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Global energy watchdog IEA warns oil stockpiles 'rapidly depleting'
The International Energy Agency has warned oil stockpiles are rapidly depleting, increasing the urgency around reopening the strait of Hormuz.
The IEA explained in a new report that observed stocks had fallen below 7.9 billion barrels for the first time since April 2025:
Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting.
The report, released this morning, was updating the market after benchmark crude prices surged to 2-month highs in July, following the breakdown of the Iran-US ceasefire agreement, which reversed the recovery in oil supplies from the Gulf.
It left oil trading in an “unusually wide range”, swinging from around $105 to $70 through the month, “driven by sudden diplomatic pivots on the conflict”, the IEA said.
The global energy watchdog has now slashed its global supply forecasts:
With an agreement enabling the reopening of Hormuz and unhindered transit through the Bab el-Mandeb Strait still elusive, we 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.
Key events
Gold prices near 2-month highs in run-up to US inflation data
Spot gold prices are up 1.1% at around $4,414.63 per ounce, as market watchers eye US inflation data due out this afternoon.
The July inflation data is expected to shed some light on the Federal Reserve’s policy path and provide some further clarity over whether they could expect a rate hike next month.
US CPI figures for July are expected at 1:30pm BST.
Saxo UK investor strategist Neil Wilson says:
A hot print will present Fed chair Kevin Warsh with an early test of his mettle - will he follow up those tough words on inflation with action, or continue to lean on jawboning the market and higher bond yields due to oil/inflation dynamics?
I continue to think the Fed will have to follow through with at least one hike this year as it remains short on the inflation side of its mandate, and it shouldn’t have to worry too much about the employment side, despite those apparently weak payrolls numbers.
Anything up to +0.2% for core and headline suggest inflation trimming back down, which pushes out the odds of a September rate hike in all likelihood and keeps the momentum in the stock market with the bulls after back-to-back days of losses for the S&P 500 in the wake of last week’s rally.
Anything above that presses the case for the Fed to move on inflation next month with deeds, not words.
Global energy watchdog IEA warns oil stockpiles 'rapidly depleting'
The International Energy Agency has warned oil stockpiles are rapidly depleting, increasing the urgency around reopening the strait of Hormuz.
The IEA explained in a new report that observed stocks had fallen below 7.9 billion barrels for the first time since April 2025:
Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting.
The report, released this morning, was updating the market after benchmark crude prices surged to 2-month highs in July, following the breakdown of the Iran-US ceasefire agreement, which reversed the recovery in oil supplies from the Gulf.
It left oil trading in an “unusually wide range”, swinging from around $105 to $70 through the month, “driven by sudden diplomatic pivots on the conflict”, the IEA said.
The global energy watchdog has now slashed its global supply forecasts:
With an agreement enabling the reopening of Hormuz and unhindered transit through the Bab el-Mandeb Strait still elusive, we 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.
Oxford Economics has hiked its oil price forecasts amid renewed hostilities between the US and Iran.
It now expects average oil prices to sit around $85 per barrel over the remainder of this year before gradually falling back to about $65 per barrel by the end of 2027.
That is roughly 0.5 percentage points lower than in February.
Ben May, director of global macro research at Oxford Economics, and author of the report, said:
The renewed hostilities between the US and Iran suggest that a long-term reduction in shipping through the strait of Hormuz is now the most likely scenario.
It isn’t in the interests of the US or Iran to keep the Strait of Hormuz permanently closed.
But mutual deep distrust and an unwillingness by either party to make large concessions mean a lasting deal is unlikely to be reached and maintained anytime soon.
As a result, until at least 2028, traffic levels are expected to fluctuate as tensions ebb and flow, while on average remaining well below pre-conflict norms.
Happy eclipse day to all who celebrate*! (* though customers are being asked to turn off their lights and fans to support the grid)
As my colleague Jillian Ambrose reported earlier this week, Great Britain’s biggest household energy supplier, Octopus Energy, has been urging customers to use less electricity during what is meant to be the deepest solar eclipse in almost 30 years.
The eclipse, due to hit its peak around 7pm local time, is expected to knock out the last of Great Britain’s solar power generation for the day, at the same time as the country’s fifth heatwave of the year is likely to increase demand for electricity to run air conditioning, fans and refrigeration systems.
Now, Britain’s national energy system operator (Neso) is forecasts a shortfall of nearly 1.2 gigawatts of energy on Wednesday, between 6pm-8pm BST , according to a market notice published early this morning.
The notice is effectively a call for any energy producers to offer any spare capacity to shore up the country’s power supplies.
Neso’s notices are a rarity for summer months, with these notices usually taking place during winter. However, consecutive heatwaves in recent months have put pressure on UK power supplies, as households turn to fans and air conditioning to keep cool.
Tui shares tumble as Iran war hits profits
Shares in German-listed Tui Group are down 3.1% as the company revealed the ongoing fallout from the Iran war.
Cautious travellers have hit booking levels, while geopolitical tensions kept fuel prices high, weighing on operating profits which fell nearly 27% in Q3 to €234.6m.
Profits at Tui’s hotels and resorts division fell 6.2% to €122.7m, while occupancy fell 5% due to 77% following a drop in demand across the eastern Mediterranean, Mexico and the Caribbean.
Meanwhile, its cruises business saw profits tumble 7.2% to €132.4m after taking a €20m hit from the war in Iran.
It comes months after Tui cut its profit forecast and suspended its revenue guidance in March, amid spiralling jet fuel costs and the uncertainty surrounding the Iran war.
Tui CEO Sebastian Ebel in a statement said that while 2026 “is no ordinary year” Tui had “held its own well in a difficult global environment.”
Our business model is proving to be resilient.
Travel remains highly relevant to people’s lives, but the timing of travel decisions has shifted.
Rivals including Lufthansa, and Air France-KLM, and British Airways owner IAG have also said they were either cutting, or maintaining capacity, in the coming months in order to help offset a broader fallout on their bottom line.
Introduction: Oil prices climb as Iran talks hit impasse
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Oil prices are still on the rise, as fresh attacks on ships raise concerns about disruptions to Middle Eastern fuel supplies, adding to doubts over the prospects of a US-Iran peace deal.
The US and Yemen’s Iran-aligned Houthis have said they endured separate attacks on ships in the strait of Hormuz and the Bab al-Mandeb strait on Tuesday, while Iran’s top security official, Mohsen Rezaei, said the strait would stay closed unless the US accepted Iran’s conditions to end the war, including the release of its frozen assets and an end to other regional conflicts.
Ipek Ozkardeskaya, a senior analyst at Swissquote says:
Yesterday, the rally in US crude paused for a minute after Pakistan’s Defence Minister said that they were getting “close to some sort of arrangement”, but the relief remained short-lived after Iran added that the Strait of Hormuz would remain closed until the conditions it demands from the US are met.
And the conditions that both parties demand from each other suggest that the problems won’t be solved by tomorrow.
That has sustained pressure on Brent crude prices, which are near their highest level in a month and hovering just under $90 per barrel.
And companies like German travel firm Tui are continuing to count the costs.
Europe’s largest travel company missed forecasts for its third quarter profits this morning, having been hit by higher jet fuel costs and a drop in bookings.
Tui, which runs cruise ships, airlines and hotels, said operating profit was down nearly 27% to €234.6m, compared to last year. That is also far lower than the €274m projected by analysts.
It reaffirms travel companies’ warnings that tourists are thinking twice before going on holiday, given the ongoing uncertainty tied to the Iran war, though bosses maintain that customers are still keen to travel.
More on that shortly. Stay tuned.
The Agenda
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1.30pm BST: US inflation data for July
