Oil prices dropped sharply yesterday on rising optimism that the US and Iran may be moving closer to reviving a Middle East deal. ICE Brent settled more than 7% lower on the day, after President Trump called off strikes against Iran, aiming to get a deal across the line. He also suggested that talks between the US and Iran have already resumed. Iranian officials continue to deny that any negotiations are under way, insisting that current discussions with Oman are limited to shipping routes through the Strait of Hormuz. At the same time, reports emerged yesterday that a cargo vessel off the Omani coast was struck by an unidentified projectile.
The scale of the sell-off seems fairly overdone, given that there’s still considerable uncertainty. We’ve been in this situation multiple times before, only to see things unravel. And with Iran denying that any talks are underway and Trump issuing warnings if no deal materialises, the backdrop clearly leaves ample room for a renewed escalation.
In the Black Sea, recent days have seen more loading activity at the CPC terminal, which ships Kazakh oil from Russia’s coast. Loadings had been disrupted in recent weeks amid ongoing Ukrainian attacks on Russian energy infrastructure. There have also been risks for oil tankers operating in and around the terminal, leaving shipowners hesitant to load. For now, flows into the terminal still appear to be running below normal levels.
European gas prices also came under pressure yesterday, although not to the same extent as oil, with TTF settling 2.65% lower on the day. There are growing concerns in Europe over storage levels and the slow injections we are seeing, leaving the region more vulnerable as we head into the 2026/27 winter. While storage is only a little above 57% full — below the utilisation seen in 2021 — in absolute volume terms it still sits just above 2021 levels. It’s also worth pointing out that EU gas demand is considerably lower now than it was in 2021. So, while the gas market is admittedly tight, it’s still quite a bit more comfortable than it was in 2021. EU gas demand in 2025 was 18% lower than 2021 levels.