Crude Oil Market Update

• Iranian officials say diplomacy is continuing as both sides review proposals involving the Strait of Hormuz, sanctions, and the US naval blockade.
• Market grapevine indicates that Asia’s crude oil imports are projected to reach 23.96 MBpd in Sep’26, up from 23.38 MBpd in Aug’26 and the highest since Feb’26, but still 13% below the pre-conflict average of 27.55 MBpd, Middle East supplies rose to 12.56 MBpd from 11.66 million bpd, yet remained 3.53 MBpd below the pre-war average.
• Asian imports of light and middle distillates are expected at 5.84 MBpd in Sep’26, up from 5.25 MBpd in Aug’26 but more than 1 MBpd below the pre-conflict average of 7.06 MBpd, keeping refined-fuel prices elevated.
• Saudi Arabia restarted its East-West Pipeline at a low rate after drone attacks forced its shutdown on 11th Sep’26, with plans to restore flows toward 4 MBpd (against 7 MBpd capacity) and potentially resume Yanbu exports, although a full restart could take 6–8 weeks.
• South Korea plans to reduce its reliance on Middle Eastern crude to 50% by 2035 from 70% in 2025, while adding 20 mln bbl to crude reserves by 2030, cutting Middle Eastern natural-gas dependence below 30%, and diversifying critical-mineral and naphtha supplies after disruptions from the Iran war.
• Global crude oil floating inventories declining in Sep’26 from the previous month, indicating some easing in offshore stock accumulation after the sharp build-up seen earlier in the year.
• floating crude oil storage declined across Asia, Europe, the Middle East and North Sea, likely reflecting stronger crude movements and reduced volumes held offshore. Meanwhile, West Africa and other regions saw an increase, indicating higher export-related inventories or slower cargo movements, while the Gulf Coast remained broadly stable.

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:

War Front: Escalation Spreads to Saudi Arabia and Red Sea.
The war continued to widen as Houthi attacks on Saudi Arabia triggered further Saudi airstrikes in Yemen and expanded security alerts across the kingdom, including near Mecca, while shipping through the Strait of Hormuz fell to just four vessels on Tuesday. The disruption to Hormuz and Saudi oil infrastructure is keeping energy markets tight, with Brent above USD 107/bbl, increasing geopolitical risk premiums and raising energy and logistics risks for GCC aluminum smelters. although crude oil prices eased on Wednesday after a larger-than-expected build in U.S. crude inventories.

The U.S Federal Reserve raised its benchmark interest rate by 25 bps to 3.75%-4.00%, marking its first rate hike since July 2023. The decision came amid persistent inflationary pressures, with the Fed stating that inflation remains elevated and that the latest rate increase would support a more timely return toward its 2% inflation target. The Fed’s updated projections indicate that 16 of 18 policymakers expect at least one more 25-bps rate hike by the end of 2026, taking the policy rate to 4.00%-4.25%. Policymakers also raised their 2026 inflation forecast, reflecting continued concerns over price pressures, particularly from higher energy costs. The Fed’s hawkish stance provides a positive backdrop for the USD and weigh on metal prices. This may keep the impact on INR relatively contained, with oil prices, capital flows and RBI intervention remaining key drivers.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 7.1% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are up 2% on a weekly basis supported by high China premium, and drawdown in SHFE inventory. However upside remains capped by rate hike pressures, tariff clarity, and geopolitical tensions.
• Aluminum prices are up 0.3% due to renewed tensions supporting energy prices and risk premium. However, gradual recovery from GCC and rate hike expectations will cap any significant upside.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• Market grapevine indicates that Asia’s crude oil imports are projected to reach 23.96 MBpd in Sep’26, up from 23.38 MBpd in Aug’26 and the highest since Feb’26, but still 13% below the pre-conflict average of 27.55 MBpd, Middle East supplies rose to 12.56 MBpd from 11.66 million bpd, yet remained 3.53 MBpd below the pre-war average.
• Asian imports of light and middle distillates are expected at 5.84 MBpd in Sep’26, up from 5.25 MBpd in Aug’26 but more than 1 MBpd below the pre-conflict average of 7.06 MBpd, keeping refined-fuel prices elevated.
• Saudi Arabia restarted its East-West Pipeline at a low rate after drone attacks forced its shutdown on 11th Sep’26, with plans to restore flows toward 4 MBpd (against 7 MBpd capacity) and potentially resume Yanbu exports, although a full restart could take 6–8 weeks.
• Russia’s ESPO Blend crude rose above 120 USD/bbl, supported by stronger Chinese demand amid Middle East supply disruptions, while record premiums to Brent and potential US tariffs on Russian oil further tightened the market and raised global oil prices.
• South Korea plans to reduce its reliance on Middle Eastern crude to 50% by 2035 from 70% in 2025, while adding 20 mln bbl to crude reserves by 2030, cutting Middle Eastern natural-gas dependence below 30%, and diversifying critical-mineral and naphtha supplies after disruptions from the Iran war.

