Donna Dong
Research Analyst, Flux
Brent Declines to $110.09/bbl
Peace talks progress; Hormuz risks grow; Chevron warns of shortages; Russian refinery shut; ships pile up near Dubai
The Jul’26 Brent futures contract has declined this afternoon, from $122.21/bbl at 13:50 BST to $110.09/bbl at 16:50 BST (time of writing).
In the news, Pakistan’s Foreign Minister Ishaq Dar announced that substantial progress has been achieved in negotiations, highlighting efforts to prevent attacks on Gulf states. “Consultations are ongoing to end the conflict, and we are hopeful that with the support of several capitals, we will succeed in ending the conflict. The goal is to end the conflict in a win-win way for both sides,” Dar stated. Chevron’s CEO, Mike Wirth, warned that oil supply shortages would begin appearing globally due to the Strait of Hormuz closing. As demand adjusts to reduced supply, economies, especially in Asia, will shrink, Wirth said during a Milken Institute discussion. Wirth emphasised that demand must align with supply, and that “economies are going to have to slow.” Elsewhere, Russia's second-largest oil refinery, Kirishi (capacity 400kb/d), has halted operations following Ukrainian drone attacks that damaged three of its four crude distillation units (CDUs), without which it cannot operate. Reuters sources say it would be hard to estimate repair time, as several secondary units were also damaged. In other news, approximately 59 vessels headed towards Dubai in a single day, adding to the growing group of at least 363 ships currently stationed off Dubai in the Persian Gulf; this comes as Iran indicated it is expanding its control over the region around the Strait of Hormuz. Iran’s IRGC revealed a new map showing expanded control around the key chokepoint, from Kuh-e Mobarak in Iran and south of Fujairah in the UAE, to Qeshm Island and Umm Al Quwain, according to the IRGC Navy. Dubai lies just outside this zone. Finally, the front-month (Jul/Aug) and 6-month (Jul/Jan) Brent futures spreads are at $5.41/bbl and $22.08/bbl, respectively.
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