Impact Assessment of US/Israel-Iran Conflict
Impact Assessment of US/Israel-Iran Conflict
- API data showed a larger than expected 3.3 mln bbl draw in crude stocks, alongside increases of 0.92 mln bbl in gasoline and 0.36 mln bbl in distillate inventories ahead of the EIA's official report.
- Trump stated that the US is engaged in constructive talks with Iran and expressed optimism about the prospects for a potential agreement, while warning that the US is prepared to take strong military action if diplomatic efforts fail.
- Thirty-seven commodity ships transited the Bab el-Mandeb Strait on Tuesday (20 inbound and 17 outbound), the highest daily count since 19th Jul'26, while only five commodity ships passed through the Strait of Hormuz (three inbound and two outbound).
- Among the vessels, three laden Aframax crude tankers carried over 1.9 mln bbl of oil, while two inbound tankers transported around 0.35 mln bbl of MTBE (methyl tertiary butyl ether) and nearly 0.09 mln bbl of chemicals, even as Houthi attacks and geopolitical tensions continued to disrupt regional shipping.
- Meanwhile, transit through the Strait of Hormuz remained subdued, with 7 vessels on 26th Jul'26, 3 vessels on 25th Jul'26 (all with transponders switched off), and 7 vessels on 24th Jul'26, reflecting continued caution over disruptions to key global oil trade routes.
- Market grapevine indicates that China is negotiating directly with Yemen's Houthi movement to ensure its oil tankers can safely transit the Red Sea despite the group's maritime blockade targeting Saudi-linked shipping.
- The discussions underscore Beijing's efforts to protect crude supplies from Saudi Arabia as escalating regional tensions continue to disrupt global shipping routes.
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-Saudi forces carried out coordinated airstrikes on Iran-aligned PMF positions in Iraq in response to alleged IRGC-directed drone attacks, while the US intercepted Iranian ballistic missiles targeting its base in Jordan, ending a five-day lull in hostilities and signaling renewed escalation. Meanwhile, Iran rejected Oman's proposal for joint management of the Strait of Hormuz, demanding greater control over shipping routes and warning the strait could remain closed if its terms are not met, raising concerns over global energy security. Despite President Trump's renewed push for peace talks, Iran remains skeptical. Markets are likely to stay cautious as the fragile situation leaves the risk of further military escalation and renewed volatility in oil and financial markets.
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 7.4%.
Base metals:
- Copper prices are down 1.5% on a weekly basis, ahead of FOMC meeting tonight. However, downside remains capped as 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 down 0.8% on a weekly basis due to expectations of a hawkish signal by Fed during the latest FOMC meeting.
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.
Impact Assessment of US/Israel-Iran Conflict
- Trump stated that the US is engaged in constructive talks with Iran and expressed optimism about the prospects for a potential agreement, while warning that the US is prepared to take strong military action if diplomatic efforts fail.
- Pakistan, backed by China, is exploring the resumption of stalled US-Iran peace talks amid escalating Middle East tensions, although progress remains challenging as continued Houthi attacks, the near-closure of the Strait of Hormuz, and disruptions in the Red Sea have heightened geopolitical risks, with Islamabad emphasizing that a halt to attacks on Saudi Arabia and other Gulf states is a prerequisite for renewed negotiations.
- Ship traffic through the Bab el-Mandeb Strait fell to 11 commodity vessels on 26th Jul'26, the lowest level in months, including 7 oil tankers, after Houthi attacks on Saudi oil facilities intensified concerns over Red Sea shipping, driving physical crude prices in the Middle East, Europe, and Africa to two-month highs.
- Meanwhile, transit through the Strait of Hormuz remained subdued, with 7 vessels on 26th Jul'26, 3 vessels on 25th Jul'26 (all with transponders switched off), and 7 vessels on 24th Jul'26, reflecting continued caution over disruptions to key global oil trade routes.