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:

War Front: Escalation Spreads to Saudi Arabia and Red Sea.
The war continued to widen as Houthi attacks on Saudi Arabia triggered further Saudi airstrikes in Yemen and expanded security alerts across the kingdom, including near Mecca, while shipping through the Strait of Hormuz fell to just four vessels on Tuesday. The disruption to Hormuz and Saudi oil infrastructure is keeping energy markets tight, with Brent above USD 107/bbl, increasing geopolitical risk premiums and raising energy and logistics risks for GCC aluminum smelters. although crude oil prices eased on Wednesday after a larger-than-expected build in U.S. crude inventories.

The U.S Federal Reserve raised its benchmark interest rate by 25 bps to 3.75%-4.00%, marking its first rate hike since July 2023. The decision came amid persistent inflationary pressures, with the Fed stating that inflation remains elevated and that the latest rate increase would support a more timely return toward its 2% inflation target. The Fed’s updated projections indicate that 16 of 18 policymakers expect at least one more 25-bps rate hike by the end of 2026, taking the policy rate to 4.00%-4.25%. Policymakers also raised their 2026 inflation forecast, reflecting continued concerns over price pressures, particularly from higher energy costs. The Fed’s hawkish stance provides a positive backdrop for the USD and weigh on metal prices. This may keep the impact on INR relatively contained, with oil prices, capital flows and RBI intervention remaining key drivers.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 7.1% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are up 2% on a weekly basis supported by high China premium, and drawdown in SHFE inventory. However upside remains capped by rate hike pressures, tariff clarity, and geopolitical tensions.
• Aluminum prices are up 0.3% due to renewed tensions supporting energy prices and risk premium. However, gradual recovery from GCC and rate hike expectations will cap any significant upside.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• Saudi Aramco loaded around 14 mln bbl of crude onto seven VLCCs at Gulf terminals on 20th Sep’26, signalling a partial recovery in exports after the East-West pipeline shutdown disrupted shipments through Yanbu.
• Saudi Gulf crude loadings have risen to around 3.7 MBpd since 12th Sep’26, from 2.9 MBpd earlier in Sep’26, while crude flows through the Strait of Hormuz averaged 2.9 MBpd over the past six days, contributing to easing supply concerns over supply disruptions.
• Russia’s ESPO Blend crude rose above 120 USD/bbl, supported by stronger Chinese demand amid Middle East supply disruptions, while record premiums to Brent and potential US tariffs on Russian oil further tightened the market and raised global oil prices.
• According to PPAC data, India’s crude oil imports fell 11% month-on-month to 19.01 mln tons in Aug’26 and declined 3% YoY from 19.60 mln tons a year earlier.
• India faces a policy trade-off as Russian crude accounts for more than 40% of its oil imports, with reducing purchases potentially raising domestic fuel costs, while continuing them could expose Indian exports to proposed US tariffs of up to 100%. With Indian refiners already securing Russian crude for Sep’26 and Oct’26, the issue could further complicate ongoing US–India trade negotiations.
• Russia’s Moscow refinery, operated by Gazprom Neft, has halted crude processing after a Ukrainian drone attack caused fires at both primary crude distillation units, with repairs potentially taking several weeks.
• The refinery processes around 0.23 MBpd of crude, comprising the 0.12 MBpd AVT-6 unit and 0.11 MBpd EURO+ unit, meaning the outage could temporarily remove its full 0.23 MBpd processing capacity.

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:

War Front: Escalation Spreads to Saudi Arabia and Red Sea.
The war continued to widen as Houthi attacks on Saudi Arabia triggered further Saudi airstrikes in Yemen and expanded security alerts across the kingdom, including near Mecca, while shipping through the Strait of Hormuz fell to just four vessels on Tuesday. The disruption to Hormuz and Saudi oil infrastructure is keeping energy markets tight, with Brent above USD 107/bbl, increasing geopolitical risk premiums and raising energy and logistics risks for GCC aluminum smelters. although crude oil prices eased on Wednesday after a larger-than-expected build in U.S. crude inventories.

