Oil and Gas Prices: A Market Guessing Game

Seven OPEC+ countries have raised output by another 188,000 b/d as producers compete for market share amid geopolitical uncertainty and slowing growth. With Saudi Arabia, Iran, the US and others boosting supply, analysts are split: will Brent drop to $60, or will new tensions push prices higher? Plus other business headlines.

Transcript

The subgroup of seven OPEC+ countries, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman - that had made in the past additional voluntary adjustments, that was in April and November 2023, met to review market conditions and outlook of the Industry. They agreed yesterday on 5 July 2026, to support oil market stability, by implementing a production increase of 188 thousand barrels per day from August. This was  the fifth month in a row of increase … a move that did not move the price of Brent which is still around the pre-war level of $72/bl.  The decision  appears to confirm the ongoing market share fight as the outlook normalises. Iran has already pushed out 40 million barrels since lifting of the US blockade and removing sanctions … Venezuelan oil is back on the market and the US monetised the recent crisis by expanding its own production significantly.   The UAE read the leaves and quickly exited OPEC to enable an accelerated ramp us as soon as they are able to do so – while they also moved fast on an alternative pipe-line bypassing the Ormuz Strait.  All this as analysts abandon previous forecasts and Citi analysts see $60/bl Brent before the end of 2026.  The seven OPEC+ countries meet monthly and they will gather next on 2 August 2026 amid very unfamiliar shifts in market dynamics.

Hello and welcome to Global Business Insights, where we bring perspectives to help you navigate today’s more complex terrain. This episode is focused on latest developments in the oil and gas sector.

OPEC plus despite recent announced increases in quota is still producing significantly less than it did before  the Strait of Hormuz crisis upended Middle East oil flows. Kuwait, Iran, Saudi Arabia and Iraq are fast coming back … while Nigeria and Libya which suffered less disruption are posting smaller increases. The scenario playing out is not so much that of new discovery but bringing back previously shut-in production even as insurers and oil logistics players cautiously watch how the cease fire develops.

The market is not moving to OPEC quotas which reflect intentions rather than actual supply impact. Rather – it is fixated on how the ceasefire  plays out also as non-middle east producers seize the opportunity to devastate OPEC share. The United States posted record crude production of nearly 14 million barrels per day, while the UAE moved record volumes as well… resulting in a  sense of impending oversupply.

So how do we see the oil markets in the second half of the year … and to what extent has it become more of a guessing game – with far too many moving parts and little certainty on what the US or Iran will do next. Iran is likely to act in a way to move prices up, if they can - while the US wants low oil prices …as a cold war progresses. But according to Citi analysts on Friday … $60 oil is likely because the expectation is for the Memorandum of Understanding to hold because the incentives to break are poor for both sides  as the broader political backdrop points toward stabilisation and a deal rather than renewed confrontation. I suspect this is more true for the US – where Trump needs all the contextual help he can get to scrape through a difficult mid term election.

It is also no more news that H2 2026 global economic growth will be more modest than initially forecast … as oil and gas research organizations recalibrate their global supply outlook. The result is a scenario of narrower deficits. For example – in June, the International Energy organisation reduced 2026 deficits to 900,000 b/d from 2 million b/d supply shortfall a month earlier. Other agencies saw shortfalls as low as 500,000 b/d and 2027 skewed towards a supply glut. Citi’s expectations of $60 brent are still much less than consensus of the rest of the market, expecting Brent well over $78 a barrel …but the gap is fast collapsing. Financial Times analysis also suggests far more shipping activity than official records show, as more shipowners switch off transponders to avoid detection in the Strait of Hormuz.

The latest news is reporting that Oil and gas shipping in the Strait of Hormuz may be showing signs of recovering as some vessels were stillearlier seen making unexplained U-turns. It is still unclear to what extent transporters are willing to take the risk of crossing the crucial waterway … making the guessing game on prices more complicated.

Speaking also at the World Peace Forum in Beijing on Saturday, Iran’s ambassador to China, Abdolreza Rahmani Fazli, said Tehran is considering new service fees for ships passing through the Strait of Hormuz, while offering “special” treatment to countries that supported Iran during the recent conflict. The US was also warned not to interfere adding that the charges should not be seen as a toll.

Although the US-Iran conflict did fuel concerns about a potential economic slowdown. Yet, most of the key indicators released so far since the conflict showed an unexpected resilience.  If the World Bank is however right and we see downgraded global economic growth from 2.9% to 2.5% for 2026, the best guess on oil prices could be that with crude oil taps fully and simultaneously opening up all over the world even despite an uncertain cease fire – the most likely situation is that the drop in oil prices has some way to go amid volatility driven by uncertainty and lingering tensions. Brent could fall to $65 in a wide rangebound forecast of $63 to $75 a barrel in the second half of the year… but in truth - your guess could be as good as mine.

