Donna Dong
Research Analyst, Flux
Brent Declines to $106/bbl
Brent falls as IEA warns of historic oil shortage; India cuts fuel use; Europe and Vietnam boost fuel imports
The Jul’26 Brent futures contract has declined this afternoon, from $108.13/bbl at 15:31 BST to $106.70/bbl at 16:42 BST (time of writing).
In the news, the International Energy Agency has stated that global oil supply will fall short of total demand this year, driven by the Iran war, which is rapidly depleting inventories; this overturns its previous forecast of a surplus. The conflict, along with damage to Iran and Gulf countries' oil infrastructure and the closure of the Strait of Hormuz, has led to what the IEA considers the largest oil supply crisis in history. Indian Prime Minister Narendra Modi has "significantly" cut the size of his motorcade to save fuel, a government source said on Wednesday, days after he urged citizens to tighten their belts amid a surge in energy prices triggered by the Iran war. Elsewhere, Indian Prime Minister Modi has reportedly reduced the size of his motorcade to conserve fuel. This comes just days after he called on citizens to practice austerity amid rising energy costs driven by the Iran conflict, such as avoiding unnecessary foreign travel, opting for public transportation, and reducing cooking oil use, as global energy prices soar and strain the country's foreign exchange reserves. In Italy, Ludoil has announced its agreement to acquire the Sicilian oil refiner ISAB, highlighting Europe's reliance on the Gulf for jet fuel and other refined products. In other news, Vietnam has increased refined product imports by nearly 17% w/w due to the Iran war. The nation has purchased mostly from Malaysia and South Korea to offset declining fuel shipments from Singapore and China. Finally, at the time of writing, the front-month (Jul/Aug) and 6-month (Jul/Jan) Brent futures spreads are at $4.15/bbl and $18.99/bbl, respectively.
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