatarEnergy maintains a target to restore 50% capacity within a month after navigation normalizes, but without safe passage for tankers, this remains a declaration. Against this backdrop, two ECB representatives indicated on Friday that further rate hikes could occur if energy inflation continues to spread to other prices in the Eurozone — a factor that limits speculative demand for commodities.
Coal: Twelve-Week High Amid Shift from Gas
Newcastle thermal coal traded around $148 per ton on September 10 — its highest in twelve weeks, up 14.5% over the month and nearly 47% year-on-year. The LNG deficit is pushing coal generation in Northeast Asia and parts of Europe, while global electricity consumption, driven by data centers and air conditioning, slows down coal's displacement. The paradox of the moment is that China officially reported solar energy has surpassed coal for the first time in installed capacity, yet in actual production, coal remains the largest source of electricity worldwide.
Electricity and Renewables: Structural Trend Against Short-Term Chaos
The energy transition remains the only predictable vector in the sector. China leads in investments, patents, and exports in clean technologies, India is building renewable capacities faster than it can utilize them, while Europe faces an excess of solar and wind generation amid a shortage of storage leading to increasingly negative electricity prices during daylight hours. Each euro rise in TTF enhances the economics of battery storage, grid investments, and long-term contracts for “green” energy. The corporate sector is restructuring portfolios: Shell sold a gas power plant in the U.S. for $715 million, while Enbridge is acquiring the Tallgrass 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 hampered by a shortage of vessels. The freight rate for VLCCs on the Middle East to China route reached a record of nearly $800,000 per day, while transporting crude from the U.S. Gulf to Asia costs $29.5 million per voyage, excluding military risks. Redirecting Saudi shipments through the Red Sea and Mediterranean prolongs routes by 30 days and ties up the fleet, exacerbating the tonnage shortage for all exporters.
What Market Participants Should Watch Over the Weekend
- Any confirmations or denials regarding a temporary shipping agreement in the Strait of Hormuz and Tehran’s reaction.
- Statements from the Yemeni coalition following the capture of Mocha and the status of the Yanbu terminal — the last major bypass for Saudi oil.
- The dynamics of injections into European gas storages and the JKM–TTF spread as indicators of competition for spot LNG.
- Signals from the Fed and ECB: a tightening rhetoric could cool commodity rallies regardless of geopolitics.
- Decisions by Russian regulators regarding export restrictions and fuel imports ahead of the heating season.
Conclusions and Risks for Investors and Energy Sector Companies
- Oil. The $100 mark has solidified as support; a diplomatic breakthrough regarding Hormuz could swiftly push Brent to $85–90, while new attacks on vessels open the way to $115–120.
- Oil Products and Refineries. Middle distillates remain the most deficit segment; refiners' margins outside the conflict zone are at historical highs, with retail prices becoming a source of political pressure from the U.S. to China.
- Gas. Europe enters the heating season with historically low storage levels; TTF above €90–100 in a cold winter serves as a baseline scenario, not a stress scenario.
- Coal. Increased demand in Asia and Europe will persist at least until Qatari LNG supply is restored.
- Renewables and Electricity. The capital flow towards solar and wind generation, storage, and networks is accelerating, but short-term stability of energy systems still relies on gas and coal.
The week's outcome for global oil and gas and energy indicates that the market has received a hint of a diplomatic exit from 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 oil, gas, and electricity prices for many weeks to come. For energy market participants, scenario planning, logistics diversification, and hedging discipline are critically important.
