Oil prices are headed for an 8% weekly loss, but sustained disruptions across two critical Middle Eastern waterways continue to prop up benchmark crude near $90 per barrel.

CL=F +1.47% | BP +1.74%

Friday, July 31, 2026

The sell-off that dominated earlier this week was arrested by the reality of two disrupted shipping lanes in the Middle East. Saudi Arabia is now working to organize a maritime coalition against Houthi threats in the Red Sea, while Iran's Islamic Revolutionary Guard Corps (IRGC) claims to have turned away several tankers transiting the Strait of Hormuz. That claim may also indicate, however, that commercial shippers remain intent on continuing to navigate the strait rather than abandoning it. The Strait of Hormuz carries roughly one-fifth of global oil consumption, making it the world's most important petroleum chokepoint; the Bab el-Mandeb strait at the mouth of the Red Sea is a critical artery for vessels transiting between the Indian Ocean and the Suez Canal.

With Tehran rejecting Oman's proposal for joint regional management of Hormuz and no new US-Iran negotiations on the agenda, ICE Brent is positioned to close July at approximately $90 per barrel.

BP Prepares North Sea Exit

UK oil major BP (NYSE: BP) has formally launched a sale process for its UK North Sea oil and gas business, which accounts for roughly 115,000 barrels per day of production. The move marks a historic retreat from a basin where BP has operated for more than six decades. The company cited high taxes and a deteriorating investment climate as primary drivers. The UK government has raised the effective tax rate on North Sea producers to 75% through successive increases to the Energy Profits Levy since 2022, a factor that has prompted several operators to review or divest maturing assets. BP press release

Saudi Arabia Seeks Red Sea Shipping Coalition

Saudi Arabia has announced the formation of an international coalition aimed at safeguarding Red Sea shipping from Houthi attacks. Thirteen other countries have joined the effort, with Riyadh serving as the founding and leading state and hosting the alliance's new headquarters. The initiative follows earlier US- and EU-led maritime security missions in the same corridor, which have struggled to fully deter ongoing attacks on commercial vessels. Reuters

Drone Strike Reaches Egypt's LNG Gateway

Egypt confirmed that a drone attack sparked a fire on two gas vessels at Damietta port, including the Energos Winter floating storage and regasification unit (FSRU). The facility is one of Egypt's three operational LNG import terminals, which have received 1.5 million tonnes of LNG so far in 2026. Egypt shifted from a net LNG exporter to a net importer over the past two years as domestic gas production declined faster than anticipated, increasing the country's reliance on imported LNG for power generation. OilPrice

CPC Mulls Loadings Halt After Fresh Drone Strikes

The Caspian Pipeline Consortium has suspended oil loadings at its Black Sea export terminal following another round of drone attacks on incoming tankers. Suppliers of Kazakh crude are now considering an indefinite halt until they receive safety guarantees. The CPC pipeline is the primary export route for Kazakh crude, typically carrying more than 1.3 million barrels per day — over 1% of global supply — to global markets via the Black Sea. OilPrice

Rhine Bottleneck Chokes Europe's Fuel Arteries

Critically low water levels on Germany's Rhine River have severely disrupted inland fuel transportation, constraining fuel flows from Northwest Europe. Water levels at the key Kaub chokepoint fell to just 25 cm, pushing freight rates to multi-year highs. The Rhine has experienced recurring low-water disruptions in recent years — including significant events in 2018 and 2022 — each time forcing shippers to reduce barge loads and seek more expensive rail and road alternatives. Bloomberg

South Korea Eyes PDVSA Imports as Supply Risks Mount

South Korean refiners are evaluating imports of Venezuelan crude for the first time in years as Middle East disruptions drive a search for alternative feedstocks. This comes as Venezuelan exports to the United States reached a record high of 715,000 b/d in July. South Korea, the world's third-largest LNG importer and a major crude buyer, has historically relied heavily on Middle Eastern supply, making it particularly exposed to disruptions in the Strait of Hormuz. Reuters

TPAO Joins BP's Kirkuk Revival Project

BP (NYSE: BP) has agreed to sell a 15% stake in its Iraqi Kirkuk venture to Turkey's state-owned TPAO, reinforcing regional support for the rehabilitation of northern Iraq's major oil and gas fields as Baghdad seeks to increase flows via the Mediterranean.