- The EU sanctioned Georgia's Kulevi refinery in its 21st sanctions package for processing Russian crude, imposing a transaction ban effective in six months, despite the refinery's commitment to stop refining Russian oil by Aug'26–Sep'26 after processing over 650,000 metric tons in the first half of 2026 and exporting products worth 811 mln Euro to the EU and US between Feb'23 and Feb'26.
- Kuwait's sale of a 49% stake in its oil pipeline network mirrors similar Gulf infrastructure deals, but heightened geopolitical risks from the Iran conflict and potential disruptions to oil exports make this transaction significantly riskier for both investors and the government.
- India's MRPL has, for the first time, instructed crude suppliers to avoid transit through the Red Sea and the Strait of Hormuz in its spot import tenders, reflecting growing concerns over supply disruptions amid escalating Middle East tensions.
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:
The United States paused its airstrike campaign against Iran after 13 consecutive nights of attacks, while Iran announced it would also halt retaliatory strikes as long as Washington maintains the pause, reaffirming its "attack-for-attack" policy. According to U.S. officials, President Donald Trump temporarily suspended the bombing campaign to create space for diplomacy after military advisers warned that most pre-selected targets had been exhausted and prolonged operations could further deplete U.S. munitions.
Despite the temporary lull, Iranian officials remain skeptical, viewing the pause as a tactical move rather than a genuine shift in U.S. policy. The de-escalation has eased immediate concerns over disruptions to the Strait of Hormuz, reducing the geopolitical risk premium in crude oil prices. However, markets are expected to remain cautious as the situation remains fragile and any renewed military action could quickly reignite volatility in energy and financial markets.
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 7.4%.
Base metals:
- Copper prices are up 1.3% on a weekly basis, as 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.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 1.1% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- Pakistan, backed by China, is exploring the resumption of stalled US-Iran peace talks amid escalating Middle East tensions, although progress remains challenging as continued Houthi attacks, the near-closure of the Strait of Hormuz, and disruptions in the Red Sea have heightened geopolitical risks, with Islamabad emphasizing that a halt to attacks on Saudi Arabia and other Gulf states is a prerequisite for renewed negotiations.
- Ship traffic through the Bab el-Mandeb Strait fell to 11 commodity vessels on 26th Jul'26, the lowest level in months, including 7 oil tankers, after Houthi attacks on Saudi oil facilities intensified concerns over Red Sea shipping, driving physical crude prices in the Middle East, Europe, and Africa to two-month highs.
- Meanwhile, transit through the Strait of Hormuz remained subdued, with 7 vessels on 26th Jul'26, 3 vessels on 25th Jul'26 (all with transponders switched off), and 7 vessels on 24th Jul'26, reflecting continued caution over disruptions to key global oil trade routes.
- Iran-aligned Houthi rebels attacked two Saudi oil tankers in the Red Sea, raising fears of disruptions to the Bab el-Mandeb and Strait of Hormuz, while U.S.-Iran tensions escalated with continued airstrikes, missile exchanges, and threats of further military action.
- As the conflict widened across the Middle East, shipping costs increased, oil exports were disrupted, and concerns grew over inflation, global economic stability, and mounting political pressure on the Trump administration despite congressional efforts to limit US military involvement.
- Tanker traffic through the Strait of Hormuz fell to just one outbound vessel and zero inbound vessels on 23rd Jul'26 (down from three crossings the previous day), while 32 tankers transited the Bab el-Mandeb Strait (up from 26), highlighting significant shipping disruptions that have driven oil prices back to around 100 USD/bbl and prompted rerouting of cargoes via the Suez Canal.
- Chinese refiners have increased purchases of Russian ESPO crude despite narrower discounts (1–3 USD/bbl vs. 4 USD/bbl previously) and resumed negotiations for Iranian crude (Pars at 8 USD/bbl discount and Iran Light at 3–4 USD/bbl discount to ICE Brent) as Middle East supply disruptions and shipping risks intensified amid the Iran conflict.
- China's crude oil imports plunged 41.3% YoY to 7.12 MBpd in Jun'26, the lowest since Oct'16, while refinery throughput fell 17.7% to 12.47 MBpd, reflecting weaker demand and reliance on stockpiles during the Iran conflict.
