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Below is a brief on the OPEC and IEA reports released today, together with our comments on the decline in demand. While demand is not consumption, supply is not production. An important fact to keep in mind looking at today’s numbers.

We also explain how Sec. Write arrived at the 9 mb/d figure for flows crossing the Strait of Hormuz. The EIA released its weekly report at the time of this writing. It showed a massive increase in crude oil inventories; +17.4 mb! We will send a detailed report this afternoon.

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Demand

OPEC and the IEA released their monthly oil market reports today. Both highlight the impact of the Strait of Hormuz disruption, though their estimates differ. The key takeaway is that demand has declined significantly. It is important to distinguish demand from consumption: demand includes changes in inventories and can therefore be higher or lower than actual consumption at any given time.

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As of 31 July 2026, European gas inventories had risen modestly to around 56.9% of total storage capacity, up from 49.1% at the end of June, as the region continued to struggle to refill storage sites ahead of the coming winter. Despite this increase, levels remained the lowest for late July since 2021 and significantly below the five-year average (2021–2025), as shown in Figure 1.

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• US crude oil inventories increased by 2.479 mb to 406.987 mb last week, per the EIA.

• Cushing inventories rose by 2.356 mb to 20.955 mb.

• The SPR decreased by 2.841 mb/d to 304.809 mb.

• Gasoline inventories decreased by 1.643 mb to 209.658 mb.

• Distillate inventories declined by 3.473 mb to 107.159 mb.

• US crude oil imports increased by 0.515 mb/d to 6.198 mb/d, and crude exports increased by 0.218 mb/d to 3.685 mb/d.

• The EIA estimates US oil demand grew by 0.216 mb/d last week to 20.970 mb/d.

• Refinery utilization decreased from 97.21% to 96.5%, with gross crude inputs into refineries decreasing from 17.518 mb/d to 17.381 mb/d.

EOA’s Main Takeaways

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July 29, 2026

Fifteen seismic shocks now convulsing the planet have forged the greatest energy cataclysm in human history. What once was the Three Seas Crises has this very hour erupted into the Four Seas Crises—as drones screamed out of the dark and struck LNG liquefaction facilities, along with two regasification ships, near the mouth of the Suez Canal on the Mediterranean. Was the target the precious LNG itself… or a blood-soaked warning carved into the throat of the Canal that feeds the world’s arteries? No one knows. But the conflict is no longer contained. It is metastasizing.

Those who still clutch at inventory numbers alone, clinging to the illusion of balance and price, are already doomed. Lift your eyes. Survey the full, shuddering panorama—and you will see the truth: something must break. And yet the most terrifying spectacle of all is the silence. The collective shrug. As though this is some trivial night-terror that will dissolve with the morning light.

European leaders stumble forward, blind and deaf to the flames licking at their shores. The Trump administration remains sealed inside its ivory tower, aloof and unmoved. While China, cold-eyed and calculating, simply watches… as the entire world sinks, screaming, into a bottomless hole.

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The Perfect Storm (List Update)

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(No paywall) This is a long interview. It covers almost all the hot issues in the oil market.

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Executive Summary

Gazprom’s exports to Europe fell 24% month-on-month in June 2026 to 33.8 mcm/d, mainly due to maintenance, as the EU continued replenishing gas storage. Inventories reached 49.1% of capacity by end-June — still the lowest late-June level since 2021. Despite robust Norwegian supplies and steady US LNG, weak inflows and negative summer-winter spreads slowed injections. TTF and JKM prices declined in June but face renewed volatility and upside risks heading into winter.

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As of 30 June 2026, European gas inventories had risen to around 49.1% of total storage capacity, up from 40.1% at the end of May, as the region continued working to replenish storage ahead of winter. Despite this increase, inventories remained at the lowest late-June level since 2021 and well below the five-year average (2021–2025), as shown in Figure 1. The slow injection pace was driven in part by persistently weak LNG inflows, amid ongoing geopolitical tensions in the Middle East and shipping disruptions affecting LNG movements through the Strait of Hormuz (SOH). At the same time, commercial incentives for storage injections weakened as the summer-winter price spread turned negative, leaving European buyers with limited reason to outbid Asian buyers for spot LNG cargoes.

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Source: Kpler, July 14, 2026

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General Comment

Oil prices surged as renewed US-Iran hostilities shattered a fragile ceasefire. The United States conducted strikes on Iranian targets in retaliation for Iranian attacks on commercial tankers in the Strait of Hormuz, including a Qatari LNG carrier that crossed a key red line. President Trump declared the recent ceasefire “over” and warned of further action.Iran responded by launching missiles and drones at US-linked sites in Kuwait and Bahrain.

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Misinformation and inaccurate coverage about the Gulf states and the global oil market, especially from Bloomberg and Reuters, are hitting unprecedented levels. In this section, we fact-check and debunk some of the most misleading stories.

In this Oil Market Update, we analyze seven key charts and debunk widespread media misinformation from Reuters and Bloomberg regarding Gulf oil dynamics.Saudi Aramco’s aggressive August OSP cuts, especially the first negative differential to Asia since 2020, reflect a strategic push to clear temporary surplus amid weak Asian demand — not a price war or OPEC+ move.

US crude production hit a new record in April, driven by a strong shale response to higher prices during the Hormuz crisis. US jet fuel exports also smashed records in June, easing Europe’s supply crunch but raising winter risks.

India’s record Russian crude imports are opportunistic and likely to reverse once Hormuz normalizes.