The U.S Federal Reserve raised its benchmark interest rate by 25 bps to 3.75%-4.00%, marking its first rate hike since July 2023. The decision came amid persistent inflationary pressures, with the Fed stating that inflation remains elevated and that the latest rate increase would support a more timely return toward its 2% inflation target. The Fed’s updated projections indicate that 16 of 18 policymakers expect at least one more 25-bps rate hike by the end of 2026, taking the policy rate to 4.00%-4.25%. Policymakers also raised their 2026 inflation forecast, reflecting continued concerns over price pressures, particularly from higher energy costs. The Fed’s hawkish stance provides a positive backdrop for the USD and weigh on metal prices. This may keep the impact on INR relatively contained, with oil prices, capital flows and RBI intervention remaining key drivers.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 7.1% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are up 2% on a weekly basis supported by high China premium, and drawdown in SHFE inventory. However upside remains capped by rate hike pressures, tariff clarity, and geopolitical tensions.
• Aluminum prices are up 0.3% due to renewed tensions supporting energy prices and risk premium. However, gradual recovery from GCC and rate hike expectations will cap any significant upside.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• Traffic through the Strait of Hormuz has fallen sharply amid continued US-Iran tensions, with only 12 commodity vessels transiting over the weekend compared with 35 the previous weekend, although some Middle Eastern oil exports continue via tankers with transponders switched off.
• Saudi Arabia has increased crude exports through the Strait of Hormuz following disruptions to its East-West pipeline, with exports recovering to over 4 MBpd in Sep’26 till date and Saudi crude shipments through the strait averaging 2.9 MBpd in recent days.
• Russia’s ESPO Blend crude rose above 120 USD/bbl, supported by stronger Chinese demand amid Middle East supply disruptions, while record premiums to Brent and potential US tariffs on Russian oil further tightened the market and raised global oil prices.
• According to PPAC data, India’s crude oil imports fell 11% month-on-month to 19.01 mln tons in Aug’26 and declined 3% YoY from 19.60 mln tons a year earlier.
• India faces a policy trade-off as Russian crude accounts for more than 40% of its oil imports, with reducing purchases potentially raising domestic fuel costs, while continuing them could expose Indian exports to proposed US tariffs of up to 100%. With Indian refiners already securing Russian crude for Sep’26 and Oct’26, the issue could further complicate ongoing US–India trade negotiations.
• China’s refinery throughput increased by 11.2% MoM to 13.91MBpd in Aug’26, marking the second consecutive monthly rise, supported by stronger fuel exports after restrictions were eased in mid Jul’26.However, throughput remained 6.9% lower YoY, while domestic crude production rose by 0.8% YoY to 4.34 MBpd.
• China’s seaborne crude arrivals are expected to recover to around 8 MBpd in Sep’26–Oct’26, supported by ample onshore inventories, although an estimated 0.639 MBpd inventory draw in Aug’26 highlights tighter stock levels. Meanwhile, Jan’26–Aug’26 refinery throughput stood at 13.7 MBpd, down by 6.6% YoY, while crude production increased by 0.9% to 4.42 MBpd.
• Russia’s YANOS refinery, with a total crude-processing capacity of 300 kbpd, halted operations after a Ukrainian drone attack damaged its AVT-3 crude distillation unit (126 kbpd), while another AVT-4 unit (105 kbpd) remains under repair from a previous attack, potentially affecting a significant portion of the refinery’s throughput.

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:

War Front: Escalation Spreads to Saudi Arabia and Red Sea.
The war continued to widen as Houthi attacks on Saudi Arabia triggered further Saudi airstrikes in Yemen and expanded security alerts across the kingdom, including near Mecca, while shipping through the Strait of Hormuz fell to just four vessels on Tuesday. The disruption to Hormuz and Saudi oil infrastructure is keeping energy markets tight, with Brent above USD 107/bbl, increasing geopolitical risk premiums and raising energy and logistics risks for GCC aluminum smelters. although crude oil prices eased on Wednesday after a larger-than-expected build in U.S. crude inventories.

The U.S Federal Reserve raised its benchmark interest rate by 25 bps to 3.75%-4.00%, marking its first rate hike since July 2023. The decision came amid persistent inflationary pressures, with the Fed stating that inflation remains elevated and that the latest rate increase would support a more timely return toward its 2% inflation target. The Fed’s updated projections indicate that 16 of 18 policymakers expect at least one more 25-bps rate hike by the end of 2026, taking the policy rate to 4.00%-4.25%. Policymakers also raised their 2026 inflation forecast, reflecting continued concerns over price pressures, particularly from higher energy costs. The Fed’s hawkish stance provides a positive backdrop for the USD and weigh on metal prices. This may keep the impact on INR relatively contained, with oil prices, capital flows and RBI intervention remaining key drivers.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 7.1% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are up 2% on a weekly basis supported by high China premium, and drawdown in SHFE inventory. However upside remains capped by rate hike pressures, tariff clarity, and geopolitical tensions.
• Aluminum prices are up 0.3% due to renewed tensions supporting energy prices and risk premium. However, gradual recovery from GCC and rate hike expectations will cap any significant upside.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• Market grapevine indicates that Saudi Aramco is offering additional crude cargoes to Asian refiners via ship-to-ship transfers off Oman’s Sohar port to bypass Strait of Hormuz risks after drone attacks disrupted the East-West pipeline and suspended Yanbu loadings, while increased Gulf loadings and potential shipment delays or cancellations highlight ongoing regional supply constraints.
• Strait of Hormuz vessel traffic fell to 4 transits on Tuesday from 7 the previous day, far below the 10-day average of 18, with no VLCCs or LNG tankers recorded, while Bab el-Mandeb traffic remained relatively stable at 22 vessels versus 24 a day earlier.
• China’s refinery throughput increased by 11.2% MoM to 13.91MBpd in Aug’26, marking the second consecutive monthly rise, supported by stronger fuel exports after restrictions were eased in mid Jul’26.However, throughput remained 6.9% lower YoY, while domestic crude production rose by 0.8% YoY to 4.34 MBpd.
• China’s seaborne crude arrivals are expected to recover to around 8 MBpd in Sep’26–Oct’26, supported by ample onshore inventories, although an estimated 0.639 MBpd inventory draw in Aug’26 highlights tighter stock levels. Meanwhile, Jan’26–Aug’26 refinery throughput stood at 13.7 MBpd, down by 6.6% YoY, while crude production increased by 0.9% to 4.42 MBpd.
• China’s refinery throughput increased by 11.2% MoM to 13.91MBpd in Aug’26, marking the second consecutive monthly rise, supported by stronger fuel exports after restrictions were eased in mid Jul’26.However, throughput remained 6.9% lower YoY, while domestic crude production rose by 0.8% YoY to 4.34 MBpd.
• China’s seaborne crude arrivals are expected to recover to around 8 MBpd in Sep’26–Oct’26, supported by ample onshore inventories, although an estimated 0.639 MBpd inventory draw in Aug’26 highlights tighter stock levels. Meanwhile, Jan’26–Aug’26 refinery throughput stood at 13.7 MBpd, down by 6.6% YoY, while crude production increased by 0.9% to 4.42 MBpd.
• Ukrainian drone strikes are disrupting Russian refining operations and tightening regional fuel supplies with 3 of Russia’s 6 largest diesel producing refineries accounting for around 50% of the country’s diesel output either halting or sharply reducing production in Sep’26 with Kirishi refinery shutting completely, while NORSI and Volgograd are operating at only around 25% of capacity.
• The IEA expects global oil supply to decline by 5.7 MBpd (6.0%) in 2026, deeper than its earlier forecast of drop of around 4.0%, as Middle East conflict delays the recovery of Gulf flows into 2027. Global oil demand is also projected to fall by 2.5 MBpd, versus the previous estimate of a 1.6 MBpd decline, while inventories dropped by 3.1 MBpd in Aug’26 to their lowest level since 2023.
• Saudi Arabia’s crude supply fell by 2.30 MBpd MoM to 6.00 MBpd in Aug’26, the lowest in over 30 years, following attacks on key energy infrastructure and shipping routes. The IEA also cut its 2026 Saudi crude supply forecast by 0.88 MBpd to 7.60 MBpd, while crude loadings declined to 3.50 MBpd.

