Industry

Image source: Rystad Energy

Oil prices have risen again following reported attacks on vessels transiting the Strait of Hormuz which prompted the USA to launch renewed airstrikes on more than 80 targets in Iran and President Trump to declare the ceasefire over

The US also revoked the sanctions waiver that had allowed limited Iranian oil exports, while missile and drone attacks on military bases in Bahrain and Kuwait have been reported.

Brent crude reached US$78-79/bbl, up more than 5%, reflecting the risk of renewed disruption to oil supply through the Strait. The move highlights how sensitive prices remain to any escalation around the Strait, given its role as a critical transit route for global oil flows, comments Rystad Energy, adding that even if no sustained physical disruption materialises, uncertainty around vessel safety, insurance costs, potential delays, and the risk of further retaliation is likely to keep volatility elevated in the near term.

“The events of the last few days significantly weaken any confidence that the current 60-day truce can still evolve into a permanent peace agreement,” said the energy consultancy.

“Vessel movements have already fallen sharply, and traffic through the Strait will almost certainly remain reduced until the security situation becomes clearer and market participants gain more visibility on whether a diplomatic off-ramp remains available.”

Prior to these events, oil prices had dropped to the lowest level since hostilities began, with Gulf producers ramping up production and exports following the ceasefire agreement and OPEC + countries agreeing an increased production quota for August, leading to the prospect of a well-supplied or even an oversupplied market later in the year. Gulf oil exports in June jumped more than 3 million barrels from May to more than 10 million barrels per day, according to Reuters, ⁠although volume remained 40% below pre-war levels.

Seven OPEC+ countries agreed a further increase in output targets from August, increasing quotas by 188,000 bpd for the fifth consecutive month in continuation of the unwinding of production cuts agreed in 2023.

Jorge Leon, head of Geopolitical Analysis at Rystad Energy said, “Tanker traffic through the Strait of Hormuz has essentially stopped, which tells you more about risk perception right now than any statement from Washington or Tehran.

Brent's climb to its highest level since 19 June shows how quickly the market is pricing in a ceasefire the US president himself says is over.

The real test comes after 9 July, once the mourning period ends and both sides show whether there is still an appetite for a diplomatic off-ramp.”

“Going forward, the latest developments are likely to restore part of the geopolitical premium that had largely unwound in recent weeks, although the broader outlook will depend on whether the conflict escalates further or diplomatic efforts resume,” commented MUFG research.

Samer Hasn, senior market analyst at XS.com said, “The return of rising oil prices comes as the market once again recognises the fragility of the current ceasefire and that the war in the Middle East has not ended, while the risks of oil supply disruptions remain high and the diplomatic path to settlement is still very long.

No breakthrough on the Strait

He added that he failure to achieve a breakthrough regarding the Strait means that the possibility of reaching an agreement on the most vital points, which relate to the Iranian nuclear program, will be much harder.

“Amid this narrative and the absence of a near-term outlook for a comprehensive diplomatic settlement, the risks of a return to the total closure of the Strait, or even the retargeting of vital energy facilities across the region, whether on the Iranian or Gulf side, remain high. This threatens a sudden spike in oil prices. Furthermore, this narrative will keep the OPEC+ decision to increase oil production on paper and unenforceable for now; in this case, the market will remain in a state of supply deficit, keeping prices vulnerable to rise.

“On the other hand, it is not unlikely that we could witness a sudden breakthrough regarding the return of ships and oil tankers crossing the Strait, or even the lifting of restrictions again on Iranian oil exports. This is for a single reason: the United States and President Donald Trump do not have enough time to engage in this war for long, with the midterm elections approaching and the average price of a gallon of gasoline remaining near US$4 per gallon. In this scenario, an OPEC+ hike might prove effective over time, lowering prices more quickly.”

Iraq is working to increase oil production. (Image source: Adobe Stock)

Iraq’s Basra Oil Company (BOC) and Halliburton have signed a five-year integrated management contract for the Bin Omar and Sindbad fields in the Basra region, according to a Ministry of Oil Statement

Oil Minister Bassem Mohammed Khudair Al-Abadi said at the signing ceremony that the contract comes in the context of the ministry’s plans and strategy to increase oil and gas production.

The Minister indicated that over the five years, crude oil production in the Ben Omar field will be increased to 150,000 barrels per day, in addition to the production of 300 million standard cubic feet per day of associated gas. He added that production rates in the Sindbad field will be developed to reach 80,000 to 100,000 barrels per day, and the associated gas capacity will be increased from 240 to 260 million standard cubic feet per day, which will provide a flexible supply of gas to the country’s power sector, which currently relies heavily on imported gas.

The Minister affirmed that the Ministry is proceeding with signing contracts with major international companies, especially American companies, and that it will provide support and remove obstacles to “achieve the goals and the public interest”, noting the longstanding involvement of Halliburton in Iraq, where it has been working since 2003.

According to Reuters, Iraq’s Cabinet has approved the Basra Oil Company (BOC), to sign a heads of agreement (HoA) and a non-disclosure agreement (NDA) with a consortium comprising US-based Capital TI and Chevron, alongside Qatar’s UCC, to study strategic oil export pipeline projects. Under the agreements, the consortium will conduct technical and financial feasibility studies for proposed pipeline routes aimed at enhancing Iraq’s crude export infrastructure. The routes under evaluation include the Basra–Haditha–Kirkuk–Ceyhan corridor, which would connect southern Iraq to Turkey’s Mediterranean port of Ceyhan, and the Basra–Haditha–Baniyas route, linking Basra to Syria’s Mediterranean port of Baniyas.

The Cabinet has also authorised Basra Oil Company to sign a consultancy services contract with US engineering firm KBR for the proposed Basra–Haditha oil pipeline project, supporting the technical development of the planned export route.

