Brent crude gains 6.39% weekly amid rising supply concerns

The price of a barrel of Kuwaiti crude rose by $3.45 to reach $93.71 on Friday trading, up from $90.26 on Thursday, according to the price announced by the Kuwait Petroleum Corporation.

In global markets, oil prices rose on Friday after U.S. President Donald Trump threatened to impose economic sanctions on Iran’s trading partners, bolstering expectations of a supply shortage in the coming weeks.

Brent crude increased by 6.39 percent, while the price of U.S. West Texas Intermediate crude rose by 5.66 percent this week, with both benchmarks hitting their highest levels since July 24 in the previous session.

Tehran stated on Friday that its response to any new U.S. threats would be “devastating,” following Washington’s pledge to impose the harshest financial sanctions in history aimed at toppling the Iranian leadership.

Chrispus Nyaiga, a research analyst at Empire FX, said: “The immediate impact on supply may be limited, as Iranian exports are already severely restricted due to the U.S. naval blockade.”

He added: “However, an increase in shipping incidents and retaliation against economic sanctions could exacerbate the current situation, as traffic through the Strait of Hormuz remains well below normal levels.”

For his part, Phil Flynn, chief analyst at Price Futures Group, said alternative solutions and supply sources are being identified while the Strait of Hormuz remains constrained.

Flynn noted in a memo: “The strait remains a problem, but it is no longer the only story. Pipelines, maritime transport voyages, U.S. shale oil, recovering Venezuela (despite bottlenecks), and the sanctions-free UAE are all factors contributing to increased oil supply.”

Prices rose due to fears of continued supply cuts from major crude-producing countries such as Saudi Arabia, Iraq, the UAE, and Kuwait.

The previous agreement between the United States and Iran expired this week without either side making efforts to resume talks.

Trade sources reported that offers of Iranian crude oil to Chinese buyers declined, while prices rose this week, as the U.S. blockade reduced Tehran’s shipments amid Washington’s threat of further sanctions.

Data from Kpler showed that seven bulk carriers crossed the Hormuz Strait on Thursday, representing half the number recorded the previous day.

Before the start of U.S.-Israeli attacks on Iran in late February, about one-fifth of global oil and liquefied natural gas supplies passed through the strait.

As the war approaches its sixth month, disruptions to energy flows through the waterway continue.

Meanwhile, Ukrainian President Volodymyr Zelenskyy said on Friday that the Ukrainian army struck a Russian oil refinery in the city of Perm during the night, located more than 1,600 kilometers from the Ukrainian border.

The agency noted that obtaining special permits for Iraqi tankers was one of Baghdad’s main demands during the visit of Iranian Parliament Speaker Mohammad Baqer Qalibaf to Iraq.

Iraqi President Nizar al-Amidi said today that Iran had facilitated the passage of ships carrying Iraqi oil through the strait in recent days, and that Baghdad had discussed with Iranian officials the issue of exporting Iraqi oil via the strait. He added in his speech at the “Baghdad Dialogue” political conference that the issue remains complex. Iraq was among the countries most affected by Iran’s ban on ships passing through the strait.

Crossing traffic through the strait remains far below pre-war levels, and ships continue to face attacks in the region. Before the outbreak of the war between the United States and Israel on one side and Iran on the other, Iraq produced approximately 4 million barrels of oil per day. On Friday, Prime Minister Ali al-Zaidi stated that Baghdad is working to expand its exports through the Turkish port of Ceyhan, as well as to begin exporting oil via the Syrian port of Baniyas and the Jordanian port of Aqaba.

Al-Zaidi said on Friday that his country had sent a delegation to Saudi Arabia to discuss increasing its production quota within the Organization of the Petroleum Exporting Countries (OPEC), as part of Iraq’s plans to raise its oil production to between 8 and 10 million barrels per day over the next six years. Adding that he had sent a delegation on Friday, led by the ministers of oil and finance, to Saudi Arabia to discuss increasing Iraq’s share within the organization, Al-Zaidi made the remarks during the Baghdad Dialogue conference.

Iraq is among the countries most affected by Iran’s closure of the Strait of Hormuz since the US and Israeli attacks on the Islamic Republic on February 28, which ignited a regional conflict involving several countries in the area.

OPEC+ has commissioned the Texas-based company DeGolyer and MacNaughton to conduct an independent assessment of the maximum sustainable production capacities of most of the alliance’s members, including Iraq. The consulting firm is expected to present its findings to the OPEC secretariat by the end of September, after which discussions will begin regarding new baseline production levels to be considered from 2027.

