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US / Israel–Iran War · Market Update
- Houthi rebels attacked Saudi Aramco's Jazan refinery with drones, causing a fire that was later extinguished without injuries, while also targeting Yemen's Mocha port, escalating tensions in the Red Sea.
- The attacks come amid ongoing uncertainty over US–Iran peace talks and access to the Strait of Hormuz, increasing concerns over disruptions to global oil supplies and regional security.
- The UAE accused Iran of attacking an ADNOC-linked oil tanker in the Strait of Hormuz, calling it an act of piracy that has further disrupted global oil shipping and heightened concerns over energy security in the region.
- ADNOC said repeated missile and drone attacks on its vessels in the Strait of Hormuz have disrupted its operations, highlighting growing risks to global oil shipping and the importance of ensuring safe navigation through the strategic waterway.
- Iran and Oman reported further progress in talks on a temporary shipping route through the Strait of Hormuz, although no final agreement has been reached .
- Petrobras reported record Q2 2026 results, with Brazil's crude production rising 15% YoY to 2.7 MBpd and total oil and gas output reaching a record 3.34 MBpd.
- Saudi Aramco lowered its September crude prices for most buyers, especially in Asia, after weaker oil market conditions in July.The company also asked Asian customers to prepare alternative loading plans outside the Strait of Hormuz in case shipping disruptions continue, although available volumes are limited.
- US crude imports increased to 6.2 MBpd, while exports reached 3.7 MBpd. At the same time, gasoline and distillate stocks declined, indicating relatively tighter fuel inventories.
- India's oil demand increased by 2.9% YoY to 19.92 million metric tons in July, supported by strong growth in diesel and gasoline consumption. Diesel and gasoline demand rose 10.0% and 9.2% respectively, while LPG, naphtha and petroleum coke consumption declined during the month.
- Angola is facing a fuel shortage due to rising domestic demand, higher global fuel prices and supply constraints, leading to long queues at fuel stations.The government is working to ease the crisis, while costly fuel subsidies continue to strain state-owned Sonangol's finances.
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 4.8% on a weekly basis, as Fed holds interest rates, market remains in backwardation structure, and inflation pressures ease amid ceasefire. Prices receive continued support from CME-LME arbitrage, high China copper premium, exchange inventory outflows, and persistent mine supply constraints which offset pressure from geopolitical uncertainty, hawkish Fed outlook, and elevated global inventories.
- Aluminum prices are up 0.9% 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.