The proposed pipelines are part of Iraq’s efforts to diversify its crude oil export routes and reduce reliance on the country’s southern export terminals and the Strait of Hormuz.

Iraq, OPEC’s second largest producer, has a sustainable capacity of 4.9mn bpd and is reported to have ambitions to raise production to 7mn bpd. Under economic pressure due to the suspension of oil exports through the Strait of Hormuz during the recent hostilities, and with the oil and gas sector still accounting for 53% of GDP, 88% of revenues and 91% of exports according to the World Bank, Iraq is reported to be lobbying for an increase in its OPEC quota, currently standing at 4.3mn bpd. Major development and rehabilitation of oilfields is underway with the participation of international oil companies; last year ExxonMobil signed an agreement with the Iraq government to develop the supergiant Majnoon oilfield, bp signed an agreement for the redevelopment of oilfields at Kirkuk, and Chevron is looking to take over from Lukoil as operator of the West Qurna Field.

The company's solutions are used in sectors including refining. (Image soruce: AT-PAC)

Global industrial scaffolding and access solutions provider AT-PAC has officially launched its dedicated Middle East presence, marking an important milestone in the company’s continued international expansion

While AT-PAC’s team has supported customers across the region for several years alongside fellow Umdasch Group company Doka, the company established AT-PAC as a dedicated business in the United Arab Emirates on 1 July.

Headquartered in Atlanta, USA, AT-PAC is a world-leading manufacturer offering globally certified scaffold products for the industrial market, in sectors such as oil and gas, mining, refining, power, and infrastructure construction.

The launch extends AT-PAC’s global branch network across the Americas, Europe, Asia-Pacific and now the Middle East, strengthening the company’s ability to deliver engineered industrial access solutions to one of the world’s most dynamic infrastructure and energy markets.

AT-PAC UAE will provide comprehensive scaffolding solutions for the regions oil and gas, petrochemical, industrial maintenance, marine, shipbuilding and energy sectors, while also supporting the delivery of major industrial infrastructure and event projects with advanced engineered access systems.

By combining the globally proven AT-PAC Ringlock scaffolding system with in-house engineering, design and project support, customers across the UAE and wider Middle East will benefit from solutions designed to improve safety, productivity and project certainty on complex industrial works.

David White, regional managing director – AT-PAC Middle East & Africa, said the launch reflects both the strength of the UAE market, and the confidence AT-PAC has in its continued growth.

“We’ve built strong relationships throughout the region over recent years, and today represents an exciting new chapter as we officially established AT-PAC in the Middle East. We’re already supporting major industrial and industrial infrastructure projects across the UAE, and our local team is backed by the global engineering expertise, product innovation and project experience that AT-PAC has developed around the world.”

“The broader Middle East continues to invest in world-class industrial facilities. We’re exciting to partner with contractors and EPCs by delivering access solutions that help projects operate more safety, efficiently and productively.”

Demand for LNG is forecast to rise sharply. (Image source: Adobe Stock)

Shell’s LNG Outlook 2026 highlights the strong growth in global LNG demand as well as the increased resilience of the LNG market

Global demand for liquefied natural gas (LNG) is expected to increase to nearly 700 million tonnes a year by 2050, an increase of around 65% from 2025 levels, according to the Outlook,

LNG remains a core pillar of the global energy system, with demand driven by Asian economic growth and intensifying energy security risks.

Disruption to shipping through the Strait of Hormuz as a result of the Middle East crisis has shut in around one fifth of the world’s monthly LNG supply since the conflict started, pushing up prices on the spot market and adversely affecting some countries in Asia.

This loss of supply has been partially offset by the ramp up of new liquefaction facilities in North America, improved performance at existing plants and reduced Asian imports of LNG. As a result, total LNG trade in 2026 could be similar to last year, when 422mn tonnes of LNG was traded, if shipping through the Strait of Hormuz returns to normal this summer, before returning to growth in 2027.

“The conflict created a system-wide shock with disruption cascading across all segments of the economy, but the LNG industry has proved resilient and able to adapt to changing market conditions,” said Cederic Cremers, President of Integrated Gas at Shell. “While more investment in both supply and demand infrastructure is needed, the long-term outlook remains strong and LNG will continue to be a stabilising force in the global energy system.”

Supply growth

Around 180 million tonnes of annual new supply is forecast to enter the market by 2030, improving the availability and affordability of gas and opening up demand in new markets. The USA continues to lead new LNG supply growth.

However, the ability to benefit from new supply will depend on the availability of infrastructure in importing countries, including regasification capacity and pipeline connectivity, especially in South and Southeast Asia.

Those regions are forecast to account for around 40% of global LNG imports by 2050 to meet rapidly growing demand for energy with lower emissions than coal. In more mature Asian markets such as Japan, data centres are emerging as a new source of power demand.

Emerging segments of demand are also growing rapidly. According to forecasts, LNG bunkering will grow seven-fold to 27 million tonnes by 2035. LNG will continue to have a vital role to deliver energy security to Europe, to balance intermittent renewables as domestic gas production declines.

To meet the growing demand, significant additional investment will be needed in new LNG liquefaction plants through the 2030s and 2040s, with around 200 million tonnes a year of new supply needed, in addition to projects already under construction.

A more resilient market

Although spot prices of LNG in Asia increased to more than US$20 per million British thermal units (MMBtu) at the peak of the Middle East crisis, they remained significantly lower than in 2022 when gas supplies were disrupted following the Russian invasion of Ukraine, reflecting the greater resilience of the LNG market now.

With long-term supply agreements accounting for around two thirds of total LNG trade, the average price that buyers paid for LNG in May was around US$11-12 per MMBtu, compared to US$7-11 in January before the conflict began.