Air strike
Fears of war returns as drone strikes hit Hormuz shipping
Two drone strikes on ships surreptitiously transiting the Strait of Hormuz and oil prices have suddenly rediscovered the geopolitical risk premium, with ICE Brent touching $74 per barrel again.
At the same time, physical oil markets feel extremely weak, even if that malaise might be temporary on the back of millions of barrels of stranded Gulf crude seeking its way out of the intermittent war zone.
Seven core OPEC+ members have decided to hike their crude oil production targets for August 2026 by another 188,000 b/d, leaving just 188,000 b/d of voluntary cuts in place, presumably to be approved at the next meeting scheduled August 2.
According to data from the US Department of Energy, inventories of crude oil held in the US Strategic Petroleum Reserve dipped by another 6.2 million barrels in the week ending July 3 to reach 319.5 million barrels, the lowest level since April 1983.
The prosecutor’s office of South Korea has formally charged four oil refiners – HD Hyundai Oilbank, SK Energy, S-Oil and GS Caltex – with colluding on fuel prices, claiming that their anti-competitive actions have caused harm of up to $17 billion.
The International Energy Agency expects global natural gas consumption to fall by 0.5% in 2026, equivalent to a 20 bcm year-on-year drop and marking the third annual decline this decade after 2020 and 2022, as high LNG prices lead to demand destruction.
The German government has decided to create a state-controlled emergency reserve of natural gas, planning to boost stored gas volumes by nearly 10% of current capacity in the country, requiring $1.7 billion with the injection expected in 2027-2028.
The Trump administration’s two-month waiver on Iranian crude and product exports has allowed Tehran to clear half of its existing floating storage, with idling barrels in Southeast Asia dropping to just 24 million barrels, down 50% from a month ago, OilPrice.com reports.
Al Rekayyat, an LNG carrier owned by QatarEnergy and targeted by (presumably) Iranian drones on June 7 some 7 nautical miles from the Omani coast, is reportedly at risk of exploding due to a fire in its engine room following the crew’s evacuation.
China’s leading battery manufacturer CATL (SHE:300750) was granted a safety production permit for its key Jianxiawo mine after an 11-month-long suspension in production, signaling Beijing’s readiness to send lithium prices lower and limit imports.
Saudi Arabia is considering expanding the capacity of the 7 million b/d East-West pipeline to accommodate more domestic crude production from the Persian Gulf and possible also flows from neighboring countries, de-risking flows from ongoing Hormuz risks.
Cuban authorities have been struggling to restore electricity across the Caribbean nation after a nationwide Monday blackout – the third in 2026 to date – left nearly 10 million people in the dark overnight amidst severe US sanctions on imports.
Iraq has brought three of its key upstream assets in the southern Basrah region – West Qurna 1, Rumaila and Artawi – to full capacity, seeking to bring production closer to the 4 million b/d threshold as quickly as possible to boost budget revenue.
Israel has launched its fifth licensing round to boost offshore production of natural gas in the Eastern Mediterranean, buoyed by the Israel-Lebanon maritime demarcation deal, with Tel Aviv eyeing another 400 bcm yet to be discovered.
The 400,000 b/d Omsk refinery, Russia’s largest by nameplate capacity, has temporarily halted operations after a Ukrainian drone attack earlier this week, with media reports suggesting that a 180,000 b/d distillation unit had been damaged.
Major exporters of cobalt in the Democratic Republic of Congo risk losing some of their H1 2026 quotas after the country’s customs platform has been blocking the registration of export declarations since July 1, impacting some 20,000 metric tonnes.
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