CorrectionOur 15 July correction to the 14 July editions itself carried an incorrect figure — August TTF settled at €53.06/MWh on 14 July, not €44.18. The cause was a stale exchange-data feed, now fixed. Read the full account →
Brent Near $85 as Iran War Premium Unwinds, Hormuz Risk Lingers
Crude sits well below its May war peak after ceasefire hopes, but the Strait of Hormuz standoff leaves a supply risk the market has largely stopped pricing.
ICE Brent crude front-month traded at $84.92 a barrel on Thursday (2026-07-16), well below the levels reached during the May war between the United States, Israel and Iran. [LIVE PRICES] The retreat followed the largest weekly decline in months for July WTI crude through Thursday (2026-05-28), when traders stripped out geopolitical risk premium on growing hopes that diplomacy between Washington and Tehran could eventually succeed.5
The selloff sits awkwardly against a physical picture that has barely moved. Every day the standoff persists, 10 million to 13 million barrels of oil fail to reach the international market, worsening an already tight balance, Reuters reported on Monday (2026-05-18).3 Before the war began on February 28, around 140 vessels transited the Strait of Hormuz daily, carrying roughly 20% of global oil supplies.3
When negotiations stalled in mid-May, crude reacted at once. Prices climbed about 3% to a two-week high on Monday (2026-05-18) as peace talks between the U.S. and Iran broke down and shipments through the strait lagged.3
Goldman Sachs raised its fourth-quarter forecast to $90 a barrel for Brent and $83 for WTI, citing reduced output from the Middle East.3 That call was set before the current unwind, and it sits above where the front-month now trades. [LIVE PRICES]
Iran holds the world's fourth-largest proven oil reserves, up to 170 billion barrels, and China buys about 90% of its crude, most of it under sanctions.4 With the strait contested, Beijing has little room to reroute those volumes.4
Bjarne Schieldrop, chief commodities analyst at SEB, called the U.S. approach "the biggest bluff in history" and said "it has gone horribly wrong."4 His point cuts at credibility as much as supply: Washington cannot force the strait open without deeper escalation, nor claim success while the shipping lanes stay closed.4
The International Energy Agency has released 400 million barrels from strategic stocks, which director Fatih Birol said amounts to only 20% of its total reserves, with 80% still in hand and further releases under consideration.1 Stock draws buy time; they do not replace the barrels stranded behind the blockade.1
Giles Alston, political risk analyst at Oxford Analytica, told CNBC's Squawk Box Asia that resolving passage is "now something for those who take oil through the Strait to sort out for themselves."2 That leaves war-risk premiums and insurance costs, rather than diplomacy, setting the terms of transit.2
The retreat has kept other markets quiet. European gas has not repriced for a full-blown Middle East supply shock, with ICE Endex TTF front-month at €54.37 on Thursday (2026-07-16); that calm would not survive a sustained closure of the strait, which still carries close to a fifth of global oil supply.3 Signal models still read the supply setup as bullish overall, with one contrarian read leaning bearish on Brent at only 40% confidence. [CONTRARIAN SIGNALS]
The signal to watch now is tanker traffic through the strait over the coming days. If passages do not pick up, the floor under crude resets higher; if they do, the debate shifts to whether the IEA can rebuild its emergency buffer before the next shock arrives.1 For now, with Brent back near $85, prices imply a resolution that the reporting has not confirmed. [LIVE PRICES]