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:

War Front: Escalation Spreads to Saudi Arabia and Red Sea.
The war continued to widen as Houthi attacks on Saudi Arabia triggered further Saudi airstrikes in Yemen and expanded security alerts across the kingdom, including near Mecca, while shipping through the Strait of Hormuz fell to just four vessels on Tuesday. The disruption to Hormuz and Saudi oil infrastructure is keeping energy markets tight, with Brent above USD 107/bbl, increasing geopolitical risk premiums and raising energy and logistics risks for GCC aluminum smelters. although crude oil prices eased on Wednesday after a larger-than-expected build in U.S. crude inventories.

The U.S Federal Reserve raised its benchmark interest rate by 25 bps to 3.75%-4.00%, marking its first rate hike since July 2023. The decision came amid persistent inflationary pressures, with the Fed stating that inflation remains elevated and that the latest rate increase would support a more timely return toward its 2% inflation target. The Fed’s updated projections indicate that 16 of 18 policymakers expect at least one more 25-bps rate hike by the end of 2026, taking the policy rate to 4.00%-4.25%. Policymakers also raised their 2026 inflation forecast, reflecting continued concerns over price pressures, particularly from higher energy costs. The Fed’s hawkish stance provides a positive backdrop for the USD and weigh on metal prices. This may keep the impact on INR relatively contained, with oil prices, capital flows and RBI intervention remaining key drivers.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 7.1% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are down 3% on a weekly basis supported by stronger dollar, rate hike, and market moving back into contango structure. Copper prices fell sharply after the White House delayed decision on tariffs on refined copper.
• Aluminum prices are down 1.3% on a weekly basis due to pressure from rate hike, recovering GCC smelter production improving regional availability, and a strong US dollar offsetting support from renewed tensions in West Asia.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• Market grapevine indicates that Saudi Aramco is offering additional crude cargoes to Asian refiners via ship-to-ship transfers off Oman’s Sohar port to bypass Strait of Hormuz risks after drone attacks disrupted the East-West pipeline and suspended Yanbu loadings, while increased Gulf loadings and potential shipment delays or cancellations highlight ongoing regional supply constraints.
• Strait of Hormuz vessel traffic fell to 4 transits on Tuesday from 7 the previous day, far below the 10-day average of 18, with no VLCCs or LNG tankers recorded, while Bab el-Mandeb traffic remained relatively stable at 22 vessels versus 24 a day earlier.
• China’s refinery throughput increased by 11.2% MoM to 13.91MBpd in Aug’26, marking the second consecutive monthly rise, supported by stronger fuel exports after restrictions were eased in mid Jul’26.However, throughput remained 6.9% lower YoY, while domestic crude production rose by 0.8% YoY to 4.34 MBpd.
• China’s seaborne crude arrivals are expected to recover to around 8 MBpd in Sep’26–Oct’26, supported by ample onshore inventories, although an estimated 0.639 MBpd inventory draw in Aug’26 highlights tighter stock levels. Meanwhile, Jan’26–Aug’26 refinery throughput stood at 13.7 MBpd, down by 6.6% YoY, while crude production increased by 0.9% to 4.42 MBpd.
• China’s refinery throughput increased by 11.2% MoM to 13.91MBpd in Aug’26, marking the second consecutive monthly rise, supported by stronger fuel exports after restrictions were eased in mid Jul’26.However, throughput remained 6.9% lower YoY, while domestic crude production rose by 0.8% YoY to 4.34 MBpd.
• China’s seaborne crude arrivals are expected to recover to around 8 MBpd in Sep’26–Oct’26, supported by ample onshore inventories, although an estimated 0.639 MBpd inventory draw in Aug’26 highlights tighter stock levels. Meanwhile, Jan’26–Aug’26 refinery throughput stood at 13.7 MBpd, down by 6.6% YoY, while crude production increased by 0.9% to 4.42 MBpd.
• Ukrainian drone strikes are disrupting Russian refining operations and tightening regional fuel supplies with 3 of Russia’s 6 largest diesel producing refineries accounting for around 50% of the country’s diesel output either halting or sharply reducing production in Sep’26 with Kirishi refinery shutting completely, while NORSI and Volgograd are operating at only around 25% of capacity.
• The IEA expects global oil supply to decline by 5.7 MBpd (6.0%) in 2026, deeper than its earlier forecast of drop of around 4.0%, as Middle East conflict delays the recovery of Gulf flows into 2027. Global oil demand is also projected to fall by 2.5 MBpd, versus the previous estimate of a 1.6 MBpd decline, while inventories dropped by 3.1 MBpd in Aug’26 to their lowest level since 2023.
• Saudi Arabia’s crude supply fell by 2.30 MBpd MoM to 6.00 MBpd in Aug’26, the lowest in over 30 years, following attacks on key energy infrastructure and shipping routes. The IEA also cut its 2026 Saudi crude supply forecast by 0.88 MBpd to 7.60 MBpd, while crude loadings declined to 3.50 MBpd.