- Although China drew about 0.94 MBpd from inventories in Jun'26 and still added around 0.53 MBpd to reserves in the first half of the year, it may increase refinery runs and fuel exports as Asian refining margins have widened.
- The EU sanctioned Georgia's Kulevi refinery in its 21st sanctions package for processing Russian crude, imposing a transaction ban effective in six months, despite the refinery's commitment to stop refining Russian oil by Aug'26–Sep'26 after processing over 650,000 metric tons in the first half of 2026 and exporting products worth 811 mln Euro to the EU and US between Feb'23 and Feb'26.
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:
The United States paused its airstrike campaign against Iran after 13 consecutive nights of attacks, while Iran announced it would also halt retaliatory strikes as long as Washington maintains the pause, reaffirming its "attack-for-attack" policy. According to U.S. officials, President Donald Trump temporarily suspended the bombing campaign to create space for diplomacy after military advisers warned that most pre-selected targets had been exhausted and prolonged operations could further deplete U.S. munitions.
Despite the temporary lull, Iranian officials remain sceptical, viewing the pause as a tactical move rather than a genuine shift in U.S. policy. The de-escalation has eased immediate concerns over disruptions to the Strait of Hormuz, reducing the geopolitical risk premium in crude oil prices. However, markets are expected to remain cautious as the situation remains fragile and any renewed military action could quickly reignite volatility in energy and financial markets.
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 7.4%.
Base metals:
- Copper prices are up 1.8% on a weekly basis, as 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.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.7% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- Iran-aligned Houthi rebels attacked two Saudi oil tankers in the Red Sea, raising fears of disruptions to the Bab el-Mandeb and Strait of Hormuz, while U.S.-Iran tensions escalated with continued airstrikes, missile exchanges, and threats of further military action.
- As the conflict widened across the Middle East, shipping costs increased, oil exports were disrupted, and concerns grew over inflation, global economic stability, and mounting political pressure on the Trump administration despite congressional efforts to limit U.S. military involvement.
- Tanker traffic through the Strait of Hormuz fell to just one outbound vessel and zero inbound vessels on 23rd Jul'26 (down from three crossings the previous day), while 32 tankers transited the Bab el-Mandeb Strait (up from 26), highlighting significant shipping disruptions that have driven oil prices back to around 100 USD/bbl and prompted rerouting of cargoes via the Suez Canal.
- Chinese refiners have increased purchases of Russian ESPO crude despite narrower discounts (1–3 USD/bbl vs. 4 USD/bbl previously) and resumed negotiations for Iranian crude (Pars at 8 USD/bbl discount and Iran Light at 3–4 USD/bbl discount to ICE Brent) as Middle East supply disruptions and shipping risks intensified amid the Iran conflict.
- China's crude oil imports plunged 41.3% YoY to 7.12 MBpd in Jun'26, the lowest since Oct'16, while refinery throughput fell 17.7% to 12.47 MBpd, reflecting weaker demand and reliance on stockpiles during the Iran conflict.
- Although China drew about 0.94 MBpd from inventories in Jun'26 and still added around 0.53 MBpd to reserves in the first half of the year, it may increase refinery runs and fuel exports as Asian refining margins have widened.
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:
The United States paused its airstrike campaign against Iran after 13 consecutive nights of attacks, while Iran announced it would also halt retaliatory strikes as long as Washington maintains the pause, reaffirming its "attack-for-attack" policy. According to U.S. officials, President Donald Trump temporarily suspended the bombing campaign to create space for diplomacy after military advisers warned that most pre-selected targets had been exhausted and prolonged operations could further deplete U.S. munitions.
Despite the temporary lull, Iranian officials remain sceptical, viewing the pause as a tactical move rather than a genuine shift in U.S. policy. The de-escalation has eased immediate concerns over disruptions to the Strait of Hormuz, reducing the geopolitical risk premium in crude oil prices. However, markets are expected to remain cautious as the situation remains fragile and any renewed military action could quickly reignite volatility in energy and financial markets.
