Page 8 - Policy Economic Report -August 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

After an increase of 3.7 mb/d in June, Gulf oil production rose by a further 2.5 mb/d in July to 23.9 mb/d,
still 8.3 mb/d below pre-war levels. Regional exports, including routes bypassing the Strait of Hormuz, fell
by a sharp 2.1 mb/d to 15 mb/d after the key passageway was effectively closed again in early July and oil
infrastructure and tankers came under attack. Loadings peaked at 20 mb/d at the start of July but dropped
to around 12 mb/d later in the month. With an agreement enabling the reopening of Hormuz and
unhindered transit through the Bab el-Mandeb Strait still elusive, have again lowered supply estimates
for the rest of the year. Global oil supply is now forecast to fall by 4.3 mb/d in 2026, to 102 mb/d, as
growth of 1.4 mb/d from the Americas only partly offsets losses in the Middle East and Russia.

Hedge funds and other money managers raised their speculative net long positions in July, although
positioning varied across markets amid uncertainty over developments in the Middle East, which fuelled
price volatility. Speculative buying was stronger in the ICE Brent market as geopolitical tensions escalated
and money managers positioned for potential oil supply disruptions. Between late June and the week of
28 July, hedge funds and other money managers bought the equivalent of 144 mb across Brent and WTI
futures and options. Buying was concentrated in ICE Brent, where net long positions rose by 232.7% over
the period, while NYMEX WTI net long positions increased by 15.6%.

Natural Gas spot prices at the US Henry Hub benchmark averaged $2.89 per million British thermal units
(MMBtu) in July 2026. Henry Hub’s natural gas prices declined in July by 8.3%, m-o-m. Prices were
pressured by strong production and healthy storage levels amid mixed demand. According to data from
the US Energy Information Administration (EIA), average weekly underground storage rose by 8.4%, m-o-
m. However, regionally, strong power demand and heatwaves in parts of the US partially offset losses.
Prices were down by ~9.7%, y-o-y.

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