Page 42 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

Oil Market

Crude oil price – Monthly Review

Benchmark crude oil prices surged to their highest level since May as negotiations between the United
States and Iran to end the war in the Middle East remained at an impasse amid renewed hostilities. ICE
Brent futures traded at $105/bbl, up $21/bbl since the start of August and 45% above pre-war levels,
while physical benchmarks were significantly higher. However, the rise in both crude futures and physical
prices pales in comparison with those for refined products, where market tightness is now most acute.
Diesel/gasoil, which accounts for nearly 30% of global demand, saw prices in the United States surpass
the $200/bbl mark in early September, 94% above pre-war levels, with Europe and Asia not far behind.

The widening differential between crude and refined products has pushed refinery margins to record
levels in the Atlantic Basin. Total oil exports from Gulf countries in August are currently estimated around
13 mb/d, nearly half their pre-war level. Crude losses appear to have narrowed to just below 45%,
supported by increased flows bypassing the Strait, as well as US military escorts protecting flows through
Hormuz. However, refined product and LPG exports remain nearly 60%, or 3.7 mb/d, less than in February.

Net exports of diesel/gasoil from the Gulf countries averaged 390 kb/d in August, just over a quarter of
pre-war levels, as flows through the Strait of Hormuz remained severely constrained. Disruptions to
Russia’s refining system and a near-halt to product exports following intensified Ukrainian attacks have
compounded these losses. Combined, net exports of diesel/gasoil exports from the Gulf and Russia in
August were 1.6 mb/d lower than in February, when they accounted for almost 45% of global seaborne
trade. A partial offset comes from other regions, where throughputs are pushed to the limit to capture
record profit margins.

Hedge funds and money managers turned more bullish on oil prices in August. The combined ICE Brent
and NYMEX WTI net long positions rose by 12% between the weeks of 28 July and 25 August, as
geopolitical tensions persisted and money managers positioned for potential oil supply disruptions. The
rise in net long positions was concentrated in ICE Brent futures and positions, which increased by about
21% over the period.

Crude oil spot prices rose on average in August, m-o-m, supported by persistent oil flow disruptions in
the Middle East, strong refining margins, and a continued recovery in global refinery intake, which
translated into stronger crude buying interest, specifically from Asia. Tight middle distillate markets,
reflecting constrained Middle Eastern product exports and disruptions to refining and export flows in the
Eastern Europe region, supported high utilization rates and lent additional support to oil prices.

In August, the ORB value rose by $3.45/b, m-o-m, to average $86.44/b. The West and North African Basket
components – Bonny Light, Djeno, Es Sider, Rabi Light, Saharan Blend and Zafiro – increased by an average
of $7.30/b, m-o-m, to average $89.86/b. Multiple-region destination grades, including Arab Light, Basrah
Medium, Iran Heavy and Kuwait Export, rose on average by $0.56/b, m-o-m, to $83.15/b. Murban crude

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