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 7.4%.
Base metals:
- Copper prices are up 1.8% on a weekly basis, as 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.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.7% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- Asian refiners are rerouting Saudi crude shipments from Yanbu via the Suez Canal and around Africa, adding up to four weeks of transit time and higher shipping costs, as Houthi blockade threats disrupt a route that recently carried a record over 4 MBpd of Saudi oil.
- Three Saudi oil tankers carrying about 4.7 mln bbl of crude for China and India reversed course in the Red Sea after the Houthis threatened ships calling at Saudi ports, raising the risk of prolonged shipping delays, higher insurance costs, and disruptions to a route that typically handles around 10 crude tankers per day.
- Saudi Arabia's crude oil exports fell for a third consecutive month to a record low of 3.43 MBpd in May'26, as Middle East conflict disrupted shipments, while rising domestic refining and crude burn further constrained exports despite a modest recovery in production.
- A potential Houthi blockade of the Bab el-Mandeb Strait could severely disrupt Saudi Arabia oil exports and global shipping, driving up crude prices, increasing freight costs, delaying fuel supplies, and raising the risk of broader economic slowdown.
- Chevron has shut in production at its Petronius platform and evacuated personnel ahead of Tropical Depression Two, which is expected to strengthen and disrupt Gulf of America oil production, potentially reducing output by up to 2 million barrels while prompting broader energy sector storm preparations.
- China's crude oil imports plunged 41.3% YoY to 7.12 MBpd in Jun'26, the lowest since Oct'16, while refinery throughput fell 17.7% to 12.47 MBpd, reflecting weaker demand and reliance on stockpiles during the Iran conflict.
- Although China drew about 0.94 MBpd from inventories in Jun'26 and still added around 0.53 MBpd to reserves in the first half of the year, it may increase refinery runs and fuel exports as Asian refining margins have widened.
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:
The Middle East conflict intensified further after Yemen's Iran-backed Houthi movement announced a maritime blockade against Saudi Arabia, opening a new front in the ongoing U.S.-Iran conflict. The Saudi-led coalition condemned the move and pledged a military response while strengthening security measures around the Bab el-Mandeb Strait, a critical shipping corridor for Saudi crude exports following the disruption of traffic through the Strait of Hormuz.
The conflict has expanded beyond Iran and Israel, with fresh attacks involving Bahrain, Kuwait, Jordan, and continued hostilities in Yemen. Iran has stated that it is fully prepared for a prolonged conflict, reinforcing expectations that the crisis is unlikely to de-escalate in the near term. Meanwhile, media reports suggesting that Iran could broaden its ground military operations toward Kuwait have further heightened regional security concerns, although the reports remain unconfirmed. At the same time, growing risks to maritime trade through the Strait of Hormuz and the Bab el-Mandeb have intensified concerns over potential disruptions to global energy supplies. Brent crude has climbed back to around USD 90 per barrel, increasing upside risks to global inflation and strengthening expectations that major central banks may be forced to maintain restrictive monetary policy for longer if elevated energy prices persist.
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 7.4%.
Base metals:
- Copper prices are up 1.3% on a weekly basis, as 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, exchange inventory outflows, and persistent mine supply constraints which offset pressure from renewed tensions, hawkish Fed outlook, contango market, and elevated global inventories.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.6% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- Asian refiners are rerouting Saudi crude shipments from Yanbu via the Suez Canal and around Africa, adding up to four weeks of transit time and higher shipping costs, as Houthi blockade threats disrupt a route that recently carried a record over 4 MBpd of Saudi oil.
- Three Saudi oil tankers carrying about 4.7 mln bbl of crude for China and India reversed course in the Red Sea after the Houthis threatened ships calling at Saudi ports, raising the risk of prolonged shipping delays, higher insurance costs, and disruptions to a route that typically handles around 10 crude tankers per day.
- Saudi Arabia's crude oil exports fell for a third consecutive month to a record low of 3.43 MBpd in May'26, as Middle East conflict disrupted shipments, while rising domestic refining and crude burn further constrained exports despite a modest recovery in production.
