Oil surges amid rising fears of supply disruptions
The price of a barrel of Kuwaiti crude oil rose by $3.18 to reach $88.41 per barrel in trading on Wednesday, compared with $85.23 in Tuesday’s trading, according to the price announced by the Kuwait Petroleum Corporation.
In global markets, oil prices rose on Thursday morning to their highest levels in three weeks, driven by concerns that ongoing stalemate regarding the Iran war could continue to disrupt Middle Eastern supplies.
The two benchmarks recorded their highest levels since late July during the session, posting gains for a fifth consecutive day, after closing at their highest levels since July 24 on Wednesday.
Giovanni Staunovo, an analyst at UBS, said, “Tensions in the Middle East remain high, leaving room for further supply disruptions,” adding, “A renewed decline in Middle Eastern oil exports is increasing pressure on the oil market.”
The UAE’s decision to suspend all financial and economic transactions with Iran until further notice has once again highlighted the strained relations between the two countries.
Hiroyuki Kikukawa, chief analyst at Nisay Securities Investment, said, “Oil prices have remained elevated, supported by sporadic attacks in the Middle East, but they lack new momentum as no major escalation has occurred.” He added, “The market is likely to maintain a gradual upward trend amid uncertainty surrounding war-ending talks and disruptions involving the UAE, Oman, and Iran.”
US President Donald Trump stated that no talks are being held with Iran and that the Strait of Hormuz is open, although Iran claimed the waterway remains closed. Trump warned on Wednesday of economic consequences for any country providing a “lifeline to Iran.”
Latest shipping data showed that navigation through the Strait of Hormuz on Wednesday was unchanged from the previous day, as negotiations to end the war between the US and Iran remained at an impasse.
Before the war broke out on February 28, shipments passing through this waterway accounted for approximately one-fifth of global consumption, while current flows are significantly lower than pre-war levels. The war has also affected refined fuel supplies, leading to declining inventories as the amount of crude oil available to refineries has fallen.
The US Energy Information Administration said on Wednesday that US distillate product stocks, including diesel and heating oil, fell for the third consecutive week last week, although crude oil inventories rose by 4.4 million barrels.
China’s crude oil imports from Russia, its largest supplier, rose by 5% year-on-year in July to 9.15 million tons, equivalent to 2.16 million barrels per day, while imports also increased by 10% compared to June.
Imports from Malaysia, which serves as the largest hub for reloading sanctioned Iranian oil, reached 1.51 million tons in July, equivalent to 350,000 barrels per day, down 64.3% year-on-year. Imports from Indonesia totaled 3.15 million tons, equivalent to 740,000 barrels per day in July, up 51.8% year-on-year, according to Reuters.
China imported approximately 0.1 million tons of crude oil from Indonesia in 2024, but monthly imports exceeded 2 million tons in July 2025. Reuters previously reported that the rise in imports from Indonesia may indicate a method for concealing shipments of sanctioned Iranian crude oil being transferred from one vessel to another off the coast of Malaysia.
Imports from Iraq also fell 98% year-on-year to 0.1 million tons, while China halted its imports from Oman in July.
In contrast, imports from Brazil rose 31.9% year-on-year to 4.98 million tons, equivalent to 1.17 million barrels per day in July. Customs data showed no recorded imports of crude oil from the United States, Venezuela, or Iran last month.
Three trade sources familiar with the matter said Indian Oil Corporation (IOC), the country’s largest refiner, was finalizing an agreement with Algerian state energy company Sonatrach to import liquefied petroleum gas (LPG) in 2027.
India is seeking to diversify its LPG sources, primarily used for cooking, to reduce its dependence on the Middle East after the closure of the Strait of Hormuz disrupted energy flows, forcing the South Asian nation to impose quotas on gas distribution and consumption.
Under the agreement, the corporation will receive a large LPG carrier monthly, carrying between 45,000 and 55,000 tons of LPG, which is a mix of propane and butane.