Al-Zaidi noted that Iraq is working to expand its exports through the Turkish port of Ceyhan, as well as to start exporting oil via the Syrian port of Baniyas and the Jordanian port of Aqaba. Sources told Reuters this week that plans to export oil via a pipeline to the Syrian port of Baniyas, aimed at avoiding any future disruptions in the Strait of Hormuz, will likely require about four years of construction work at a cost of no less than $15 billion.

The Iraq-Turkey pipeline transports oil to Ceyhan, which is currently the only operational Iraqi oil export pipeline, and now transports approximately 170,000 barrels per day. Despite two ceasefire agreements between Washington and Tehran in April and June, navigation traffic through the strait remains far below pre-war levels, and ships continue to face attacks in the region.

Data from traders and the London Stock Exchange Group showed that Saudi Arabia remained the primary destination for shipments of fuel oil and vacuum gas oil departing from Russian ports in July, amid rising summer demand for air conditioning, despite a 18 percent drop in shipments compared to June to 1.1 million tons.

Saudi Arabia increased its purchases of discounted Russian fuel oil to supply its power sector, instead of using higher-value crude oil that would otherwise be burned for electricity generation.

Since the European Union’s full ban on Russian oil products entered into force in February 2023, Middle Eastern and Asian countries have become the main outlets for Russian fuel oil and vacuum gas oil. Meanwhile, Russian fuel exports to Singapore and Malaysia, two major bunkering and storage hubs, rose 2.5 times month-on-month in July to approximately 0.47 million tons, according to London Stock Exchange Group data.

There were no shipments of fuel oil or vacuum gas oil from Russian ports to India last month, following the arrival of 150,000 tons in June, although tankers carrying approximately 230,000 tons of heavy oil products are currently near the Suez Canal, with their final destination still unclear.

During 2025, India was among the main importers of Russian fuel oil and vacuum gas oil for its refineries, using them as a cheaper alternative to Urals crude. However, sanctions imposed by the U.S. Treasury last year on Russia’s two major oil companies, Rosneft and Lukoil, forced buyers to back off from purchasing fuel.

Overall, Russian seaborne exports of fuel oil and vacuum gas oil fell 12 percent month-on-month in July to 2.4 million tons, as Ukrainian drone attacks halted some refineries and reduced oil product output.

According to Shana News Agency, affiliated with Iran’s Ministry of Oil, the CEO of Pars Oil and Gas Company stated that repair work at the Phase 14 gas refinery of the South Pars field, damaged in an Israeli attack in June last year, is 70 percent complete.

Trade sources reported that offers of Iranian crude oil to Chinese buyers have declined, while prices rose this week, as U.S. sanctions have curtailed Tehran’s shipments, amid threats from Washington to impose further penalties.

The United States reimposed a blockade on Iranian ports and restricted the movement of its ships on July 13, following the collapse of a ceasefire agreement between the two sides, in an effort to deprive the Islamic Republic of oil sales, which constitute its primary source of foreign currency.

This has exacerbated previous losses suffered by Iran due to strikes targeting its energy infrastructure during the war. Four informed trade sources stated that the number of Iranian crude oil shipments offered to China for September and October delivery has decreased compared to offers for July and August.

The sources added that this decline is because the barrels already on tankers in international waters have already been sold. Kpler data shows a drop in Iranian oil exports since mid-July, with no sightings of large tankers carrying Iranian crude transiting the Strait of Hormuz since then. However, many tankers have turned off their transponders, making tracking difficult.

This threatens to disrupt the supply of a key crude feedstock to independent refineries in Shandong province in eastern China, which account for about one-fifth of China’s refining capacity and are the largest buyer of sanctioned oil.

Three trade sources reported that some Iranian crude oil, typically sold at discounted prices, is now being offered at prices higher than Brent futures contracts on the Intercontinental Exchange.

This represents a sudden shift, as shipments of light Iranian crude were offered earlier this week at a discount of approximately $3 per barrel, the same level as a month ago.

Kpler data showed that Iranian crude oil stored in floating storage outside the U.S. sanction zone has fallen to approximately 80 million barrels from around 105 million before the reimposition of sanctions.

Moyo Kwaku, Kpler’s chief crude oil analyst, estimated that there are 40 million barrels of Iranian oil on tankers in Malaysian waters east of Singapore, but most of these volumes have already been allocated to buyers.

In a post on LinkedIn on Friday, she wrote, “This suggests that buyers may not find any new Iranian supplies available for delivery in late September and beyond, as no Iranian oil tankers carrying cargo have yet managed to breach the US embargo.”