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:

War Front: Escalation Spreads to Saudi Arabia and Red Sea.
The war continued to widen as Houthi attacks on Saudi Arabia triggered further Saudi airstrikes in Yemen and expanded security alerts across the kingdom, including near Mecca, while shipping through the Strait of Hormuz fell to just four vessels on Tuesday. The disruption to Hormuz and Saudi oil infrastructure is keeping energy markets tight, with Brent above USD 107/bbl, increasing geopolitical risk premiums and raising energy and logistics risks for GCC aluminum smelters. although crude oil prices eased on Wednesday after a larger-than-expected build in U.S. crude inventories.

The U.S Federal Reserve raised its benchmark interest rate by 25 bps to 3.75%-4.00%, marking its first rate hike since July 2023. The decision came amid persistent inflationary pressures, with the Fed stating that inflation remains elevated and that the latest rate increase would support a more timely return toward its 2% inflation target. The Fed’s updated projections indicate that 16 of 18 policymakers expect at least one more 25-bps rate hike by the end of 2026, taking the policy rate to 4.00%-4.25%. Policymakers also raised their 2026 inflation forecast, reflecting continued concerns over price pressures, particularly from higher energy costs. The Fed’s hawkish stance provides a positive backdrop for the USD and weigh on metal prices. This may keep the impact on INR relatively contained, with oil prices, capital flows and RBI intervention remaining key drivers.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 7.1% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are down 3% on a weekly basis supported by stronger dollar, rate hike, and market moving back into contango structure. Copper prices fell sharply after the White House delayed decision on tariffs on refined copper.
• Aluminum prices are down 1.3% on a weekly basis due to pressure from rate hike, recovering GCC smelter production improving regional availability, and a strong US dollar offsetting support from renewed tensions in West Asia.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• Strait of Hormuz vessel traffic fell to just 4 transits on 15th Sep’26 from 7 a day earlier and well below the 10 day average of 18, with no VLCCs or LNG tankers transiting, while Bab el-Mandeb traffic remained relatively stable at 22 vessels on 15th Sep’26 versus 24 on 14th Sep’26, highlighting continued shipping and supply risks.
• Attacks on Saudi Arabia’s East-West Pipeline on Friday forced the country to shut the pipeline, raising concerns over sour crude supplies to Asia and contributing to a 3% rise in oil prices on Monday. Saudi’s Red Sea crude loadings from Yanbu had already plunged to 0.50 – 1.00 MBpd in Jul’26 from around 6.00 MBpd in Jun’26, intensifying supply concerns.
• To offset the disruption caused by the shutdown of Saudi Arabia’s East-West pipeline after drone attacks, crude loadings from Saudi Arabia’s Ras Tanura and Juaymah terminals have doubled to around 4MBpd, equivalent to roughly 2 VLCCs per day, with 4 VLCCs carrying up to 8mln barrels at Ras Tanura on 16th Sep’26.
• China’s refinery throughput increased by 11.2% MoM to 13.91MBpd in Aug’26, marking the second consecutive monthly rise, supported by stronger fuel exports after restrictions were eased in mid Jul’26.However, throughput remained 6.9% lower YoY, while domestic crude production rose by 0.8% YoY to 4.34 MBpd.
• China’s seaborne crude arrivals are expected to recover to around 8 MBpd in Sep’26–Oct’26, supported by ample onshore inventories, although an estimated 0.639 MBpd inventory draw in Aug’26 highlights tighter stock levels. Meanwhile, Jan’26–Aug’26 refinery throughput stood at 13.7 MBpd, down by 6.6% YoY, while crude production increased by 0.9% to 4.42 MBpd.
• Ukrainian drone strikes are disrupting Russian refining operations and tightening regional fuel supplies with 3 of Russia’s 6 largest diesel producing refineries accounting for around 50% of the country’s diesel output either halting or sharply reducing production in Sep’26 with Kirishi refinery shutting completely, while NORSI and Volgograd are operating at only around 25% of capacity.
• The IEA expects global oil supply to decline by 5.7 MBpd (6.0%) in 2026, deeper than its earlier forecast of drop of around 4.0%, as Middle East conflict delays the recovery of Gulf flows into 2027. Global oil demand is also projected to fall by 2.5 MBpd, versus the previous estimate of a 1.6 MBpd decline, while inventories dropped by 3.1 MBpd in Aug’26 to their lowest level since 2023.
• Saudi Arabia’s crude supply fell by 2.30 MBpd MoM to 6.00 MBpd in Aug’26, the lowest in over 30 years, following attacks on key energy infrastructure and shipping routes. The IEA also cut its 2026 Saudi crude supply forecast by 0.88 MBpd to 7.60 MBpd, while crude loadings declined to 3.50 MBpd.
• Rosneft’s Ryazan refinery halted operations following a 06th Sep’26 drone attack, with its CDU-6 unit (160 kbpd production capacity) and CDU-4 unit (80 kbpd production capacity) taken offline, while CDU-3 remains under maintenance, potentially affecting around 240 kbpd of crude-processing capacity.

