European Oil Report - 19 July

Welcome to the European oil report, for week ending 19 July 2026. We will focus on Brent, spreads, crude supply, refinery demand, inventories and major news.

Price Review

Brent settled at around 88.10 USD/bbl on Friday 17 July 2026, up 15.9% week-on-week from the previous week's settlement of 76.01 USD/bbl. This is the highest level in a month, and prices rose more than 14% during the week alone. The price is anything but stable.

WTI settled at around 82.49 USD/bbl. The Brent-WTI spread widened by 22% this week, from 4.60 USD to 5.61 USD.

Gasoline settled at around 3.3930 USD/gal, up strongly week-on-week and near its highest level since late May. Heating Oil settled at around 4.0645 USD/gal, hitting a two-month high during the week.

ICE Gasoil vs Brent spread widened by around 8% week-on-week, from roughly 59 USD to roughly 64 USD. Gasoline vs Brent spread also widened week-on-week, to around 41 USD in Europe, a four-year high.

Crude Supply

OPEC supply:

Gulf supply had been recovering after last month's ceasefire reopened the Strait of Hormuz. Production shut-ins in the Middle East fell to an average of 8.3 million bpd in June, from a peak of 11.2 million bpd in May, and OPEC+ is still raising its output targets. But this week the recovery stalled: the ceasefire collapsed, the US reinstated its naval blockade of Iranian ports, Iran intercepted vessels in the Strait of Hormuz, and an Iranian strike hit a Kuwaiti oil facility. Gulf exports are once again at risk. A stalled supply recovery is a bullish indicator.

Non-OPEC supply:

The non-OPEC oil supply gives an image of a stable market:

•        The most recent estimate of US crude oil production was published for 3 July 2026. Production was 13.86 mbpd, up only 0.36% from 26 June. US production remains stable.

•        US rig count increased by 7, to 588, from the previous week, with the Permian adding 3 rigs. Rig count is a major indicator of future production, and this increase in the count indicates a future rise in production in the US but doesn't affect next week.

•        Oil output of Canada and Brazil remain stable.

Overall, the supply section gives a bullish view, driven by the renewed threat to Gulf exports.

Refinery demand

Refinery demand has turned around completely from two weeks ago. US refineries are running at 96.2% of capacity, and refining margins are at record highs: the US 3-2-1 crack spread hit a record 64.58 USD/bbl on 8 July, and European diesel margins are above 60 USD/bbl. Refiners are running as hard as they can and shifting output towards diesel and jet fuel, where margins are best. Global refinery runs are still well below last year's levels though, since Middle East export refineries are yet to restart and Russian throughput is curtailed by attacks. Strong refinery demand for crude is a bullish indicator.

Inventories

US Commercial Crude Oil stock is at 409.7 million bbl, down 0.4% week-on-week, and 3.0% less than for the same date last year. Strategic Petroleum Reserve is at 316.5 million bbl, down 0.9% week-on-week, and 21.4% less than for the same date last year. The cumulative post-war SPR drawdown is now almost 100 million barrels. Gasoline stocks are at their lowest level for this time of year since 2012, 8% below the five-year average, while distillate stocks rose by 4.6 million bbl but are still 11% below the five-year average. Inventories are low and are still being drawn - bullish indicator.

European inventories also remain at the extreme low. OECD stocks fell by a further 62 million bbl in June, following a 73 million bbl draw in May. The low levels are explained by the crisis in the Middle East. Bullish indicator.

Major news

The ceasefire between the US and Iran has effectively collapsed, as mentioned earlier. Both sides have expanded attacks beyond military targets to critical infrastructure, and traffic through the Strait of Hormuz is once again severely disrupted. This is the main driver of the week's price surge and a strongly bullish indicator.

Russia imposed an immediate ban on diesel exports through 31 July, after Ukrainian attacks on its refineries. Russian seaborne diesel and gasoil shipments in early July were around 214,000 bpd, compared to nearly 800,000 bpd a year ago. This is tightening the European diesel market and pushing product cracks higher.

The EIA's July forecast has Brent averaging 74 USD/bbl in 3Q26, well below current prices. But that forecast was published before the ceasefire collapsed, and assumed most shut-in production would return by the end of the year, so it is likely already outdated. The market is currently pricing in a large geopolitical risk premium instead.

Balance Table

Total count: 4.0 points, indicating a strongly bullish market. In the short term, Brent is expected to stay high or rise further.

The key question is whether the US and Iran can return to the ceasefire. On Monday morning, reports of new mediation proposals already pulled prices back from their highs, so if diplomacy succeeds, we should expect a sharp pullback. If tensions keep building instead, the market will stay strongly bullish. Brent remains extremely sensitive to geopolitical news.