- A potential Houthi blockade of the Bab el-Mandeb Strait could severely disrupt Saudi Arabia oil exports and global shipping, driving up crude prices, increasing freight costs, delaying fuel supplies, and raising the risk of broader economic slowdown.
- Chevron has shut in production at its Petronius platform and evacuated personnel ahead of Tropical Depression Two, which is expected to strengthen and disrupt Gulf of America oil production, potentially reducing output by up to 2 million barrels while prompting broader energy sector storm preparations.
- China's crude oil imports plunged 41.3% YoY to 7.12 MBpd in Jun'26, the lowest since Oct'16, while refinery throughput fell 17.7% to 12.47 MBpd, reflecting weaker demand and reliance on stockpiles during the Iran conflict.
- Although China drew about 0.94 MBpd from inventories in Jun'26 and still added around 0.53 MBpd to reserves in the first half of the year, it may increase refinery runs and fuel exports as Asian refining margins have widened.
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:
The Middle East conflict intensified further after Yemen's Iran-backed Houthi movement announced a maritime blockade against Saudi Arabia, opening a new front in the ongoing U.S.-Iran conflict. The Saudi-led coalition condemned the move and pledged a military response while strengthening security measures around the Bab el-Mandeb Strait, a critical shipping corridor for Saudi crude exports following the disruption of traffic through the Strait of Hormuz.
The conflict has expanded beyond Iran and Israel, with fresh attacks involving Bahrain, Kuwait, Jordan, and continued hostilities in Yemen. Iran has stated that it is fully prepared for a prolonged conflict, reinforcing expectations that the crisis is unlikely to de-escalate in the near term. Meanwhile, media reports suggesting that Iran could broaden its ground military operations toward Kuwait have further heightened regional security concerns, although the reports remain unconfirmed. At the same time, growing risks to maritime trade through the Strait of Hormuz and the Bab el-Mandeb have intensified concerns over potential disruptions to global energy supplies. Brent crude has climbed back to around USD 90 per barrel, increasing upside risks to global inflation and strengthening expectations that major central banks may be forced to maintain restrictive monetary policy for longer if elevated energy prices persist.
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 7.4%.
Base metals:
- Copper prices are up 1.3% on a weekly basis, as 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, exchange inventory outflows, and persistent mine supply constraints which offset pressure from renewed tensions, hawkish Fed outlook, contango market, and elevated global inventories.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.6% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- A potential Houthi blockade of the Bab el-Mandeb Strait could severely disrupt Saudi Arabia oil exports and global shipping, driving up crude prices, increasing freight costs, delaying fuel supplies, and raising the risk of broader economic slowdown.
- Chevron has shut in production at its Petronius platform and evacuated personnel ahead of Tropical Depression Two, which is expected to strengthen and disrupt Gulf of America oil production, potentially reducing output by up to 2 million barrels while prompting broader energy sector storm preparations.
- China's crude oil imports plunged 41.3% YoY to 7.12 MBpd in Jun'26, the lowest since Oct'16, while refinery throughput fell 17.7% to 12.47 MBpd, reflecting weaker demand and reliance on stockpiles during the Iran conflict.
- Although China drew about 0.94 MBpd from inventories in Jun'26 and still added around 0.53 MBpd to reserves in the first half of the year, it may increase refinery runs and fuel exports as Asian refining margins have widened.
- Two oil tankers were attacked while loading at the Caspian Pipeline Consortium (CPC) terminal on Russia's Black Sea coast, forcing the suspension of oil exports through the 1,510 KM pipeline that handles about 80% of Kazakhstan's oil exports, although no casualties or oil spill were reported.
- Gulf crude and condensate exports rose 16% MoM to 12 MBpd in the first half of Jul'26, but shipments through the Strait of Hormuz have since slowed as renewed US-Iran fighting and Red Sea security risks intensified, with exports still 32% below their Feb'26 pre-war peak of 17.6 MBpd.
