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US / Israel–Iran War · Market Update
- Venezuela's oil exports declined slightly to 1.16 MBpd in Jul'26 from 1.20 MBpd in Jun'26, reflecting lower inventory drawdowns, although shipments to the US surged to 0.77 MBpd, the highest level since early 2019.
- Meanwhile, exports to India fell to 0.18 MBpd (from 0.28 MBpd) and to Europe declined to 0.08 MBpd (from 0.10 MBpd), while imports of 0.08 MBpd of heavy naphtha supported crude blending operations.
- The US crude oil exports fell to 3.66 MBpd in Jul'26, the lowest level in eight months, down from a record 5.7 MBpd in May'26, as a temporary US-Iran peace agreement increased Middle Eastern oil supplies and reduced demand for US crude.
- Exports to Asia declined to 40% of total shipments (from 52% in Jun'26), while shipments are expected to recover to 4.58 MBpd in Aug'26 and 4.45 MBpd in Sep'26.
- Two Saudi oil tankers carrying a combined 3 mln bbl of crude successfully transited the Bab el-Mandeb Strait despite vessel traffic dropping to 18 ships on 02nd Aug'26 from 28 on 31st Jul'26, following the Houthis' maritime embargo on Saudi Arabia.
- Meanwhile, commodity vessel transits through the Strait of Hormuz fell to 10 on 01st Aug'26 from 19 on 31st Jul'26 amid reports of tanker attacks, underscoring heightened risks to a route that normally handles about 20% of global crude oil and LNG trade.
- OPEC+ group agreed to increase crude production by 0.19 MBpd in Sep'26, completing the rollback of its 1.65 MBpd voluntary supply cuts, although the move has limited near-term impact as exports remain constrained by disruptions around the Strait of Hormuz and Bab el-Mandeb.
- South Korea plans to begin importing 0.88 mln bbl of crude oil from Argentina, marking its first regular purchases from the country as part of efforts to diversify energy supplies away from the Middle East and deepen bilateral cooperation in energy and critical minerals.
- ADNOC announced that, effective 1st Nov'26, it will price the official selling prices (OSPs) of all its crude grades, including Murban, Das, Umm Lulu, and Upper Zakum, against prompt-month Platts Dubai instead of Murban crude futures, aiming to enhance pricing transparency and better align OSPs with cargo loading periods following recent market disruptions.
War Impact on Crude Oil & Gasoil/Diesel Prices
War Impact on Gasoline, ATF & Natural Gas Prices
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.
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.
Geopolitical backdrop:
US President Donald Trump says ongoing negotiations are Iran's "last chance" for a deal to end the conflict, after he called off a planned major military strike. Meanwhile, Tehran publicly denies direct talks with Washington, stating it is only discussing a temporary safe shipping route through the Strait of Hormuz with Oman.
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 7.1%.
Base metals:
- Copper prices are up 1% on a weekly basis, as Fed holds interest rates, China copper premium rises to 13 month high, and inflation pressures ease with softer CPI and weaker job data despite persistent geopolitical conflicts. Prices receive continued support from CME-LME arbitrage, backwardation structure, exchange inventory outflows, and persistent mine supply constraints which offset pressure from renewed tensions, hawkish Fed outlook, and elevated global inventories.
- Aluminum prices are up 2.1% on a weekly basis due to renewed tensions.
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
- For August 2026, Saudi Aramco Contract Prices (CPs) rebounded to USD 620/ton for propane and USD 640/ton for butane, compared with USD 580/ton and USD 600/ton, respectively, in July. This represents a 6.9% month-on-month increase in propane CPs and a 6.7% month-on-month increase in butane CPs.
- Sonatrach raised its August propane OSP by 4.2% m-o-m, from $518/ton to $540/ton, while the butane OSP was cut by 5.0%, from $600/ton to $570/ton.
- India’s commercial LPG prices eased further in August, with the 19 kg cylinder price in New Delhi declining by ₹192, from ₹2,930 in July to ₹2,738 as of 3 August 2026. Despite the recent correction, commercial LPG remains substantially above its pre-war level of ₹1,741/cylinder. In contrast, the 14.2 kg domestic LPG cylinder remained unchanged at ₹942, reflecting continued price stability for household consumers.