Oil Prices Dip as U.S. Fuel Stockpiles Rise Despite Global Demand Signals

Oil prices edged lower on Wednesday, with Brent settling at $68.52 (-0.3%) and WTI at $66.38 (-0.2%), as U.S. fuel inventory builds offset signs of growing global demand. U.S. gasoline stocks rose by 3.4 million barrels and distillates by 4.2 million barrels—far exceeding expectations—while crude inventories dropped by 3.9 million barrels to 422.2 million barrels. Gasoline demand declined by 670,000 bpd to 8.5 million bpd, disappointing investors during peak summer driving season. Ongoing tariff tensions, including potential U.S. sanctions on Russia and EU trade friction, added economic uncertainty, though possible U.S. rate cuts are seen as supportive for energy demand. Meanwhile, global demand is strengthening: Barclays said that China's oil demand in the first half of the year grew by 400,000 bpd to 17.2 million bpd, and Kurdish oil output dropped by up to 150,000 bpd due to drone attacks.

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Drone Strikes Disrupt Oil Output in Iraqi Kurdistan, Cutting Production by 150,000 bpd

A series of drone attacks on oilfields in Iraq's Kurdistan region over three consecutive days have slashed crude output by 140,000–150,000 bpd, cutting more than half of the region’s total 285,000 bpd production. The strikes caused significant infrastructure damage, forcing shutdowns at key fields including Shaikan, Tawke, Peshkabour, and Ain Sifni, operated by firms such as Gulf Keystone, DNO, and Hunt Oil. No group has claimed responsibility, but Iraqi security sources suggest Iran-backed militias may be involved. While no injuries were reported, the attacks have caused major disruptions, prompting many operators, including non-targeted members of APIKUR, to suspend production and assess damage. DNO’s shares dropped 5% following the attack, marking their worst performance since June 25.

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Iran Seizes Small Tanker in Ongoing Crackdown on Fuel Smuggling near Strait of Hormuz

Iran has seized a small foreign oil tanker carrying 2 million liters of fuel in the Gulf of Oman, near the strategic Strait of Hormuz, amid a continued crackdown on alleged fuel smuggling. The vessel’s 17 crew members, including the captain, have been detained and are under investigation in the port city of Jask. Iranian media did not disclose the vessel’s identity or the nationalities of its crew. This marks at least the fifth such seizure in recent weeks, with smaller tankers often accused of smuggling Iran’s heavily subsidized fuel to neighboring markets. While these incidents have not significantly heightened regional tensions, they underscore the persistent economic and security challenges in the area.

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Egypt’s Surging Diesel Imports Strain European Supply Ahead of Winter

Egypt’s diesel and gasoil imports soared to over 370,000 bpd in the first half of July—65% higher than last year and 35% more than June—marking a record high since 2016. This surge stems from Egypt’s need to compensate for halted Israeli gas supplies amid regional conflicts and declining domestic gas production. The country is increasingly relying on diesel and fuel oil to support summer electricity demands, drawing supplies largely from the Middle East and Russia. These imports have redirected diesel flows away from Northwest Europe, tightening the region's market and boosting refining margins. Analysts caution that diesel may remain scarce into winter, despite reduced power generation needs and upcoming refinery maintenance in September.

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IATA Raises Concerns Over EU’s Sustainable Aviation Fuel Mandate’s Costs and Environmental Impact

The International Air Transport Association (IATA) expressed reservations about the European Union’s sustainable aviation fuel (SAF) mandate, describing it as costly and potentially counterproductive due to limited local supply and added emissions from transporting fuel. IATA projects that SAF will account for only 0.7% of airline fuel consumption in 2025, falling short of the EU’s 6% target by 2030. Director-general Willie Walsh suggested that requiring an insufficiently available fuel increases costs without clear environmental gains and may empower suppliers to impose higher prices. He also called for the EU to reassess its SAF targets and highlighted the need for a more nuanced evaluation of palm oil sustainability as a feedstock. Meanwhile, several Asian projects, including in Singapore, are preparing to export SAF to Europe.

