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<\/p>\nTrump’s latest comments cooled oil prices, but talks over ending the Strait of Hormuz blockade could prove far more consequential.<\/p>\n
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Hedge Funds Pile Back into Oil as Chokepoint Risks Return<\/p>\n
– The signing of the US-Iran Memorandum of Understanding triggered one of the largest hedge fund sell-offs for crude futures and options, however the closure of the Strait of Hormuz (and now of Bab el-Mandeb) has made bullishness in vogue again.\u00a0\u00a0<\/p>\n
– Net positions held by hedge funds and other money managers in ICE Brent futures and options rebounded to the equivalent of more than 192 million barrels, a 2-month high, in the week ending July 21.
– Interestingly, the positioning of hedge funds in Nymex WTI has been somewhat stagnant throughout June-July, suggesting that speculative market participants prefer to avoid futures contract with physical delivery.\u00a0<\/p>\n
– As attested by last week\u2019s price rally and this week\u2019s sudden drop, lower trading activity in crude futures (open interest in ICE Brent is down 11% year-over-year) has been widening the amplitudes of price swings.
– Diesel might be the most bullish energy commodity out there, with hedge funds ramping up their net long positions held in ICE gasoil to 84,540 lots last week, higher than at any given point during the US-Iran conflict.<\/p>\n
Market Movers<\/p>\n
– Expand Energy (NASDAQ:EXE), the largest independent gas producer in the US, has agreed<\/a> to buy privately held gas marketer Twin Eagle Holdings for $1.25 billion to boost its logistics and marketing foothold.\u00a0<\/p>\n – French oil major TotalEnergies (NYSE:TTE) claimed<\/a> that it would appeal a Paris Court decision that ordered it to brings its business with climate change-mitigating policies under the country\u2019s corporate duty of vigilance law.\u00a0<\/p>\n – Africa\u2019s largest refinery, the Dangote Group operating the 650,000 b\/d Lekki plant in Nigeria, raised $2.5 billion in private<\/a> funding for its upcoming expansion, eyeing 1.4 million b\/d capacity as soon as end-2028.\u00a0<\/p>\n – Russia\u2019s largest private oil firm Lukoil (MCX:LKOH) saw its divestment deadline for its international assets extended<\/a> by the US Treasury Department until August 22, the 8th one-month extension already.\u00a0<\/p>\n – US asset management giant Apollo Global Management (NYSE:APO) has agreed<\/a> to invest $1.5 billion into six operational oil rigs owned by Singapore\u2019s Keppel (SGX:BN4), seeking to benefit from a renaissance in Asian offshore drilling. The oil markets continue to trade Donald Trump\u2019s announcements, with his \u2018good talks\u2019 comment about the ongoing diplomatic engagements between the US and Iran sending a (temporarily) bearish signal. Omani-Iranian negotiations, however, might prove just as consequential, as media reports suggest Gulf states have coalesced around a voluntary fee proposal to end the ongoing blockade of the Strait of Hormuz. Against this background, ICE Brent is trading around $87 per barrel again, waiting for the next big geopolitical move.<\/p>\n Muscat Floats a Voluntary Aya-toll. Meeting with Iranian officials Tuesday, Omani authorities have presented<\/a> Tehran with a Hormuz navigation plan backed by Gulf States, modeled on the Strait of Malacca, suggesting that transit fees be voluntary and used for environmental protection.<\/p>\n Oman Seeks a Middle Way Through Hormuz. Iranian and Omani negotiators are discussing<\/a> reopening the Hormuz strait\u2019s largely unused middle passage, potentially restoring commercial shipping, although Iranian sea mines may need to be removed before vessels can return safely.<\/p>\n OPEC+ Hits Pause on Supply Hikes. The seven-member OPEC+ group is expected<\/a> to halt its gradual output increases after September and keep production steady through the remainder of 2026, buying time for negotiations over increasingly contentious national production quotas for 2027.<\/p>\n China\u2019s Imports Crawl Back from the Abyss. China\u2019s seaborne crude arrivals<\/a> are set to rise to 7.8 million b\/d in July from a 10-year low of 6.2 million b\/d last month, as stranded Gulf cargoes finally reach China and Russian flows climb 10%, however domestic consumption remains constrained.<\/p>\n Russia Keeps Gasoline at Home Until Year-End. Moscow will extend<\/a> its gasoline export ban until end-2026 as Ukrainian drone attacks continue to disrupt refinery operations and leave some southern regions short of fuel, although diesel export restrictions could be lifted relatively soon.<\/p>\n Houthis Disable Key Saudi Refinery. Saudi Aramco\u2019s (TADAWUL:2222) 400,000 b\/d Jazan refinery became<\/a> the most significant victim of Houthi missile attacks to date, with fires burning across the plant\u2019s storage tanks for three days since the Yemeni militia targeted the site over the weekend.<\/p>\n Kuwait Sells $16 Billion Worth of Pipelines. Kuwait\u2019s KOC will lease<\/a> a 49% stake in 13 domestic and export pipelines to Blackstone, Brookfield and KKR while retaining operational control, raising $7.85 billion to help finance Kuwait\u2019s push toward 4 million b\/d of crude production capacity by 2035.<\/p>\n Italy Cuts Diesel Taxes as Fuel Prices Soar. The Italian government will temporarily<\/a> slash diesel duties by \u20ac0.17\/l until August 6, spending \u20ac125 million to contain protests over soaring fuel costs even as public debt approaches 139% of GDP, simultaneously seeking relief from EU deficit rules.<\/p>\n CPC Closure Halves Kazakhstan\u2019s Oil Output. Kazakh output plunged from 2.16 million b\/d in June to just 1 million b\/d after drone attacks forced a week-long suspension at the CPC Terminal on Russia\u2019s Black Sea coast, however the resumption<\/a> of CPC loadings this week could prompt a swift recovery.<\/p>\n Libya Quells Resurgent Oilfield Protests. Libya\u2019s NOC halted<\/a> the 90,000 b\/d El Feel (Elephant) field and reduced flows at Wafa after demonstrators stormed the production sites, disrupting crude exports and gas supplies for several hours before government forces regained control of both.<\/p>\n Taiwan Lets Politics Shape Its LNG Policy. Taipei will halt spot purchases of liquefied natural gas from Papua New Guinea after its representative office there was closed, cutting<\/a> roughly 1.9 mtpa of LNG supply bought in 2025 while preserving CPC\u2019s 1.2 mtpa contract, forcing it to resell its volumes.<\/p>\n Australia Dusts Off Domestic Refining. Canberra is considering<\/a> building the country\u2019s first new refinery in more than 60 years as the US-Iran conflict exposed its dependence on imports for 80% of fuel demand, to be built by chemical firm Perdaman in Western Australia (if deemed commercial).<\/p>\n Cyprus Greenlights First Ever Offshore Field. French oil major TotalEnergies (NYSE:TTE) and Italy\u2019s ENI (BIT:ENI) approved<\/a> the development of the 3 Tcf Cronos offshore gas field in Cyprus, targeting first gas in 2028 and seeking to pipe all production to Egypt\u2019s Damietta LNG terminal for exports.<\/p>\n Trump\u2019s China Minerals Ban Hits Reality Wall. According to Reuters, the White House may need to waive its January 2027 deadline for ending<\/a> Chinese critical mineral purchases, as domestic supply of rare earth magnets remains capped at 300 tonnes per year, only 1% of the country\u2019s consumption.<\/p>\n By Tom Kool for Oilprice.com<\/p>\n
Tuesday, July 28, 2026<\/p>\n