Oil markets are facing rising supply disruption risk across the Middle East and the Black Sea, with pressure points spanning Saudi export routes in the Red Sea, renewed Persian Gulf tensions, and halted Kazakhstan shipments through Russia’s CPC terminal. Diplomatic hopes for a ceasefire between the US and Iran have ebbed after President Trump ruled out immediate talks, while the US has carried out an 11th consecutive night of strikes against Iran. Separately, shippers have adjusted tanker movements following the Houthis’ declared maritime blockade on Saudi Arabia, as vessels seek to avoid the Bab el-Mandeb Strait.
Rerouting via the Suez Canal could add time and costs to Asia-bound voyages, tightening prompt supply conditions. In the Black Sea, prolonged disruption raises the risk of upstream curbs in Kazakhstan, after around 1.7m b/d was loaded from the CPC terminal in June. Against that backdrop, Brent trading at just over US$91/bbl is framed as potentially undervalued if disruption persists into August, while refined products remain structurally tight. Relief would require normalisation of Middle East flows to lift refinery run rates in the Middle East and Asia, alongside a pullback in Ukrainian attacks on Russian refineries.
Brent Price Outlook and Supply Risk
We believe derivative traders should prepare for a strong upward move in Brent crude as we head into August 2026. With Brent currently trading near $91 per barrel, the options market is failing to fully price in severe, compounding supply shocks across major global transit corridors. Historically, similar supply squeezes during peak summer demand periods have quickly pushed prices past the $95 threshold.
Traders should consider buying out-of-the-money Brent call options to capitalize on worsening bottlenecks in the Red Sea and Persian Gulf. Daily tanker transits through the Bab el-Mandeb Strait have plummeted by more than 50% over the last two years, forcing costly detours around Africa. This massive diversion adds roughly 10 to 14 days to voyage times, structurally trapping millions of barrels of oil at sea and tightening prompt physical markets.
Additionally, the ongoing halt at the Black Sea’s CPC terminal risks keeping up to 1.7 million barrels per day of Kazakh crude offline. Bullish call spreads are highly attractive here, as any prolonged suspension will force upstream producers to shut in wells, sharply reducing global sweet crude availability. Past disruptions of this scale have triggered immediate, multi-dollar spikes in front-month Brent futures.
Outlook for Refined Products and Crack Spreads
We also recommend going long on refined product crack spreads, particularly diesel, as Ukrainian drone strikes continue to hamper Russian refining capacity. Up to 14% of Russia’s primary refining capacity has been knocked offline at various points, keeping global middle distillate inventories well below five-year averages. With refiners unable to easily boost run rates, product cracks are poised to outperform crude in the coming weeks.