One source said IOC had a long-term supply agreement with Sonatrach even a few years ago, but later shifted to purchasing from the Middle East. A second source noted that LPG prices in Algeria are lower than the contract price set by Saudi Aramco, adding that the IOC-Sonatrach agreement stipulates delivery on board the vessel.
India began importing LPG from Algeria in June and is expected to receive about 110,000 tons in August, according to preliminary trade flow data from the London Stock Exchange Group. It has also increased imports of US LPG to offset supply shortages from the Middle East and plans to purchase up to a quarter of its LPG imports from the United States.
Trade sources reported on Thursday that Saudi Aramco sold at least four million barrels of crude oil to two Chinese refiners, to be loaded outside the Strait of Hormuz.
The world’s largest oil exporter had offered on Monday cargoes of Arab Medium and Arab Heavy crude for ship-to-ship loading off the coast of Fujairah in the UAE, through private negotiations with some Asian refineries.
Sources said both PetroChina and Sinochem purchased two million barrels each at a premium. Aramco resumed loading oil from inside the Strait of Hormuz last week, and more tankers are still waiting to load.
Latest shipping data showed that traffic in the Strait of Hormuz remained unchanged on Wednesday compared to the previous day, as talks between the United States and Iran to end the war remained deadlocked. Data from Kpler showed that the total number of cargo ships transiting the Strait of Hormuz was nine on Wednesday, the same as on Tuesday.
Transit traffic remained low amid conflicting statements between the US and Iran. US President Donald Trump stated on Tuesday that no talks were underway and that the strait was open, while Iran claimed the waterway remained closed. Meanwhile, traffic at the Bab el-Mandeb Strait slowed. Kpler data showed that 27 cargo ships transited it on Wednesday, down from 32 on Tuesday. Some ships may be sailing through the straits with their transponders turned off, which would not be captured in the data.
German natural gas network operators have warned that it is “almost impossible” to reach the target of filling Germany’s gas storage facilities to 70% of their capacity by next November, urging the government to take measures to ensure sufficient reserves to meet peak winter demand.
According to Bloomberg News, Germany’s gas storage facilities, the largest in Europe, are currently filled to only 50%, compared to an average fill rate of around 61% at this time last year.
Germany entered last spring’s gas storage season with very low reserves due to soaring global natural gas prices triggered by the US-Iranian war in the Middle East. This made purchasing and storing gas during the current summer more expensive than buying it in winter, dampening the incentive to inject gas into storage facilities, according to the German Press Agency (dpa).
These reserves serve as a crucial backup during the cold winter months, when gas demand rises and the system must cover periods of high consumption or potential supply disruptions. The European Union is facing a narrowing window to fill gas storage facilities before winter arrives.
In a statement, the Association of German Gas Network Operators noted that with current daily injection rates below 0.5 terawatt-hours, storage levels will be “far below” the 70% target of total storage capacity by the set deadline, particularly as injection capacity declines due to facilities nearing fullness.
Meanwhile, Tajikistan’s Ministry of Transport announced that the Central Asian country has requested imports of 2.5 million tons of oil and petroleum products from Iran, as its traditional supplier, Russia, faces fuel shortages.
In a statement published on its website this week, the ministry said Tajikistan requested 2.55 million tons of fuel, including 2 million tons of crude oil, 150,000 tons of gasoline, 300,000 tons of diesel, and 100,000 tons of jet fuel.
Tajikistan typically imports up to 80% of its oil consumption from Russia. The Persian-speaking country also maintains close ties with Iran. The ministry has not yet specified a timeline for receiving these supplies. Russia has been grappling with fuel shortages for months amid Ukraine’s campaign of drone strikes against Russian oil refineries.
In July, Tajikistan’s Energy Minister stated that authorities were negotiating with Kazakhstan, Turkmenistan, Iran, Iraq, and Belarus for additional petroleum product supplies. Russia has imposed an export ban on diesel, gasoline, and jet fuel to stabilize its domestic market, though international government supply agreements are exempt from the ban.
