Hormuz tensions are flaring again as Iranian exports collapse, pushing Brent toward $87 and raising the risk of another move toward $100. The Strait of Hormuz, through which roughly a fifth of global daily oil consumption transits, is widely regarded as the world's most critical oil shipping chokepoint.

China's crude drawdown puts Iranian barrels back in demand

• Shrinking crude inventories in China could spur a buying spree over the coming weeks, particularly for Russian and Iranian crude, supported by a record-high July stock draw in Shandong.

• Chinese teapots — the independent refiners concentrated in Shandong that process a substantial share of the country's crude — are expected to increase purchases of Iranian oil in the coming days as stockpiles in the northeastern province fell by 35 million barrels in July, equivalent to a draw of 1.1 million barrels per day.

• The gradual reopening of product exports from China is lifting utilization rates among independent refiners, with run rates now around 50% after multi-year highs seen in June and July.

• Meanwhile, prices for Iranian barrels are edging higher as new supply from Kharg Island appears to be dissipating. In the first ten days of August, not a single VLCC — each capable of carrying roughly 2 million barrels of crude — was seen loading in Iran.

• According to Kpler, Iranian crude held in floating storage remains relatively steady at around 40 million barrels, double the level seen in the first weeks of July, when navigation was still unimpeded.

Market movers

• US energy firms Phillips 66 (NYSE:PSX), Kinder Morgan (NYSE:KMI) and HF Sinclair (NYSE:DINO) have jointly agreed to build the $5 billion Western Gateway pipeline system, a key conduit for refined products to California from St. Louis, Missouri.

• UK major BP (NYSE:BP) has agreed to buy a 70% interest in the Calypso deepwater offshore project in Trinidad and Tobago from Australia's Woodside (ASX:WDS), taking full ownership of the 3.5 Tcf asset.

• Italian energy giant ENI (BIT:ENI) has signed an agreement with US driller APA (NASDAQ:APA) to become a strategic partner in APA's Block 6 offshore Uruguay, with ENI funding most of the exploration work planned for 2027.

• French upstream specialist Maurel et Prom (EPA:MAU), majority-owned by Indonesia's Pertamina, has agreed to buy the entire South American portfolio of Gran Tierra Energy, mainly in Colombia and Ecuador, for $1.33 billion.

• ADNOC, the national oil company of the UAE, has bought six VLCCs and five VLGCs on the secondary market for $1.3 billion, expanding its shipping capacity as it continues to navigate transits through the Strait of Hormuz.

Tuesday, August 11, 2026

The rapid slowdown in Hormuz transits, the first Houthi casualties in the Red Sea, and another round of escalatory rhetoric from US President Donald Trump suggest there was never really a deal in discussion. ICE Brent has rebounded to $87 per barrel; however, another rally toward $100 per barrel remains firmly on the table as Iranian loadings are close to zero in August, raising the risk that Tehran could halt Hormuz transits completely.

Trump adds a new price tag to Hormuz talks. The US president demanded compensation from Iran for deaths across decades of conflicts after Tehran sought payment for wartime damage, further complicating negotiations to reopen the Hormuz Strait despite progressing Iran-Oman talks.

Red Sea attacks lead to first Houthi victims. Three sailors were killed in a suspected Houthi attack on an Egyptian-owned cargo vessel in the Bab el-Mandeb Strait, while a Pakistani-flagged container ship, Vela Nova, was struck by a US helicopter missile in the Gulf of Oman as tensions escalated.

Houthis test Saudi Arabia's new pact. Yemen's Houthi militia attacked Aramco's 400,000 b/d Jazan refinery just two days after Riyadh signed a collective-defense agreement with Turkey and Pakistan, marking a second successful attack in less than a month and keeping it shut until September.

OPEC output rebounds despite Hormuz woes. Oil production from OPEC countries rose by 1.17 million b/d to 19.9 million b/d, according to Reuters, as Gulf countries partially restored output after a multi-decade low seen in May, with most of the increase coming from Iraq and Kuwait.

Libya's key refinery gets shelled. A fuel-storage tank caught fire at the 120,000 b/d Zawiya refinery just two days after a drone damaged another tank, prompting Libya's NOC to declare an emergency and potentially halt operations completely, just as the country's central bank governor resigned.

Trump extends Jones Act waiver with a tighter leash. US President Donald Trump has extended his Jones Act waiver for another 90 days, but exemptions will now be reviewed voyage by voyage after 208 waivers in less than five months triggered backlash from domestic shipbuilders and lawmakers. The Jones Act, a century-old statute, requires that goods shipped between US ports be transported on vessels that are US-built, US-owned, and US-crewed.

Glencore faces a half-billion-dollar iron ore question. After global traders Vitol and Cargill stopped doing business with Singapore-based iron ore trader Radiant World due to counterfeit invoices, Reuters reported that Glencore's exposure to the disgraced buyer amounted to $500 million.

UAE gas plots a Hormuz-proof LNG plant. ADNOC, the national oil company of Abu Dhabi, is exploring a multibillion-dollar 9.6 mtpa export terminal on the country's east coast in Fujairah, connected to western gas fields by pipeline, in an effort to minimize Hormuz exposure completely.

Venezuela shuffles power leadership after US visit. Caracas appointed Corpoelec veteran Juan Fernandez to head the state utility while moving his predecessor into the deputy electricity minister role, days after US envoy John Barrett traveled to the country to discuss improved power supply.

Canada offers concessions to escape Trump's tariffs. Trade negotiators from Canada and the US are discussing a prospective deal that would remove Ottawa's tariffs on US cars and reconfigure dairy quotas in exchange for Washington dropping steel and aluminium tariffs on Canadian goods.

Rhine oil traffic grinds to a halt. Barge traffic along the River Rhine in Europe has stopped, with several ports across Germany and Switzerland cut off from refined product supply after water levels at the key Kaub chokepoint fell to a record-low 17 cm and could reach just 4 cm by mid-August.

Japan may subsidize a Hormuz bypass. The Japanese government is considering support measures to help refiners reduce transportation costs for crude and naphtha shipments, incentivizing buyers that diversify away from the Middle East by partly covering their extra logistics costs.

Disruptions push food prices to a three-year high. The FAO food price index, compiled by the UN Food and Agriculture Organization, climbed to 131.1 points in July, the highest since January 2023, as Black Sea shipping disruptions and crop heat damage lifted wheat prices by 6% from June, while higher crude costs boosted vegetable oils and sugar.

Aluminum rallies as war tightens supply. LME aluminium prices climbed for a seventh straight session to a seven-week high of $3,350 per tonne as shrinking inventories and repeated disruptions in flows from the Middle East — which accounts for almost 9% of global capacity — tightened the market further.

Jellyfish knock out three French nuclear reactors. A massive swarm of jellyfish forced France's state energy company EDF to shut three reactors, or 2.7 GW of capacity, at its Gravelines plant and halve output from another unit, compounding heat-related restrictions across France's nuclear fleet.

By Tom Kool for Oilprice.com

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