Oil markets are facing renewed disruption risks after direct attacks between the United States and Iran resumed, heightening concerns that the conflict could persist into 2027 and pushing Middle Eastern crude benchmarks above $100 per barrel.
The latest escalation followed a US attack on Larak Island, after which President Donald Trump threatened additional strikes against Iran. The developments have increased uncertainty around the Strait of Hormuz, a key route for Gulf oil shipments, as US sanctions on Tehran make tanker movements through the waterway increasingly difficult.
The renewed tension has already affected the movement of Saudi crude. Two very large crude carriers, Sidr and Senegal Prosperity, were struck by projectiles while exiting the Strait of Hormuz on Tuesday, raising concerns that the fragile recovery in Gulf oil exports could be disrupted.
The attacks occurred as Saudi Aramco increased its August Gulf loadings to 700,000 barrels per day. The increase in shipments had pointed to a recovery in flows from the Persian Gulf before the latest incidents threatened to reverse that progress.
ICE Brent was trading at $92 per barrel, while Middle Eastern crude benchmarks had risen above $100 per barrel again.
The renewed oil price pressure is occurring against a broader financial backdrop that could eventually weaken petroleum demand. Global bond yields have climbed to their highest levels since 2008, as higher energy prices add to concerns that inflation could remain elevated for longer than previously expected.
The rise in US Treasury yields accelerated after newly appointed Federal Reserve Chairman Kevin Walsh pledged to bring inflation under control. US inflation currently stands at 3.4%, while the yield on 10-year Treasury bonds has risen to 4.76%.
Higher yields have also spread across other major developed economies. Japan’s 10-year government bond yield has reached a 30-year high and moved above 3%, while the corresponding UK yield has climbed to 5.2%.
The increase in borrowing costs could weigh on vehicle purchases, air travel, construction, manufacturing and freight activity, potentially reducing fuel consumption. At the same time, higher financing costs are increasing the expense of drilling, pipeline projects and large upstream developments.
Markets are pricing an almost 60% probability of a 25-basis-point Federal Reserve rate increase at its meeting this month, indicating a possible shift back towards tighter monetary policy.
US energy demand could also be affected by changes to vehicle efficiency regulations. The Trump administration is preparing to reduce US fuel-economy requirements, reversing stricter standards introduced under the Biden administration. The proposed fleetwide average would be 34.5 miles per gallon by 2031, compared with the previous target of 50.4 miles per gallon.
Weather conditions are adding another source of uncertainty to the US petroleum market, with Saudi-owned Motiva and ExxonMobil preparing their refineries in Port Arthur and Beaumont, Texas, for Tropical Storm Edouard. The storm is expected to strengthen into a hurricane before making landfall on Tuesday, prompting both companies to activate storm-response measures.
Beyond the immediate supply risks, activity across the global energy sector remains focused on new investments, acquisitions and changes in supply portfolios.
US midstream company ONEOK has agreed to acquire Brazos Midstream’s natural gas gathering and processing assets in West Texas for $4.4 billion. The transaction will increase ONEOK’s gas-processing capacity by 1.2 billion cubic feet per day.
In Ghana, Shell and Chevron have reached a preliminary agreement with the government to enter the South Deepwater Tano oil block, located in waters as deep as 3,000 metres. The agreement marks Ghana’s first new offshore licence since 2018.
Norway’s Equinor and its project partner Standard Lithium have secured a second binding offtake agreement for the SW Arkansas lithium project. The agreement with LG Energy Solution is expected to support progress towards a final investment decision later this year.
UK-listed upstream company Energean is reportedly in exclusive negotiations with BP to acquire part of the British major’s Egyptian upstream portfolio in a transaction valued at around $1 billion.
Norwegian upstream company DNO is also set to acquire UK-listed Capricorn Energy for $400 million after outbidding Kurdistan-focused Genel Energy. The deal would expand DNO’s portfolio through the addition of onshore Egyptian assets.
Venezuela has meanwhile signed a long-term agreement covering 17 oil fields with more than 65 billion barrels of proven reserves. US-backed operators, largely associated with Alejandro Betancourt’s NABEP, are expected to play a leading role in developing the fields.
Mexico’s state-owned oil company Pemex has restructured approximately $15 billion in supplier and contractor obligations as it seeks to ease immediate cash-flow pressures. The restructuring moves $7.4 billion in repayments beyond 2030 and reduces the company’s projected 2027 payout to $1.3 billion.
Canada’s federally owned Trans Mountain pipeline has applied for a further expansion that would add 210,000 barrels per day to its system. The project would increase total capacity to nearly 1.2 million barrels per day by late 2028 at an estimated cost of $2.9 billion, with the expansion supported by demand from Asian markets.
Russia is also expanding its capacity to maintain LNG exports despite Western sanctions. The country has doubled the fleet serving its sanctioned Arctic LNG 2 project to 20 vessels, allowing it to increase efforts to ship LNG to China through the Northern Sea Route. August LNG loadings reached a record 650,000 tonnes.
In commodities markets, zinc prices have risen to $3,980 per tonne, the highest level since 2022, as mine disruptions, constrained Iranian supply and declining concentrate availability tighten the market. The increase represents zinc’s fifth consecutive monthly gain and makes it the best-performing metal of 2026.
China’s energy mix is also undergoing a significant shift, with installed solar power capacity surpassing coal-fired capacity for the first time. Solar capacity has reached 1,286 gigawatts, representing 31.5% of the country’s power-generation fleet, while solar generation increased 15% year-on-year to 802 billion kilowatt-hours between January and July 2026.
Saudi Arabia is considering at least $8 billion in additional borrowing as the economic effects of the Iran conflict weigh on activity. The kingdom recorded a 4.8% year-on-year contraction in GDP in the second quarter of 2026 and is seeking to broaden its financing sources.
Meanwhile, US Treasury Secretary Scott Bessent said Washington plans to introduce new secondary sanctions targeting Iran every week. The initial measures are expected to focus on banks and financial institutions as the US intensifies its maximum-pressure campaign against Tehran.
European energy companies are also seeking more time to comply with new regulatory requirements. Twenty energy industry associations have called on the European Union to postpone its methane emissions regulations by three years to 2030, warning of potential legal risks for oil and gas importers and conflicts involving long-term supply agreements.
Egypt expects its Damietta floating storage and regasification unit, which was damaged in a drone attack in July, to return to service in the fourth quarter of 2026. The Egyptian government said the loss of 5 million tonnes per annum of regasification capacity has not affected the domestic market, citing increased domestic natural gas production.
In Chile, severe winter storms disrupted mining operations and contributed to weaker economic activity in July. Copper production fell 10% year-on-year to 403,424 metric tonnes, the lowest July output recorded since 2011.