Martha Dowding
Research Associate, Flux
July Brent Rallies Near $108/bbl
Drone strike hits Russian refinery; US warns banks on Iran oil; Hormuz tensions rise; tanker passes
Jul'26 Brent rallied this morning, from a low of $103.30/bbl at 03:25 BST to just shy of $108.00/bbl at 09:36 BST, softer at $107.52/bbl at 10:54 BST (time of writing).
A Ukrainian drone strike hit an oil refinery in Tuapse for the third time in under two weeks, sparking a major fire and forcing evacuations. Vladimir Putin condemned the attack as targeting civilian infrastructure, while Ukraine says such strikes are aimed at cutting Russia’s war funding by hitting its oil industry. The refinery, which produces about 12 million mtpa, had already halted operations on 16 Apr due to earlier damage disrupting shipments. The United States Department of the Treasury warned global banks they could face sanctions if they facilitate transactions linked to Chinese refineries processing Iranian oil. These smaller “teapot” refineries, mainly in Shandong province, handle a large share of Iran’s crude, with China buying about 90% of Iran’s exports. The oil trade often uses deceptive tactics like ship-to-ship transfers, “shadow fleet” tankers, and relabeling cargo as “Malaysian blend” to evade detection. Qatar warned that the Strait of Hormuz must not be used as political leverage, stressing its importance to global energy security amid stalled US–Iran talks. A spokesperson from the Qatar Ministry of Foreign Affairs said turning the strait into a bargaining tool is unacceptable amid rising tensions. Donald Trump escalated his rhetoric, warning Iran to “get smart soon” and criticising its handling of nuclear negotiations. Meanwhile, a Japanese-linked tanker, the Idemitsu Maru, successfully passed through the strait after receiving clearance from Iranian authorities. The vessel, managed by a unit of Idemitsu Kosan, had loaded roughly 2 mb of crude oil in Saudi Arabia. Its delayed departure near Abu Dhabi before transiting highlights the heightened caution and control surrounding shipping routes in the region. Finally, at the time of writing, the Jul/Aug and 6-month (Jul/Jan) Brent futures spreads are at $6.09/bbl and $21.17/bbl, respectively.
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