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:

US-Iran Escalation Raises Risks to Hormuz Shipping and Gulf Energy Infrastructure: US-Iran tensions remain elevated, with Iran threatening further retaliation against U.S. military action and warning that Gulf energy infrastructure could be targeted. Tehran is also preparing to establish a restricted maritime zone around the Strait of Hormuz, increasing the risk of prolonged disruption to regional shipping. Shipping activity through the Strait of Hormuz has fallen sharply. Only 7 commodity vessels crossed the strait on Monday, down from 8 on Sunday, while traffic averaged around 10 vessels per day over the past 10 days, the lowest level since May. Qatar has warned that prolonged disruption could lead to an “industrial catastrophe.” The disruption continues to support energy prices, with Brent trading around USD 97/bbl.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 8% on a monthly basis due to raw material price surge.

Base metals:

• LME 3M copper are down 3.4% on a weekly basis supported by stronger dollar and market moving back into contango structure. Copper prices fell sharply after the White House delayed a decision on tariffs on refined copper and copper concentrate, as policymakers weigh the benefits of supporting U.S. domestic mining against the risk of higher copper prices increasing manufacturing costs and hurting affordability ahead of the November midterm elections.
• Aluminum prices are broadly stable on a weekly basis due to support from renewed tensions in West Asia offsetting pressure from rate hike expectations.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• The latest escalation came after Houthi militants seized control of Yemen’s port city of Mocha and increased attacks around the Bab el-Mandeb Strait, creating an additional threat to crude and refined-product flows through the Red Sea, while continued disruption in the Strait of Hormuz further tightened supply concerns, with only seven vessels transiting the strait on 09th Sep’26, around half of the 10-day average.
• The risk to Saudi Arabian oil exports has also increased, as Houthi attacks could disrupt the Red Sea route that Saudi Arabia is increasingly relying on to bypass Hormuz.
• Meanwhile, the US President Trump said he expects the US–Iran war to end immediately after the midterm elections and indicated that oil prices would decline following the end of the conflict, although the immediate market reaction remains bullish as renewed attacks continue to threaten regional supply and shipping flows.
• Vessel traffic through the Strait of Hormuz fell to seven on 10th Sep’26 from 11 the previous day, well below the 10-day average of 15, while 26 commodity vessels transited the Bab el-Mandeb Strait versus a 10-day average of 27, highlighting continued disruption in Hormuz despite the first Qatar-linked LNG shipment since late Jul’26.
• China’s seaborne crude oil imports increased marginally to 7.14 MBpd in Aug’26 from 6.93 MBpd in Jul’26, but remained 4.27 MBpd (37%) below the pre-conflict average of 11.41 MBpd, as constrained Middle East flows and elevated crude prices continued to limit imports.
• Meanwhile, China increased seaborne crude imports from Russia to 1.68 MBpd in Aug’26 from 1.40 MBpd in Jul’26, while light and middle distillate exports rose to 0.96 MBpd from 0.77 MBpd, suggesting that higher refinery product exports could support further crude imports if Asian product margins remain elevated..
• The US national average diesel price surpassed 6 USD/gal for the first time on 11th Sep’26, driven by supply disruptions from the US–Iran conflict and attacks on Russian refineries, increasing transportation, freight, agricultural, and logistics costs and thereby adding further inflationary pressure across the US economy, particularly as higher operating and delivery costs are passed through to consumers and businesses.
• Market grapevine indicates that the global diesel markets are expected to remain tight as disruptions have removed nearly 2.00 MBpd of Russian and 2.00 MBpd of Middle Eastern product supplies, while limited spare refining capacity and approaching winter demand are supporting record high diesel margins, with US diesel crack spreads reaching 108.02 USD/bbl.
• Rosneft’s Ryazan refinery halted operations following a 06th Sep’26 drone attack, with its CDU-6 unit (160 kbpd production capacity) and CDU-4 unit (80 kbpd production capacity) taken offline, while CDU-3 remains under maintenance, potentially affecting around 240 kbpd of crude-processing capacity.
• The refinery processed approximately 13.1 mln tons (96 mln bbl) of crude in 2024, representing about 4.9% of Russia’s total refining throughput, and produced 2.2 mln tons (16.1 mln bbl) of gasoline, 3.4 mln tons (24.9 mln bbl) of diesel, and 4.3 mln tons (31.5 mln bbl) of fuel oil.

