Oil hit nearly $110 a barrel on Thursday, its highest since July, after Iran's IRGC said it struck tankers and U.S. destroyers in the Strait of Hormuz. Standard Chartered now expects sharper, more frequent price spikes through Q3 as the U.S.-Iran standoff drags on, while diesel, gasoil and jet fuel stay especially tight and Europe's gas crisis deepens.
Oil prices climbed to nearly $110 per barrel on Thursday, the first time it has reached that level since July. The IRGC said on Wednesday it had attacked and heavily damaged eight oil tankers and two U.S. Navy destroyers in the Strait of Hormuz, in retaliation after the U.S. military destroyed five IRGC-linked oil tankers in the Gulf of Oman on Tuesday night. CENTCOM has denied the IRGC's claims.
Hopes for a quick resolution have faded further after U.S. President Donald Trump said the war is unlikely to end before the November midterm elections, with advisors reportedly warning it could last the rest of his term. By Friday morning, Brent crude traded at $103.58 while WTI traded at just over $98.
StanChart sees a fatter upside tail
Standard Chartered expects the sharp oil price swings to continue through the third quarter amid the ongoing stalemate, with little sign diplomacy will ease export restrictions through Hormuz. The bank says middle distillates remain extremely strong, and expects diesel, gasoil and jet fuel to keep outperforming gasoline. Even so, StanChart forecasts oil averaging $77.50 a barrel in 2027 as demand returns, particularly from Chinese imports, and as countries work to refill and expand strategic reserves.
China's rebounding appetite for crude, plus its ability to redirect refined product supplies to tight Asian markets, has emerged as an important potential source of flexibility in global oil flows, according to StanChart. But the bank warns that spare capacity, inventory and logistical slack are all thinner than before, so when multiple disruptions hit at once, price spikes turn sharper and more frequent even as rallies eventually fade.
Europe's gas crunch deepens too
Europe's natural gas rally is not slowing either, with prices rising above €81 per megawatt-hour on Thursday, the highest level since December 2022. A Qatar-loaded LNG carrier sailed through Hormuz on September 8 bound for Pakistan, but QatarEnergy has extended force majeure on LNG deliveries into October and November, and StanChart says it remains unclear whether the transit signals a sustained export restart.
European gas storage stands at 66% of capacity, 12 percentage points below the same period last year and a 15-year low for the season, with Germany at 54% and the Netherlands at 48%. Experts have warned Germany could face a demand-supply gap as wide as 25% on peak January days if winter temperatures come in lower than expected.
Source: Oilprice.com
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