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:
The Middle East conflict intensified further after Yemen's Iran-backed Houthi movement announced a maritime blockade against Saudi Arabia, opening a new front in the ongoing U.S.-Iran conflict. The Saudi-led coalition condemned the move and pledged a military response while strengthening security measures around the Bab el-Mandeb Strait, a critical shipping corridor for Saudi crude exports following the disruption of traffic through the Strait of Hormuz.
The conflict has expanded beyond Iran and Israel, with fresh attacks involving Bahrain, Kuwait, Jordan, and continued hostilities in Yemen. Iran has stated that it is fully prepared for a prolonged conflict, reinforcing expectations that the crisis is unlikely to de-escalate in the near term. Meanwhile, media reports suggesting that Iran could broaden its ground military operations toward Kuwait have further heightened regional security concerns, although the reports remain unconfirmed. At the same time, growing risks to maritime trade through the Strait of Hormuz and the Bab el-Mandeb have intensified concerns over potential disruptions to global energy supplies. Brent crude has climbed back to around USD 90 per barrel, increasing upside risks to global inflation and strengthening expectations that major central banks may be forced to maintain restrictive monetary policy for longer if elevated energy prices persist.
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 7.4%.
Base metals:
- Copper prices are up 1.3% on a weekly basis, as 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, exchange inventory outflows, and persistent mine supply constraints which offset pressure from renewed tensions, hawkish Fed outlook, contango market, and elevated global inventories.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.6% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- China's crude oil imports plunged 41.3% YoY to 7.12 MBpd in Jun'26, the lowest since Oct'16, while refinery throughput fell 17.7% to 12.47 MBpd, reflecting weaker demand and reliance on stockpiles during the Iran conflict.
- Although China drew about 0.94 MBpd from inventories in Jun'26 and still added around 0.53 MBpd to reserves in the first half of the year, it may increase refinery runs and fuel exports as Asian refining margins have widened.
- Two oil tankers were attacked while loading at the Caspian Pipeline Consortium (CPC) terminal on Russia's Black Sea coast, forcing the suspension of oil exports through the 1,510 KM pipeline that handles about 80% of Kazakhstan's oil exports, although no casualties or oil spill were reported.
- Gulf crude and condensate exports rose 16% MoM to 12 MBpd in the first half of Jul'26, but shipments through the Strait of Hormuz have since slowed as renewed US-Iran fighting and Red Sea security risks intensified, with exports still 32% below their Feb'26 pre-war peak of 17.6 MBpd.
- Escalating US-Iran military strikes disrupted oil flows through the Strait of Hormuz and raised fears that Iran-backed Houthis could also threaten the Red Sea shipping route. The heightened geopolitical tensions have added a significant risk premium to crude prices.
- Yemen Houthi leader Abdul Malik al-Houthi warned that Saudi oil facilities, airports, and other critical infrastructure would become targets if Saudi Arabia escalates its military involvement, marking a renewed threat to regional energy security after the collapse of a four year truce.
- Iraq briefly suspended oil loadings after a drone incident near its Basra terminal before quickly resuming operations, while heightened regional security threats—including disruptions at the Khor Mor gas field and the Strait of Hormuz, continue to pose risks to the country's oil and gas exports.
- The US energy firms added seven rigs this week, bringing the total to 588, the highest since Apr'25, with oil rigs rising to 452, as the EIA forecasts US crude production to increase from a record 13.6 MBpd in 2025 to 13.8 MBpd in 2026 despite years of declining rig activity.
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:
The conflict in the Middle East intensified further after Iran declared the June Memorandum of Understanding (MoU) with the United States effectively void. Tehran stated that the framework for de-escalation had collapsed, prompting a fresh round of military exchanges. In response, the United States launched another wave of strikes on Iranian military targets, while Iran retaliated by targeting US-linked military assets and commercial shipping in the Gulf. The conflict has now expanded beyond the US-Iran theatre. Yemen's Saudi-backed government carried out airstrikes on Sanaa International Airport, saying the strike was meant to prevent an Iranian aircraft from landing in violation of Yemeni sovereignty. The Houthis, who control Sanaa and are backed by Iran, blamed Saudi Arabia for the strikes and retaliated by launching missiles and drones at Saudi Arabia's Abha International Airport. No casualties were reported, but the attacks mark the first major escalation between the Houthis and Saudi Arabia since an informal truce took effect roughly four years ago, effectively ending that period of relative calm.
