Crude Benchmarks Head for 20% Monthly Surge as Hormuz Traffic Begins to Recover
ICE Brent and NYMEX WTI front-months are on course for close to 20% July gains, but a Friday (2026-07-31) pullback on recovering Hormuz flows signals the war premium may be fading.
ICE Brent crude front-month and NYMEX WTI crude front-month are each on course for a gain of close to 20% in July, oilprice.com reported on Friday (2026-07-31). Both slipped around 1% on that session as reports of increased tanker traffic through the Strait of Hormuz began to erode the war premium accumulated over the past month. Brent was trading at $87.67 a barrel and WTI at $82.07, with traders citing news of additional vessels crossing the strait even as broader hostilities with Iran continued.5
U.S. Energy Secretary Chris Wright said some 13 million barrels daily were leaving the Persian Gulf. That figure, if it holds as a sustained trend rather than a single-session reading, would represent a meaningful reopening of the supply route that drove prices higher throughout July.5
Shell was among the clearest corporate beneficiaries of the price environment. The company more than doubled its quarterly earnings, oilprice.com reported on Friday (2026-07-31), as upstream margins expanded sharply on benchmarks that spent much of July well above pre-conflict levels.5
The scale of July's move has a supply-side explanation that is now partly reversing. Before the Iran conflict began, Morgan Stanley's models pointed to a 2 million to 3 million barrel per day surplus for 2026. The Strait of Hormuz closure temporarily flipped that surplus into a deficit, driving the spike in both benchmarks. With Middle East exports ramping up again, the bank said in a note dated Monday (2026-06-29), the shortfall is rapidly diminishing and a surplus is beginning to re-emerge in the Brent and Dubai markets. Morgan Stanley also flagged a 2027 supply surplus in the same report, adding a longer-dated bearish signal to its near-term downward revisions to ICE Brent crude front-month price forecasts.3
JPMorgan analysts offered a ceiling estimate on July 27 (2026-07-27): if the conflict is contained to one month, ICE Brent crude front-month is likely to remain capped around a $94 monthly average. Eroding global inventory buffers, they added, have been largely offset by depressed demand, a balance that limits the upside even if Hormuz disruptions do not fully resolve.4
China supplied the demand backstory. The world's largest oil importer recorded a record 11.99 million barrels per day in early 2026, nearly 16% above the prior year, according to analysis published on Yahoo Finance on May 12 (2026-05-12), a pace of import growth that set the baseline for bullish positioning before hostilities began. Separately, oilprice.com's Friday (2026-07-31) report cited escalating Chinese export controls as another variable overhanging the demand outlook, though the report did not detail the specific measures.2,5
OPEC+ adds little incremental upward pressure from current levels. The 2.2 million barrel per day voluntary cuts the group extended into the second half of the year are already priced in, FXEmpire noted on June 1 (2026-06-01). For the group to push prices meaningfully higher from here it would need to announce additional restraint, a higher bar given the compliance record of several members.1
But the immediate variable is whether Wright's 13 million barrel per day figure holds. One day of increased tanker crossings does not reopen a strait, and the broader conflict remains unresolved. If crossings stall again in the days after Friday (2026-07-31), month-end settlement near $87 looks like a floor built on continued supply disruption. If the strait is genuinely reopening, Morgan Stanley's surplus thesis gains fresh support, and a portion of July's 20% gain starts to look like a premium that markets will spend the coming sessions unwinding.5,3