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:

US-Iran Hostilities Reignite, Raising Hormuz Risk: U.S.-Iran tensions remain elevated following renewed military exchanges. U.S. Central Command said Tuesday it had completed a new wave of attacks against Islamic Revolutionary Guard Corps targets, including air defense sites, radar systems and communications sites. Iranian state media said the strikes killed 18 people and injured 108, citing the country's health minister, and added that Iran retaliated by hitting Camp Titin, a U.S. Marine base in Jordan, with ballistic missiles. The renewed conflict has pushed Brent crude oil above USD 95/bbl, as concerns over potential supply disruptions and reduced shipping activity through the Strait of Hormuz added a significant geopolitical risk premium to energy markets.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 1% on a monthly basis due to raw material price surge.

Base metals:

• Copper prices are down 1.2% on a weekly basis as Kevin Warsh's Jackson Hole speech renewed rate hike expectations citing inflationary concerns. Further, escalation in the Gulf, weak Chinese economic data, and inventory buildup is weighing on market sentiments. However, downside remains capped due to supply tightness, CME-LME spread, backwardation structure, and lowered production guidance in Chile.
• Aluminum prices are up 0.9% on a weekly basis due to renewed tensions in West Asia.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• The latest escalation came after Houthi militants seized control of Yemen’s port city of Mocha and increased attacks around the Bab el-Mandeb Strait, creating an additional threat to crude and refined-product flows through the Red Sea, while continued disruption in the Strait of Hormuz further tightened supply concerns, with only seven vessels transiting the strait on 09th Sep’26, around half of the 10-day average.
• The risk to Saudi Arabian oil exports has also increased, as Houthi attacks could disrupt the Red Sea route that Saudi Arabia is increasingly relying on to bypass Hormuz.
• Meanwhile, the US President Trump said he expects the US–Iran war to end immediately after the midterm elections and indicated that oil prices would decline following the end of the conflict, although the immediate market reaction remains bullish as renewed attacks continue to threaten regional supply and shipping flows.
• Vessel traffic through the Strait of Hormuz fell to seven on 10th Sep’26 from 11 the previous day, well below the 10-day average of 15, while 26 commodity vessels transited the Bab el-Mandeb Strait versus a 10-day average of 27, highlighting continued disruption in Hormuz despite the first Qatar-linked LNG shipment since late Jul’26.
• China’s seaborne crude oil imports increased marginally to 7.14 MBpd in Aug’26 from 6.93 MBpd in Jul’26, but remained 4.27 MBpd (37%) below the pre-conflict average of 11.41 MBpd, as constrained Middle East flows and elevated crude prices continued to limit imports.
• Meanwhile, China increased seaborne crude imports from Russia to 1.68 MBpd in Aug’26 from 1.40 MBpd in Jul’26, while light and middle distillate exports rose to 0.96 MBpd from 0.77 MBpd, suggesting that higher refinery product exports could support further crude imports if Asian product margins remain elevated..
• The US national average diesel price surpassed 6 USD/gal for the first time on 11th Sep’26, driven by supply disruptions from the US–Iran conflict and attacks on Russian refineries, increasing transportation, freight, agricultural, and logistics costs and thereby adding further inflationary pressure across the US economy, particularly as higher operating and delivery costs are passed through to consumers and businesses.
• Market grapevine indicates that the global diesel markets are expected to remain tight as disruptions have removed nearly 2.00 MBpd of Russian and 2.00 MBpd of Middle Eastern product supplies, while limited spare refining capacity and approaching winter demand are supporting record high diesel margins, with US diesel crack spreads reaching 108.02 USD/bbl.
• Rosneft’s Ryazan refinery halted operations following a 06th Sep’26 drone attack, with its CDU-6 unit (160 kbpd production capacity) and CDU-4 unit (80 kbpd production capacity) taken offline, while CDU-3 remains under maintenance, potentially affecting around 240 kbpd of crude-processing capacity.
• The refinery processed approximately 13.1 mln tons (96 mln bbl) of crude in 2024, representing about 4.9% of Russia’s total refining throughput, and produced 2.2 mln tons (16.1 mln bbl) of gasoline, 3.4 mln tons (24.9 mln bbl) of diesel, and 4.3 mln tons (31.5 mln bbl) of fuel oil.

