Impact Assessment of US/Israel-Iran Conflict

⚡ US / Israel–Iran War · Market Update

Last Updated: 06 July 2026

Crude Oil Market Update

OPEC+ agreed to raise August crude production quotas by 0.19 MBpd, bringing total quota increases since April to about 0.80 MBpd, but actual exports remain constrained, with Middle East crude shipments at 9.62 MBpd in Jun'26 and 9.99 MBpd so far in Jul'26, well below the 18.4 MBpd average before the conflict.
A key uncertainty is demand, as China's seaborne crude imports fell to 5.84 MBpd in Jun'26 and are tracking 5.31 MBpd in Jul'26, with analysts expecting Chinese refiners to resume buying only if oil prices remain low, potentially supporting demand from August onward.
Vessel transits through the Strait of Hormuz have rebounded since the US-Iran ceasefire, reaching 242 crossings in the week to 28th June, but remain well below the 700-plus weekly transits seen before the conflict.
OPEC+ is expected to approve a further output target increase of about 0.19 MBpd for August at its Sunday meeting, despite lower prices and easing supply concerns following the reopening of the Strait of Hormuz.
US crude oil production climbed by 0.22 MBpd to a record 13.93 MBpd in Apr'26, with New Mexico reaching 2.37 MBpd, Texas rising to 5.83 MBpd, and North Dakota increasing to 1.13 MBpd as higher oil prices encouraged producers to boost output.
The US natural gas production edged down to 135.3 bcfd (from 135.4 bcfd in March), meanwhile total petroleum demand rose to 20.81 MBpd, gasoline demand increased to 9.12 MBpd (an eight-month high), and distillate fuel demand fell to 3.89 MBpd.
The UAE increased crude oil and condensate exports to a record 3.7 MBpd in Jun'26, up from 3.3 MBpd earlier this year, while Abu Dhabi crude loadings reached 4.0 MBpd, supported by higher production, inventory drawdowns, and the resumption of flows through the Strait of Hormuz after leaving OPEC.

War Impact on Crude Oil & Gasoil/Diesel Prices

War Impact on Gasoline, ATF & Natural Gas Prices

Strategic Petroleum Release

Key Supply Infrastructure

GCC Bypass Pipelines Running Near Capacity — But Shah Gas Field Ablaze and Fujairah Zone Struck

Saudi Arabia's East-West pipeline is pumping oil at its full capacity of 7 MBpd, bypassing the Strait of Hormuz. Crude oil exports from Yanbu port have reached 5 MBpd, and the country is also exporting 0.70 to 0.90 MBpd of oil products.
Of approximately 15 MBpd of crude transiting the Strait of Hormuz in OND'25, combined SPR releases and bypass pipeline capacity can offset roughly two-thirds — or slightly more — for the next 20 to 30 days, providing the Trump administration a window to assess strategic direction.
New strikes directly threaten this buffer — Iranian drones struck the UAE's Shah gas field (currently ablaze) and the Fujairah Oil Industry Zone on Mar 17. A tanker was also hit near the Strait of Hormuz. Saudi Arabia intercepted over a dozen drones; Kuwait and Bahrain sustained additional attacks. These represent the first direct strikes on GCC energy export infrastructure since the conflict began.

Supply Analysis

Supply & Demand Analysis

War Scenarios Point to Global Supply Deficit of 0.92–1.07 MBpd in 2026 and AMJ Quarter Most Severe with a deficit of 4.10 MBpd.

Pre-war, global supply and demand were near-balanced with a modest surplus of +0.55 MBpd projected for 2026. Both conflict scenarios introduce significant supply deficits driven by Strait of Hormuz disruptions and impacts on Iraq and Kuwait crude production.

Scenario 1 (Preferred): Ceasefire talks continue to progress positively, with tanker flows through the Strait of Hormuz gradually normalizing over the next 4–5 weeks. Supply recovers steadily, while demand improves at a slower pace and remains below pre-war expectations, resulting in a moderate market surplus.
Scenario 2 (Alternate): The Strait of Hormuz normalizes over the next 4–5 weeks, supporting a gradual recovery in oil exports and supply. Demand rebounds more strongly than in Scenario 1, reducing the market surplus, although overall consumption remains below pre-war levels.

Metals & Energy Market Update – Geopolitical Context (Iran Conflict)

Geopolitical backdrop:

Indirect talks between the U.S. and Iran concluded in Doha with limited progress, focusing primarily on restoring maritime traffic through the Strait of Hormuz and the release of Iran's frozen assets. While both sides described the discussions as constructive, no breakthrough was achieved, and negotiations on Iran's nuclear program are expected to take place in a later round. The talks helped ease concerns over a renewed disruption in the Strait of Hormuz, a key route for global oil and LNG trade, contributing to a decline in oil prices. However, uncertainty persists as Iran continues to seek formal recognition of its control over the waterway and plans to introduce shipping tolls from mid-August, keeping geopolitical risks elevated for global energy markets.

While the Fed has kept interest rates unchanged, updated projections indicated an increased likelihood of a rate hike later this year, with Chair Kevin Warsh reaffirming the central bank's commitment to containing inflation. Higher Treasury yields and firm U.S. economic data continue to support the dollar.

Steel:

Domestic steel prices have moderated from recent highs.
Steel supply chains remain largely insulated from the Middle East conflict.
Since, the start of war steel HRC prices are up by 8.1%.

Base metals:

Copper prices are down by 1% since the start of war, primarily due to easing war tensions, FOMC outcome, and expectations of rate hikes towards the end of the year.
Easing U.S.–Iran tensions reduced geopolitical supply risks and pushed energy prices lower, contributing to a 19% decline in LME aluminum prices during the month. The decline was further reinforced by the Federal Reserve's hawkish policy stance and a stronger U.S. dollar, weighing on aluminium prices.

Precious metals:

Stronger U.S. yields and weak industrial offtake, especially auto are suppressing any upside momentum.
Stronger US Dollar due to anticipation of rate hike in US is weighing on precious metal prices.

LPG Market Update

As of 1 July 2026, India has reduced the price of the 19 kg commercial LPG cylinder by INR 183.5 per cylinder, lowering it from INR 3,113 to INR 2,930. The reduction reflects the recent easing in international LPG prices and freight rates following the de-escalation of geopolitical tensions in the Middle East, which has improved global supply conditions and reduced import costs.
In response to the improving supply outlook, the Government has also begun rolling back several emergency measures implemented during the recent LPG supply disruption. Supplies of non-domestic packed LPG have been fully restored, while bulk LPG allocations to commercial and industrial consumers have been increased to 50% of pre-crisis consumption levels. These measures are expected to provide significant relief to LPG-dependent sectors, including manufacturing industries, hotels, restaurants, catering services, and other commercial establishments, while supporting a gradual normalization of the domestic LPG market.