Brent crude traded at $94 a barrel on Friday while tanker traffic through the Strait of Hormuz languished in single digits for a fifth consecutive day, a direct market response to President Trump’s declaration of an “Economic D-Day” campaign targeting Iranian oil exports and the nations that buy them. Asian LNG prices held at $24 per million British thermal units and very large crude carrier freight rates remained at punishing levels, reinforcing a gradual grind toward triple-digit oil that shows little sign of reversing before month-end.
White House targets China’s Iranian supply
The administration framed the move as economic warfare, threatening sweeping penalties and “tremendous consequences” for any country continuing to purchase Iranian barrels. China, the largest buyer of Tehran’s crude, sits squarely in the crosshairs. The pressure has already upended pricing: Iranian grades that traded at a $3 discount to Brent have flipped to a $2 premium as the maritime blockade restricts new shipments to Asia and drains floating storage, pushing Chinese independent refiners toward Brazilian and Iraqi alternatives.
Iraq hedges with alternative export routes
Baghdad approved three-month marketing contracts allowing local and international firms to sell crude through multiple outlets other than Hormuz, a bid to shield state revenue from the strait’s volatility. The new government also reiterated an ambition to lift output to 8-10 million barrels a day within six years, a dramatic jump from the current 2.9 million constrained by OPEC quotas, though the timeline depends on securing a larger allocation and building the infrastructure to bypass the chokepoint entirely.
Venezuela becomes a larger US supply source
US refiners are now taking more than 500,000 barrels a day of Venezuelan crude as the country’s production nears 1.25 million barrels a day, according to Energy Under Secretary Kyle Haustveit. In return, the United States ships over 100,000 barrels a day of naphtha to dilute Venezuela’s heavy grades, a two-way flow that has quietly reshaped Gulf Coast slate economics.
Japan rewires its energy map
Tokyo’s diversification away from the Middle East accelerated sharply in July. Japanese imports of US crude jumped eight-fold to a record 891,000 barrels a day, accounting for 36 percent of total inflows, while US liquefied natural gas purchases rose 59 percent. Cheaper West Texas Intermediate pricing provided the economic rationale; Hormuz risk supplied the strategic urgency.
Supply watch: Tengiz plateau, Panama rationing, Korea’s demand surge
ExxonMobil expects Kazakhstan’s Tengiz field to plateau at 1 million barrels a day next year before declining to 500,000 by 2035, pressuring Astana to resolve legal disputes blocking a potential $80 billion Kashagan expansion. Meanwhile, the Panama Canal Authority will cut daily transits to 32 from roughly 35 by mid-September as watershed inflows run 44 percent below normal. In South Korea, the 2040 peak power forecast was raised by 27 gigawatts to as much as 165 gigawatts, driven by semiconductor plants and data centers, complicating a plan to phase out coal, which still provides nearly 29 percent of generation.
Equinor enters Namibia’s Orange Basin
Norway’s state-owned Equinor agreed to buy a 17.4 percent stake in Chevron’s PEL 90 offshore licence, marking its first upstream entry into a new country since 2017. Initial exploration drilling is scheduled before year-end.