European Oil Report - 9 August

Welcome to the European oil report, for week ending 9 August 2026. We will focus on Brent, spreads, crude supply, refinery demand, inventories and major news.

Price Review

Brent settled at around 82.29 USD/bbl on Friday 7 August 2026, down 8.5% week-on-week from the previous week's settlement of 90.12 USD/bbl. This is the biggest weekly fall since June. The week was very volatile: prices dropped around 11% over the first three sessions, then bounced back on Thursday and Friday.

WTI settled at around 77.14 USD/bbl, down 8.7% on the week. The Brent-WTI spread narrowed slightly, from 5.45 USD to 5.15 USD.

Gasoline settled at around 2.99 USD/gal, well below the 3.39 USD/gal seen in mid-July. Heating Oil settled at around 3.90 USD/gal and is holding up much better than gasoline, which tells us the tightness is now in diesel rather than in crude.

The ICE Gasoil vs Brent spread hit a record of about 74.66 USD/bbl during the week, up from roughly 64 USD in mid-July. Because crude fell while diesel did not, product cracks got wider even as Brent got cheaper. Gasoline vs Brent in Europe stayed strong but came off its highs.

Crude Supply

OPEC supply:

Seven OPEC+ countries met online on 2 August and agreed to raise their September output target by about 188,000 bpd. This completes the unwinding of the 1.65 million bpd voluntary cut agreed in 2023, and delegates have signalled that quotas will probably stay flat for the rest of 2026. The next meeting is on 6 September.

The quotas are mostly paper barrels for now. OPEC+ pumped 36.28 million bpd in June, against almost 43 million bpd in February before the war, and Saudi Arabia produced only 7.34 million bpd against a target of roughly 10.29 million bpd. The real question is not the quota but whether Gulf barrels can get out through the Strait of Hormuz, and this week the market decided the answer was becoming yes. That is a bearish indicator.

Non-OPEC supply:

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

•        The most recent estimate of US crude oil production was published for 31 July 2026. Production was 13.80 mbpd, essentially unchanged from the week before and about 0.48 mbpd higher than a year ago. US production remains stable.

•        US rig count was unchanged at 588. Oil rigs rose by 3 to 454 while gas rigs fell by 3 to 124. The count is up around 48 rigs on the year, so the slow build in future US supply continues, but there is no change to report this week.

•        Oil output of Canada and Brazil remain stable.

Overall, the supply section has turned bearish, driven by the prospect of Gulf exports restarting.

Refinery demand

Refinery demand is still the strongest part of the market. US refineries ran at 96.5% of capacity, only slightly down from 97.2% the week before, and crude runs fell by just 183,000 bpd. Refiners are still pushing hard for diesel and jet fuel because that is where the money is: the European gasoil crack hit a record of about 74.66 USD/bbl this week, and US diesel exports reached a record 1.884 million bpd.

The reason margins stay this high is that refining capacity, not crude, is the bottleneck. The IEA estimates that closures and war damage removed roughly 4.5 million bpd, or 5.4%, of global refinery output in the second quarter. Even if more crude arrives from the Gulf, it cannot quickly become diesel. Strong refinery demand for crude is a bullish indicator.

Inventories

US Commercial Crude Oil stock is at 407.0 million bbl, up 2.5 million bbl week-on-week, and around 6% below the five-year average for this time of year. The build went against expectations of a draw and was the main bearish number in the report. Cushing also built by 2.4 million bbl to 21.0 million bbl.

The Strategic Petroleum Reserve is at 304.8 million bbl, down 2.8 million bbl week-on-week. That is the lowest level in over 43 years and roughly 108 million bbl below where it stood when the war started on 28 February. The SPR is now close to its normal operational minimum of 250-300 million bbl, so this source of extra supply is nearly used up. It is also worth saying that the crude build looks better than it is, because government barrels are filling part of the gap.

Products are still tight. Gasoline stocks fell by 1.6 million bbl to 209.7 million bbl, 7% below the five-year average. Distillate stocks fell by 3.5 million bbl to 107.2 million bbl and are now about 12% below the five-year average, worse than the 10% of the week before, at a time of year when they normally build ahead of winter.

European inventories tell the same story. Diesel stocks at the Amsterdam-Rotterdam-Antwerp hub remain well below the five-year seasonal range, as do stocks at Fujairah and Singapore. Overall this section is mixed: bearish on crude, clearly bullish on products, and slightly bullish on balance.

Major news

The whole week was about the Strait of Hormuz. On Monday President Trump called off a planned strike on Iran and said talks would follow, and prices fell around 5%. On Tuesday a US official said a deal could be done "today or tomorrow" and Brent dropped over 6% to below 79 USD/bbl. On Wednesday Iran and Oman announced an agreement on a shipping route through the strait. This is the main driver of the week's fall and a strongly bearish indicator.

The deal is not what the headline suggests, though. It only opens a route for two to four months and is not a full reopening, and Iran is still demanding that the US lift its naval blockade, lift sanctions and pay compensation for war damages. On Thursday, news that Iran was reviewing a bill to ban US and Israeli ships from the strait pushed prices back up more than 3 USD/bbl in a single session.

Attacks have not stopped either. ADNOC reported three of its vessels attacked while transiting Hormuz, and over the weekend the Houthis claimed an attack on Saudi Arabia's Jazan refinery. So the physical risk is still there even while the diplomatic news is positive.

The EIA's July forecast has Brent averaging 74 USD/bbl in 3Q26, below current prices. The next Short-Term Energy Outlook is due on 11 August and should give a clearer view now that a Hormuz deal is on the table.

Balance Table

Total count: -0.5 points, indicating a roughly balanced market with a slight bearish tilt. This is a big change from last week's strongly bullish reading, and it is driven entirely by news rather than by fundamentals, which have barely moved.

The key question is whether the Iran-Oman route actually opens and stays open. If tankers start moving in volume, Brent has further to fall, because the risk premium is doing most of the work in the current price. If the deal stalls, prices go straight back up. In fact that is what has already started to happen: Brent has risen for four sessions in a row and was back above 86 USD/bbl on Monday, as Iran denied direct talks with Washington and repeated its conditions. Brent remains extremely sensitive to geopolitical news.