Meanwhile, Iran also intensified its operations around the Strait of Hormuz. The United States has reimposed a naval blockade on Iranian ports, raising concerns over disruptions to one of the world's most critical energy shipping routes. The renewed escalation has pushed Brent crude oil prices back to around USD 85 per barrel, as markets price in a higher geopolitical risk premium and the growing possibility of supply disruptions through the Strait of Hormuz, reinforcing expectations that interest rates could remain higher for longer.
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 21%.
Base metals:
- Copper prices are up 1.6% on a weekly basis as renewed tensions worsen sulphuric acid supply fears and softer CPI supports upward movement. However, upside remains contained by rate hike expectations.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.2% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- Escalating US-Iran military strikes disrupted oil flows through the Strait of Hormuz and raised fears that Iran-backed Houthis could also threaten the Red Sea shipping route. The heightened geopolitical tensions have added a significant risk premium to crude prices.
- Yemen Houthi leader Abdul Malik al-Houthi warned that Saudi oil facilities, airports, and other critical infrastructure would become targets if Saudi Arabia escalates its military involvement, marking a renewed threat to regional energy security after the collapse of a four year truce.
- Iraq briefly suspended oil loadings after a drone incident near its Basra terminal before quickly resuming operations, while heightened regional security threats—including disruptions at the Khor Mor gas field and the Strait of Hormuz, continue to pose risks to the country's oil and gas exports.
- China's fuel oil demand remains weak as refiners continue to favor discounted crude oil over fuel oil, with May fuel oil imports falling to a record low of 0.115 MBpd and June imports recovering only to around 0.14–0.17 MBpd, indicating a gradual recovery despite improving regional fuel oil margins.
- China's crude oil imports fell 41.3% YoY to 7.12 MBpd in Jun'26 the lowest level since Oct'16 and were down a further 12% from May'26, with seaborne imports averaging around 6.0 MBpd, Middle East supplies at a 10-year low, and Iranian crude imports dropping 40% MoM to below 0.8 MBpd as refinery utilization declined to 57.72%.
- Weak domestic fuel demand and export restrictions on refined products kept refinery run rates near a 10-year low, while China's refined oil product exports stood at approximately 1.06 MBpd in Jun'26 and averaged about 0.95 MBpd during the first half of 2026, down 13.2% YoY.
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:
The conflict in the Middle East intensified further after Iran declared the June Memorandum of Understanding (MoU) with the United States effectively void. Tehran stated that the framework for de-escalation had collapsed, prompting a fresh round of military exchanges. In response, the United States launched another wave of strikes on Iranian military targets, while Iran retaliated by targeting US-linked military assets and commercial shipping in the Gulf. The conflict has now expanded beyond the US-Iran theatre. Yemen's Saudi-backed government carried out airstrikes on Sanaa International Airport, saying the strike was meant to prevent an Iranian aircraft from landing in violation of Yemeni sovereignty. The Houthis, who control Sanaa and are backed by Iran, blamed Saudi Arabia for the strikes and retaliated by launching missiles and drones at Saudi Arabia's Abha International Airport. No casualties were reported, but the attacks mark the first major escalation between the Houthis and Saudi Arabia since an informal truce took effect roughly four years ago, effectively ending that period of relative calm.
Meanwhile, Iran also intensified its operations around the Strait of Hormuz. The United States has reimposed a naval blockade on Iranian ports, raising concerns over disruptions to one of the world's most critical energy shipping routes. The renewed escalation has pushed Brent crude oil prices back to around USD 85 per barrel, as markets price in a higher geopolitical risk premium and the growing possibility of supply disruptions through the Strait of Hormuz, reinforcing expectations that interest rates could remain higher for longer.
