Global oil markets remain heavily influenced by geopolitical tensions in the Middle East, with uncertainty over the reopening of the Strait of Hormuz driving recent price movements. Early optimism surrounding potential US-Iran negotiations briefly pushed oil prices to four-week lows, but sentiment reversed as no agreement emerged and Iranian officials outlined stringent conditions for restoring normal maritime traffic. Continued attacks on vessels in the Red Sea and Strait of Hormuz, combined with declining tanker activity, have strengthened expectations that regional oil exports will remain disrupted for an extended period. These concerns lifted Brent crude close to USD 90 per barrel and WTI above USD 84 per barrel before both eased slightly.
The prospect of prolonged supply disruptions is accelerating efforts by importing nations to reduce dependence on Middle Eastern crude. Africa is emerging as a key alternative source. Nigeria nearly doubled crude deliveries to domestic refineries in the second quarter compared with the previous quarter, with most volumes directed to the Dangote refinery. Meanwhile, Libya has outlined plans to increase output from roughly 1.4 Mn bpd to 2 Mn bpd by the start of the next decade, supported by increased investment and recent exploration successes.
On the demand side, China continues to exert significant influence on global oil balances. Although crude imports recovered in July after falling to near decade lows in June, they remain substantially below levels seen earlier in the year. Large stockpiles accumulated since 2025 have allowed China to limit purchases of expensive crude during periods of market stress. With prices rising again, analysts expect Chinese imports to stabilise or decline, potentially keeping broader Asian demand subdued.
Downstream markets are also under pressure. Repeated attacks on Russian oil infrastructure have constrained refining operations, contributing to domestic fuel shortages and increasing imports of gasoline, diesel and jet fuel from countries including Belarus and South Korea. As refinery disruptions persist, Russia may be forced to maintain or extend export restrictions on refined products.