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Stronger Rouble Undermines Russia’s Oil Revenue, Puts Pressure on 2025 Budget

Russia’s average oil price in roubles stayed below the 2025 federal budget target, putting additional strain on the country’s finances. The rouble strengthened about 45% since the start of the year, while international oil prices in dollars declined roughly 10%. The rouble oil price is calculated based on a currency rate of 78.39 per $1 in early July and an average oil price of $59.97 per barrel. As a result, the oil price for taxation was around 4,701 roubles per barrel, 11.1% below the government’s target of 5,281 roubles. This shortfall, combined with increased defense spending, has contributed to a budget deficit estimated at 1.7% of GDP for 2025.

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Petrobras Weighs Retail Fuel Reentry Amid Concerns Over Price Transmission

Petrobras is considering reentering the retail fuel market to better align pump prices with its wholesale price cuts, amid pressure from President Lula and company leadership. The potential move—under discussion for the 2026–2030 strategic plan—follows complaints that retail fuel prices remain high despite reductions at the wholesale level. It's uncertain whether Petrobras would seek to repurchase Vibra Energia, its former retail arm privatized under the Bolsonaro administration, or pursue a partial stake. Lula has criticized privatization for creating layers in the fuel supply chain that inflate consumer costs. Meanwhile, Brazil’s attorney general is probing possible anti-competitive practices in fuel pricing by distributors and retailers.

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Mercuria Secures Two VLCCs on Floating Rate Charters Amid Rising Market

Swiss commodity trader Mercuria has chartered two VLCCs—Almi Titan and Bukha—on floating, index-linked terms, reflecting growing interest in flexible tanker deals. The Almi Titan, built in 2018, is chartered for 10 to 14 months, while the 2012-built Bukha is fixed for six months. Both vessels are scrubber-fitted and eco-designed, aligning with current preferences for fuel-efficient tonnage. Despite owners generally favouring spot deals, recent rate gains—up 25.7% week-on-week to $42,800/day—are sparking renewed interest in time charters. Mercuria’s move joins a short list of VLCC time charters this year, including similar fixtures by Trafigura and Petrobras.

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Asyad Shipping Acquires Two VLCCs in $2.7bn Fleet Expansion Plan

Oman’s Asyad Shipping has confirmed the $206m acquisition of two VLCCs — Landbridge Wisdom (2020) and Landbridge Glory (2019) — from Hong Kong’s Landbridge Universal, as part of a broader $2.7bn fleet expansion strategy. One vessel was delivered on 11 July and renamed Qurayyat, while the second is scheduled for handover soon. The ships are equipped with scrubbers and had been chartered by BP and Clearlake Shipping, with contracts ending in the coming months. Asyad plans to invest between OMR 885m and OMR 1.04bn to grow its 89-ship fleet by 30 more tankers, gas carriers, and cargo vessels, with over $1bn already committed. Despite the expansion, Asyad reported a Q2 net profit of OMR 20.2m ($52.5m), down from OMR 27.7m last year, with revenues also declining year-on-year.

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Eastern Pacific Expands Suezmax Fleet with $360m Order at China’s Hengli Shipyard

Eastern Pacific Shipping has ordered up to four LNG dual-fuelled suezmax tankers from China’s Hengli Heavy Industry for nearly $360m, marking its first deal with the yard. The contract includes two firm 158,000-dwt crude carriers, each priced around $90m, with an option for two more. This ends an 18-month suezmax order hiatus for the company, which previously placed three similar ships at New Times Shipbuilding in 2023–2024. If all options are exercised, Eastern Pacific’s suezmax fleet will grow to 15 vessels, nearly doubling its size. Hengli, acquired by Hengli Group in 2022 and significantly expanded with a CNY 11bn ($1.5bn) investment, now boasts annual shipbuilding capacity of 8.1 million tonnes.

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India’s GAIL in Early Talks for Long-Term LNG Supply from Alaska LNG Project

India’s state-run GAIL is engaged in preliminary discussions to purchase liquefied natural gas (LNG) from the proposed Alaska LNG project, as the country seeks to expand its import capacity and diversify energy sources. The talks with developer Glenfarne come amid India’s efforts to increase U.S. energy imports and ease trade tensions with Washington. While the landed cost of LNG remains a key factor, Glenfarne noted growing commercial interest in the project, which could export up to 20 million tons per year starting around 2030. GAIL aims to boost the capacity of its Dabhol LNG terminal significantly by 2032 to support India’s goal of increasing gas’s share in its energy mix to 15% by 2030. Other regional players like Thailand’s PTT and Japan’s JERA are also monitoring the project as they await further clarity on its financing and costs.