To other stories … In the US as it celebrated 250 years … Trump in his speeches repeatedly warns that America is at risk of becoming a communist state .. a shift in rhetoric and an exaggeration that will be repeated till the midterm elections as fear of a communist takeover is galvanised to drive votes. If this is played well … fewer may have Epstein, US-Iran, tariffs or even affordability on their minds by November.  Democrats also will not be outdone as they assert  simplistic claims that oligarchs are now running the show – also belittling the 250 extravaganza as nothing more than opportunity to rev up MAGA campaigns and push for electoral reforms that potentially help the GOP.  What is back is the familiar noise of politics.  

We can still expect the politically wily Trump to move aggressively to ramp up inflationary give-aways, jolt up the economy with public spend and all levers within its influence. Already US oil reserves are reported to be currently at dangerously low levels as depletion of inventories is at all time high and fuel companies bullied by the White house to accelerate downwards price adjustments ahead of the busy high demand summer travel season. 

Just in … Latest ISM data showed US services losing momentum, with PMI easing to 54.0 from 54.5, in line with expectations. Activity dipped as the Middle East war-related order rush faded, though employment rebounded after three months of contraction.

Separately, S&P Global said US services growth hit a four-month high in June as Its Services PMI rose to 51.2 from 50.7, though growth remained below pre-Iran conflict levels.

Also … Traders will focus on more details coming from the first Kevin Warsh Federal Reserve meeting  - with the minutes of the June meeting expected on Wednesday

Still in the US, amid a booming defense sector, Lockheed Martin is gaining traction with recent contract wins and a potential acquisition of Ultra Maritime, which could enhance its undersea defense capabilities. Lockheed Martin is reportedly leading a roughly $3.5 billion bid for Ultra Maritime’s naval defense business, as it targets small and mid-sized acquisitions to broaden its defense and aerospace portfolio. Ultra, owned by private equity firm Advent International, specialises in anti-submarine technology, including radar, electronic warfare systems and torpedo defence countermeasures.

British budget airline easyJet said on Sunday that it has agreed in principle to an improved takeover offer from U.S. investment firm Castlelake, valuing the carrier at up to £5.5 billion ($7.34 billion) and potentially reshaping Europe’s aviation sector. The £6.90-per-share offer is 73% above easyJet’s May 29 closing price, when Castlelake disclosed its interest to British regulators, sending the airline’s shares sharply higher.

Still on mergers, Swiss drugmaker Novartis said today it agreed to acquire U.K.-based biotech firm Myricx Bio for up to $1.5 billion, with the deal expected to close in the second half of 2026. Novartis will pay $1.1 billion upfront and up to $400 million in milestone payments for the London-based company, which develops antibody-drug conjugates for cancer treatment.

Germany’s factory orders rose 1.9% in May, beating estimates of 1.2%, according to official data just released. April’s figure was revised higher to a 3.2% decline, from an earlier estimate of 3.8%. On an annualised basis, factory orders increased 6.2%, up from the previous revised reading of 2.1%.

For central banks – forward guidance is no more in fashion … still European Central Bank (ECB) Governing Council member Emmanuel Moulin said in France over the week end that the apex bank is well positioned  after raising interest rates in its June policy meeting. The good news is that inflation is easing alongside the slump in oil prices … but Moulin wont say what he thinks the ECB will do in July… markets expect rates to be held.

To Africa … Mastercard, last weeklaunched a Cybersecurity Centre of Excellence to help governments, banks and businesses tackle increasingly sophisticated digital threats. The initiative will roll out first in South Africa and Nigeria this year before expanding across the continent, providing a platform to share threat intelligence, strengthen preparedness and coordinate responses to emerging risks.

Nigeria’s Federal Government has rejected claims it spent more than ₦8 trillion, or about 2% of GDP, outside the approved budget, saying the reports misrepresented IMF comments and its 2026 Article IV Consultation Report. Oyedele, that is the Finance minister, said multi-year capital projects follow existing laws and approved rollover provisions, and should not be mistaken for off-budget spending.  Oyedele also denied that the figure raised Nigeria’s budget deficit, saying the IMF’s concern was about the scope, timing and presentation of fiscal reporting, and not the legality of spending. He added that Nigeria is working to align its budget presentation and execution with international fiscal reporting standards.

Asian shares faltered ending trading mixed with investors cautious ahead of key Artificial Intelligence companies earnings data coming out later. This was also as prospects of higher oil supply offered potential relief from inflation.

More on the oil price war front … Saudi Arabia was reported today to have cut the price of its main crude grade for Asia customers in August by the most in at least 26 years.

Well that’s it on this special episode of global business insights. This is Bode Ososami. Thanks for watching. Bye Bye.