Iraq-Turkey Pipeline Gets Temporary Reprieve

Crude flows through the Kirkuk-Ceyhan pipeline are expected to continue despite the expiry of the bilateral transit agreement. The entry of Turkey's state oil firm TPAO into the Iraqi upstream sector paved the way for a negotiated 12-month contract extension. The pipeline, with a capacity of approximately 500,000 b/d, has been a recurring flashpoint between Baghdad and the Kurdistan Regional Government over revenue-sharing and export control. Upstream Online

Venezuela Eyes Gas Sector Overhaul

Venezuela is preparing to discuss a new natural gas law that would reduce the role of state oil company PDVSA in gas production and offer more favorable fiscal terms for foreign investors, signaling a push to accelerate international participation in major offshore projects. Venezuela holds some of the largest proven natural gas reserves in the Western Hemisphere, but development has been constrained by years of underinvestment and sanctions. Reuters

Shell Exit Clouds Cyprus Gas Ambitions

London-based energy giant Shell (LON: SHEL) has decided to sell its 35% stake in Cyprus's Aphrodite gas field to Hungary's MOL, triggering frustration within the Cypriot government. Officials have criticized the oil major's handling of the divestment process ahead of a long-awaited final investment decision (FID). Aphrodite, discovered in 2011, is estimated to hold roughly 4.5 trillion cubic feet of natural gas, and a delayed FID would push back Cyprus's ambitions to become a regional gas exporter. OilPrice

Qatar LNG Tanker Breaks Hormuz Drought

A QatarEnergy-owned LNG carrier has successfully exited the Strait of Hormuz for the first time in nearly three weeks. The Al Areesh vessel is now en route to Pakistan after Islamabad lobbied Tehran to help ease the country's energy shortages, which were worsened by a coal mine explosion earlier in the week. Qatar is the world's largest LNG exporter, and extended disruption to Hormuz traffic would have significant implications for global LNG supply, particularly to South Asian buyers. New York Times

Russia Poised to Extend Diesel Export Curbs

Russia has extended its diesel export ban for another month through the end of August in an effort to cap rising domestic fuel prices amid ongoing Ukrainian drone strikes. July outflows totaled only 150,000 b/d, though officials indicated they could lift restrictions earlier if conditions improve. Russia is one of the world's largest seaborne diesel exporters, and extended curbs tighten global middle distillate supply, which is already under pressure from refinery outages and seasonal demand in the Northern Hemisphere. OilPrice

China's Coal Share Drops Below 50% for First Time

China generated less than half of its electricity from coal — 49.7% — in the first half of 2026, marking a significant milestone in the country's energy transition. Renewable energy surpassed 40% of the power mix, driven by rapid expansion in wind and solar capacity. China remains the world's largest coal consumer and importer by a wide margin, meaning even marginal shifts in its power mix carry implications for global coal trade flows and seaborne pricing. OilPrice

Portugal Targets Oil Firms with New Levy

Portugal has approved a draft solidarity tax that would impose a 33% levy on excess profits earned by oil companies in 2026, channeling energy firms' revenues into household support. The move comes as Galp (ELI: GALP) reported a $0.6 billion net profit for the second quarter. Several European governments introduced similar windfall taxes on energy companies during the 2022–2023 price surge, and Portugal's draft follows that precedent amid renewed political pressure to address household energy costs. Reuters

Zijin's Allied Gold Takeover Falls Through

China's Zijin Gold (SSE: 601899) and Canada's Allied Gold have abandoned a planned $3.9 billion acquisition deal. Zijin has instead opted for a $295 million investment that secures a 9.2% stake and provides fresh funding for Allied Gold's growth projects across Africa. Chinese gold producers have been pursuing overseas mining assets as domestic reserves remain limited relative to China's position as the world's largest gold consumer. Reuters

By Tom Kool for Oilprice.com