UAE export and production surges reported by Reuters are largely inaccurate, stemming from stranded storage and double-counting rather than new output.

Hormuz traffic has recovered partially, but a tense status quo with sporadic attacks remains the base case.

Japan is unlikely to refill inventories without a stronger yen or deep discounts, limiting upside support from Asia.

Bottom line: Temporary surplus pressure dominates, but a solid price floor is forming as Gulf producers prioritize volume over margins until the current surplus is cleared.

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1- Saudi Aramco OSP

EOA: Saudi Aramco Announces August OSP: Arab Light to Asia Turns Negative for First Time Since 2020

Summary

Saudi Aramco has set the August 2026 Official Selling Price (OSP) for its flagship Arab Light crude to Asia at a $1.50-per-barrel discount to the Oman/Dubai benchmark. This marks the first negative differential since the 2020 price war as shown in Figure 1.

The move delivers a steep $11-per-barrel cut from July’s +$9.50 premium, representing one of the largest single-month OSP reductions in decades and surpassing consensus forecasts, including ours. As our readers might recall form last week, we predicted a decline of $6-$7/b with positive premium to reflect the additional cost of transporting the oil from east to west via pipelines. We were wrong. The premium for Arab Light to Asia has now collapsed by $21/b in just 11 weeks, sliding from +$19.50 in May.

Aramco also implemented notable reductions in other key markets. Prices to Europe fell by $15/b, setting Arab Light at a modest +$0.85/b premium to ICE Brent.

For the United States, the OSP declined by $8/b, placing Arab Light at a +$4.60/b premium to the Argus Sour Crude Index (ASCI) in the U.S. Gulf.

EOA Main Takeaway

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Summary

China’s crude oil imports fell sharply in June, resulting in a much larger-than-expected drop in global oil demand and putting significant downward pressure on prices. We estimate this decline shaved $9–14 per barrel off oil prices. This marks the fourth consecutive monthly decline.

Compared to pre-crisis levels, China’s crude imports are down roughly 5.5 mb/d. Including petroleum products, the total reduction reaches approximately 6 mb/d. This dramatic pullback has created widespread confusion and raised several important questions:

1. Why did Chinese refiners and companies cut imports so aggressively?

2. Does the decline in China’s imports reduce global oil demand on a one-for-one basis?

3. Has actual Chinese oil consumption fallen?

4. Have Chinese oil inventories declined proportionally?

5. How sustainable is this drop in imports?

6. What happens to the oil market when Chinese demand recovers?

Answers and analysis follow with supporting charts.

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1. Why did Chinese refiners and others cut imports so significantly?

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Source: EOA, 2026

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Libya is a major African hydrocarbon producer with a long record of exploration and development. Recent OPEC data show that its proven natural gas reserves reached 730 billion cubic meters (bcm) in 2025, ranking Libya fifth in Africa after Nigeria, Algeria, Egypt, and Mozambique, and ahead of Congo and Cameroon, as shown in Figure 1.

Libya’s unconventional gas potential is even more striking. The U.S. Energy Information Administration (EIA) estimates the country’s technically recoverable shale gas resources at 3,446 bcm, more than four times the size of its proven conventional reserves.

For context, Libya’s technically recoverable shale gas resources are broadly in line with the estimated gas resources of the Levant Basin, which the U.S. Geological Survey (USGS) places at around 3,455 bcm. Discoveries in the Levant Basin have helped turn the Eastern Mediterranean into one of the world’s most attractive hydrocarbon provinces for international oil companies.

Despite this large resource base, Libya remains one of the “least explored and least developed” gas frontiers in the Mediterranean region. Political instability, security challenges, and prolonged underinvestment since the 2011 conflict have held back exploration and development, leaving much of the country’s gas potential undeveloped.

Successfully developing Libya’s conventional and unconventional gas resources could have transformative economic and energy-sector effects. Additional gas production could help satisfy rapidly growing domestic demand, ease chronic power shortages, revive upstream investment, and potentially re-establish Libya as a more important gas supplier to Europe. Realizing this potential, however, will require a stable investment climate, clear energy policies, substantial capital spending, advanced technologies, and a regulatory framework that balances economic development with environmental and social considerations.

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Supply Volatility and the Tightening Domestic Balance

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https://urldefense.proofpoint.com/v2/url?u=https-3A__x.com_zerohedge_status_2067013516431642830&d=DwMFaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=Gf9NMEbr1W5qlhivzlBUxCC58NW4pJ8xGPjRFtOp2bC0rUOrvn8TSnkMsNYqaqgc&m=cQkAcPFTDinvsiFUfS0aGxMC30kBMQ6bNiwNsqTYvQV4iXxaxMHAgt2TXrtbi05y&s=znoedbRUvaAjmocC48hvpkQzh90ocOCgpWHbGzBFb2s&e=

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Summary

Asian crude and refined product markets have largely retreated to pre-war pricing levels following a US-Iran agreement to end the Middle East conflict. Spot premiums for Dubai crude, diesel, jet fuel, naphtha, and fuel oil have fallen sharply as additional cargoes from the UAE, Kuwait, and other exporters improve supply expectations. However, uncertainty over how quickly shipping can safely resume through the Strait of Hormuz and elevated war-risk insurance costs continue to support prices above pre-war norms. Bellow is a presentation of evidence that the MOU is serious with fears of third party interferences.

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EOA’s Main Takeaway

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