Brent crude has seen another volatile month of trading, with the most actively traded contracts for Brent futures and Dated Brent ranging between $79.5-100.7 per barrel and $85.3-105.6 per barrel, respectively, at the market’s close over July 20 to August 19.
That’s what analysts at BMI, a unit of Fitch Solutions, said in a report sent to Rigzone by the Fitch Group on Friday, adding that, so far, trading over the third quarter of 2026 had fallen “broadly in line” with their expectations. They added, however, that “ongoing struggles to reach a preliminary deal to reopen the Strait of Hormuz pose upside risk” to their near-term outlook.
“Our Country Risk analysts are holding to their core view, which sees a preliminary deal to reopen the strait reached this quarter,” the BMI analysts stated in the report.
“However, the current equilibrium is unstable, and they retain a 35 percent probability of a wider escalation and return to high-intensity warfare, threatening damage to regional oil infrastructure and deeper export losses,” they noted.
The BMI analysts warned in the report that exports are already under considerable pressure because of the twin disruptions in play in the Strait of Hormuz, due to the Iranian shut-in of the strait and the U.S. naval blockade on Iran, and the Red Sea, due to the Houthi embargo on Saudi-linked shipping.
“There is considerable debate as to the volume of oil currently leaving the region, with the U.S. administration claiming that exports have at times approached pre-conflict levels (of roughly 20 million barrels per day), while data from tanker tracking agencies points to more muted levels of around 10 million barrels per day,” the analysts said in the report.
“Nevertheless, exports are still flowing in sizeable volumes and this – coupled with global inventory drawdowns and depressed crude imports into Asia, led by Mainland China – is helping to put a lid on prices,” they outlined.
The analysts went on to warn, however, that risks to their price outlook are “once again tilted to the upside”.
“We had provisionally assumed that a deal to reopen the strait would be reached at the Q3 midpoint, in mid-August,” they pointed out.
“Continued failure to reach such a deal would require us to upwardly revise our rest of year forecasts,” they added.
“Moreover, as long as the current status quo endures, regional crude exports will remain vulnerable to renewed disruption, including more effective Iranian interference with the southern Hormuz corridor or Houthi attacks on infrastructure around Yanbu,” they stated.
Looking outside of the region, the analysts noted that continuing attacks on Russian energy infrastructure and Black Sea shipping pose an underappreciated threat to supply.
“Pressures are most acute downstream, with exceptionally high middle distillate cracks reflecting depressed Asian refinery runs, Middle Eastern outages, and sustained Ukrainian attacks on increasingly critical Russian refining units,” they said.
“A further tightening in fuel markets could incentivize higher refinery runs and feed directly into stronger crude demand,” they noted.
The analysts went on to state that two “important buffers” are also eroding.
“Inventory releases cannot continue indefinitely without pushing stockpiles to uncomfortably low levels, while Asian refiners will eventually need to rebuild crude purchases as inventories decline and fuel markets tighten,” they said.
“The risk will become increasingly acute if disruptions persist into the northern hemisphere winter, when stronger seasonal demand for middle distillates could collide with already constrained refining capacity and depleted inventories, amplifying upside pressure on diesel and, ultimately, crude,” they warned.
The BMI analysts highlighted in the report that their current forecast for Dated Brent sits at an annual average of $86 per barrel in 2026 but said they will be reviewing the outlook at the end of August, “with a view towards a potential upward revision”.
Oil Moves Lower on Monday
In a market analysis sent to Rigzone today, Naeem Aslam, CIO at Zaye Capital Markets, outlined that oil prices were lower by roughly 1.5 percent to 1.6 percent this morning “as traders take profits and reassess the next stage of the Middle East risk premium”, but added that Brent and WTI still gained more than five percent last week.
“At Zaye Capital Markets, the main driver remains physical supply uncertainty rather than ordinary demand weakness,” Aslam noted in the analysis.
“Tanker traffic through the Strait of Hormuz is still heavily disrupted, and that keeps the market highly sensitive to any development that threatens Iranian exports, regional shipping routes, or refinery access,” he added.
“The result is a market where prices can fall sharply on easing headlines but remain structurally supported as long as available barrels and transport capacity stay constrained,” he continued.
Aslam went on to state that U.S. President Donald Trump’s latest comments reinforce that volatility.
“His warning that military intervention remains an option and his statement that the U.S. has ‘total control’ around the Strait of Hormuz increase the probability that traders continue to price a geopolitical premium into crude,” Aslam said.
“His comments on trade and tariffs also matter because a wider tariff conflict can push inflation higher, weaken global manufacturing demand, and create conflicting forces for oil: higher geopolitical risk supports prices, while slower trade activity can eventually reduce consumption,” he added.
“For us at Zaye Capital Markets, the key distinction is whether political rhetoric translates into real supply disruption. If tougher sanctions reduce Iranian exports or trigger further shipping constraints, Brent could remain supported above $90; if diplomatic conditions improve and tanker flows normalize, part of that premium could unwind quickly,” he continued.
In the analysis, Aslam said today’s economic calendar is “unusually light”, which he said means oil is more likely to react to policy and geopolitical developments than to a conventional “actual-versus-forecast data surprise”.
“The most important catalyst is the U.S. Treasury Secretary’s expected policy remarks, particularly if they involve Iran sanctions, trade measures, government borrowing or broader financial conditions,” he said.
“For Zaye Capital Markets, investors should … watch Hormuz tanker traffic, Iranian export volumes, global inventories, refinery margins, OPEC supply discipline, and whether today’s policy comments increase or reduce the probability of further disruption,” he noted.
“The near-term oil outlook remains a balance between softer demand expectations and a supply system that is still vulnerable to geopolitical shocks,” he added.
In a market quick take posted on Saxo Bank’s website on Monday, Saxo Bank said crude slipped after a two-week rally “as traders awaited details of the U.S. plan to increase the economic pressure on Iran, due later Monday”.
“Brent eased toward $93 after gaining around 13 percent over the past two weeks, while WTI traded near $86,” the bank added.
“Treasury Secretary Scott Bessent is expected to unveil the measures and press U.S. allies to participate,” it continued.
“With the U.S.-Iran war now in its sixth month and continuing to restrict global supplies of crude and refined products, it remains unclear how Washington can meaningfully increase the pressure on Tehran without targeting China, the main buyer of Iranian crude, and risking significant economic and geopolitical blowback,” it went on to state.
To contact the author, email
