Brent crude hit nearly $110 a barrel on Thursday for the first time since July, and the people who watch oil closely think the price spikes ahead will be bigger and more frequent. That is the warning from StanChart, which says the Strait of Hormuz conflict shows no sign of ending soon.
On Wednesday, the IRGC stated that it struck and severely harmed eight oil tankers and two U.S. Navy destroyers in the Strait of Hormuz, in response to the U.S. military’s destruction of five IRGC-linked oil tankers in the Gulf of Oman on Tuesday night. CENTCOM has rejected those claims.
The prospect of a swift conclusion to the conflict has dimmed. U.S. President Donald Trump has said the fighting is unlikely to stop before the midterm elections in November, while his advisers have informed him that the war could persist through the remainder of his term.
StanChart’s Warning
StanChart expects the current pattern of oil price movement to continue through the third quarter, with sudden rises driven by headlines. There is little sign that diplomatic progress will ease the export restrictions through the Strait of Hormuz.
Diesel, gasoil and jet fuel, which fall within the category of middle distillates, are performing well. A number of refineries are finding themselves under great pressure as heat and drought join forces with already existing logistical issues. The bank anticipates that these products will keep doing better than gasoline, with diesel and jet leading the way.
The expectation that the conflict drags on is pushing some of that strength into longer-dated contracts. StanChart forecasts oil averaging $77.50 a barrel in 2027, driven by returning demand from China’s imports and the need to refill and expand depleted strategic reserves.
What Makes the Upside Worse Than the Downside
StanChart’s main argument is that the market is moving toward a one-sided situation. The amount of extra capacity, inventory and space available within the system has shrunk, especially when several disruptions strike at the same time.
The upward swings — the peaks — are growing in size, even though they eventually subside. This increased variability demands a higher reward. Finished goods will remain more exposed to disturbances than the underlying oil, with crude itself proving more resilient.
It pays to keep the two sides of the market apart, for their differences are worth noting.
| Crude | Refined Products | |
|---|---|---|
| Vulnerability to disruption | Lower | Higher |
| Inventory cushion | Larger | Smaller |
| Price spikes | Smaller | Larger |
Europe’s Gas Problem
Thursday saw Europe’s natural gas prices climb past €81/MWh, a peak not seen since December 2022. The rise came mainly because of problems in the Middle East.
On 8th September, a Qatar-loaded LNG carrier sailed through Hormuz bound for Pakistan, coming after several empty Qatar-linked LNG carriers had returned toward the Persian Gulf. This represents the clearest evidence so far that Qatar may be examining whether it can restart shipments through the waterway again.
StanChart points to significant doubt about whether this marks the beginning of sustained exports. The flow of outbound LNG from the Persian Gulf still sits far beneath pre-war levels. QatarEnergy has kept its force majeure on LNG shipments to European and Asian customers running through October and November.
European storage stands at just 66% of full capacity, 12 percentage points lower than last year and marking a 15-year low for this time of year. Germany’s inventories sit at 54%, while the Netherlands is at 48%.
Experts warn that if winter temperatures come in lower than expected, Germany could face a demand-supply gap as wide as 25% on peak January days.
A short-term burst of LNG already loaded onto vessels inside the Gulf is possible without signalling a sustained recovery in Qatari supply, according to StanChart. The markets still carry a supply-risk premium embedded in European gas prices.
What stands out is the clear message that global oil and gas systems have less room for error than meets the eye, which means the next disruption will hit a system with far slimmer reserves to cushion the blow.
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