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:

US-Iran Hostilities Reignite, Raising Hormuz Risk: U.S.-Iran tensions remain elevated following renewed military exchanges. U.S. Central Command said Tuesday it had completed a new wave of attacks against Islamic Revolutionary Guard Corps targets, including air defense sites, radar systems and communications sites. Iranian state media said the strikes killed 18 people and injured 108, citing the country's health minister, and added that Iran retaliated by hitting Camp Titin, a U.S. Marine base in Jordan, with ballistic missiles. The renewed conflict has pushed Brent crude oil above USD 95/bbl, as concerns over potential supply disruptions and reduced shipping activity through the Strait of Hormuz added a significant geopolitical risk premium to energy markets.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 1% on a monthly basis due to raw material price surge.

Base metals:

• Copper prices are down 1.2% on a weekly basis as Kevin Warsh's Jackson Hole speech renewed rate hike expectations citing inflationary concerns. Further, escalation in the Gulf, weak Chinese economic data, and inventory buildup is weighing on market sentiments. However, downside remains capped due to supply tightness, CME-LME spread, backwardation structure, and lowered production guidance in Chile.
• Aluminum prices are up 0.9% on a weekly basis due to renewed tensions in West Asia.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.

Crude Oil Market Update

• The US-Iran conflict escalated sharply as Iran attacked a US base in Jordan and 10 vessels near the Strait of Hormuz, while the US destroyed five Iranian oil tankers and Iran-aligned Houthis targeted Saudi Arabian cities and oil infrastructure, heightening concerns over regional supply and shipping disruptions.
• Commodity vessel traffic through the Strait of Hormuz fell to six vessels on 08th Sep’26 from nine on 07th Sep’26 and remained below the 10-day average of 12 vessels, while Bab el-Mandeb traffic declined to 25 vessels from the 10-day average of 27, highlighting continued disruption to key Middle East shipping routes.
• China’s seaborne crude oil imports increased marginally to 7.14 MBpd in Aug’26 from 6.93 MBpd in Jul’26, but remained 4.27 MBpd (37%) below the pre-conflict average of 11.41 MBpd, as constrained Middle East flows and elevated crude prices continued to limit imports.
• Meanwhile, China increased seaborne crude imports from Russia to 1.68 MBpd in Aug’26 from 1.40 MBpd in Jul’26, while light and middle distillate exports rose to 0.96 MBpd from 0.77 MBpd, suggesting that higher refinery product exports could support further crude imports if Asian product margins remain elevated.
• Demand from major Asian buyers, particularly China and India, also strengthened, with Chinese refiners purchasing at least 16 mln bbl of Basrah crude for Sep’26 delivery, while Reliance Industries received around 4 mln bbl in Aug’26 which is improving the availability of heavy, high sulphur Iraqi crude in Asian markets.
• Market grapevine indicates that the global diesel markets are expected to remain tight as disruptions have removed nearly 2.00 MBpd of Russian and 2.00 MBpd of Middle Eastern product supplies, while limited spare refining capacity and approaching winter demand are supporting record high diesel margins, with US diesel crack spreads reaching 108.02 USD/bbl.

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:

US-Iran Hostilities Reignite, Raising Hormuz Risk: U.S.-Iran tensions remain elevated following renewed military exchanges. U.S. Central Command said Tuesday it had completed a new wave of attacks against Islamic Revolutionary Guard Corps targets, including air defense sites, radar systems and communications sites. Iranian state media said the strikes killed 18 people and injured 108, citing the country's health minister, and added that Iran retaliated by hitting Camp Titin, a U.S. Marine base in Jordan, with ballistic missiles. The renewed conflict has pushed Brent crude oil above USD 95/bbl, as concerns over potential supply disruptions and reduced shipping activity through the Strait of Hormuz added a significant geopolitical risk premium to energy markets.

Steel:

• Steel supply chains remain largely insulated from the Middle East conflict.
• Moreover, HRC prices are up by 1% on a monthly basis due to raw material price surge.

Base metals:

• Copper prices are down 1.2% on a weekly basis as Kevin Warsh's Jackson Hole speech renewed rate hike expectations citing inflationary concerns. Further, escalation in the Gulf, weak Chinese economic data, and inventory buildup is weighing on market sentiments. However, downside remains capped due to supply tightness, CME-LME spread, backwardation structure, and lowered production guidance in Chile.
• Aluminum prices are up 0.9% on a weekly basis due to renewed tensions in West Asia.

Precious metals:

• Stronger U.S. yields and weak industrial offtake are suppressing any upside momentum.
• Stronger US Dollar and geopolitical tensions are weighing on precious metal prices.

LPG Market Update

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.