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 21%.
Base metals:
- Copper prices are up 1.6% on a weekly basis as renewed tensions worsen sulphuric acid supply fears and softer CPI supports upward movement. However, upside remains contained by rate hike expectations.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 0.2% on a weekly basis.
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.
Impact Assessment of US/Israel-Iran Conflict
- The US intensified military operations against Iran by striking coastal defense systems, missile sites, and naval infrastructure, while Iran retaliated with attacks on US military facilities across the Gulf, further escalating tensions and disrupting shipping through the Strait of Hormuz. The renewed conflict has heightened concerns over regional energy security.
- China's fuel oil demand remains weak as refiners continue to favor discounted crude oil over fuel oil, with May fuel oil imports falling to a record low of 0.115 MBpd and June imports recovering only to around 0.14–0.17 MBpd, indicating a gradual recovery despite improving regional fuel oil margins.
- The IEA has warned that the EU's methane emissions rules, set to take effect in 2027, could reduce the pool of legally importable crude by more than 50%, potentially increasing refining costs and weakening the bloc's energy security, prompting several member states to seek a delay in implementation.
- A bipartisan US Senate bill proposes tougher sanctions on Russia, including tariffs of up to 100% on major buyers of Russian oil and gas and sanctions on its shadow tanker fleet and key energy projects, while introducing exemptions for some countries and granting the President authority to waive the measures if deemed in the US national interest.
- The US Strategic Petroleum Reserve (SPR) crude oil stocks declined by 3.0 mln bbl last week to 316.5 mln bbl, the lowest since Apr'83, bringing total SPR draw downs since the onset of the US/Israel-Iran conflict to 98.9 mln bbl, while overall US crude inventories (commercial + SPR) fell to 730.8 mln bbl, the lowest level since 1984.
- China's crude oil imports fell 41.3% YoY to 7.12 MBpd in Jun'26 the lowest level since Oct'16 and were down a further 12% from May'26, with seaborne imports averaging around 6.0 MBpd, Middle East supplies at a 10-year low, and Iranian crude imports dropping 40% MoM to below 0.8 MBpd as refinery utilization declined to 57.72%.
- Weak domestic fuel demand and export restrictions on refined products kept refinery run rates near a 10-year low, while China's refined oil product exports stood at approximately 1.06 MBpd in Jun'26 and averaged about 0.95 MBpd during the first half of 2026, down 13.2% YoY.
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:
The conflict in the Middle East intensified further after Iran declared the June Memorandum of Understanding (MoU) with the United States effectively void. Tehran stated that the framework for de-escalation had collapsed, prompting a fresh round of military exchanges. In response, the United States launched another wave of strikes on Iranian military targets, while Iran retaliated by targeting US-linked military assets and commercial shipping in the Gulf. The conflict has now expanded beyond the US-Iran theatre. Yemen's Saudi-backed government carried out airstrikes on Sanaa International Airport, saying the strike was meant to prevent an Iranian aircraft from landing in violation of Yemeni sovereignty. The Houthis, who control Sanaa and are backed by Iran, blamed Saudi Arabia for the strikes and retaliated by launching missiles and drones at Saudi Arabia's Abha International Airport. No casualties were reported, but the attacks mark the first major escalation between the Houthis and Saudi Arabia since an informal truce took effect roughly four years ago, effectively ending that period of relative calm.
Meanwhile, Iran also intensified its operations around the Strait of Hormuz. The United States has reimposed a naval blockade on Iranian ports, raising concerns over disruptions to one of the world's most critical energy shipping routes. The renewed escalation has pushed Brent crude oil prices back to around USD 85 per barrel, as markets price in a higher geopolitical risk premium and the growing possibility of supply disruptions through the Strait of Hormuz, reinforcing expectations that interest rates could remain higher for longer.
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 1.3% on a monthly basis due to FOMC outcome, and expectations of rate hikes towards the end of the year.
- Renewed tensions and weaker US CPI release is supporting aluminum prices. Prices are up 1.7% on a weekly basis.
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.