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Oil Prices Remain Key Driver of Global Markets, Central Banks, Macquarie Says

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An about $8-per-barrel decline in Brent crude and signs of easing US-Iran tensions boosted global equity markets as energy prices continued driving investor sentiment, Macquarie said in a Monday note.

The firm said crude oil remains the biggest factor shaping the global economic outlook and central bank expectations. It added that lower oil prices also weakened the US dollar and reduced pressure on the Japanese yen.

Macquarie pointed to growing diplomatic momentum after Iran and Oman held talks on July 24 and 25 over the Strait of Hormuz. Pakistan and Qatar also proposed renewed negotiations between Washington and Tehran, the note said.

The note added the White House continues to favor a diplomatic solution, although President Donald Trump has warned the US could resume military action if Iran attacks regional allies or commercial vessels in the Strait of Hormuz.

Macquarie said Iran continues to claim control over the Strait of Hormuz and has threatened to use naval mines to deter commercial shipping, while US threats to strike Iran's Pickaxe Mountain nuclear site remain unresolved.

The firm said developments in diplomacy will remain a key driver of investor sentiment this week, with markets closely tracking any changes in oil prices alongside geopolitical developments.

Macquarie said elevated crude prices continue to weigh on Japan through higher energy import costs. It added that additional declines in oil prices could support the yen by easing pressure on the country's terms of trade.

The note added Japan's inflation accelerated mainly because of higher fuel costs and base effects, reinforcing the role of energy prices in shaping the country's economic outlook.

Macquarie expects the Federal Reserve to adopt a tighter policy bias this week, saying policymakers have become more willing to raise interest rates if crude oil prices remain elevated and inflation stays high.

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Crude Benchmarks Post 3rd Straight Weekly Gain Amid Middle East Supply Fears

Global oil benchmarks logged their third straight week of gains as the escalating US-Iran conflict, a closed Strait of Hormuz, and tanker attacks intensified supply concerns, even as prices pulled back slightly on Friday.West Texas Intermediate settled higher at $90.47 per barrel, up from $82.47/bbl the previous week, while Brent closed at $98.70/bbl, up from $88.30/bbl a week earlier.Brent futures registered a weekly increase of 11.8%, while the WTI futures contract rose about 8.3% over the week.The rally kicked off early in the week following intensified US-Iran military exchanges and reports that Iran had received mediator-backed proposals for a ceasefire.However, diplomatic hopes quickly evaporated as shipping traffic through the critical Strait of Hormuz ground to a halt due to active military exchanges, tanker strikes near Oman, and decisions by major refiners like India's state-run firms to cancel crude liftings to avoid the hazardous chokepoint."The key question is at what price level pressure begins to build on the Trump administration to return to the negotiating table," ING noted.Mid-week panic deepened significantly as Brent breached the $100/bbl mark on Thursday, hitting its highest level since May 22, while WTI futures touched their highest since June 11.The upward spiral was supercharged by a combination of factors such as Houthi attacks on Red Sea commercial vessels and Saudi tankers near the Bab el-Mandeb Strait, President Donald Trump's warnings of major military action against Iran, threats from Iranian officials targeting regional exports, and storm-related support from Tropical Storm Bertha.Meanwhile, Murban widened its premium over Brent well beyond its pre-conflict relationship, when Murban typically traded near parity levels or at only a modest premium, Naveen Das, senior analyst at Kpler, toldin an emailed response."As of July 23, 2026, Murban surged 19% to above $106/bbl while Brent climbed to $97-100.69/bbl, putting Murban at a roughly $6-9/bbl premium to Brent, a sharp outlier versus the pre-conflict relationship, where Murban typically traded within a few dollars of Brent or at a modest quality premium," Das said.Compounding global supply pressures, physical disruptions extended outside the Middle East following an attack on the Caspian Pipeline Consortium terminal on Russia's Black Sea coast, threatening the bulk of Kazakhstan's crude exports.Although prices cooled on Friday, analysts noted that underlying physical markets remain exceptionally tight.While the European Union's Oil Coordination Group assured markets that commercial inventories can temporarily cover regional demand, shrinking global stockpiles, low US Strategic Petroleum Reserves, and persistent threats to critical trade corridors leave the energy sector acutely vulnerable to further shocks, analysts warned.The US oil rig count dropped by two from 452 the previous week to 450, in the week ending July 24, according to data from Baker Hughes (BKR) released Friday. That compares with 415 oil rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, increased by 5 to 791 from 786 the previous week.On the supply side, US commercial crude oil inventories increased by 2 million barrels to 411.7 mmbbls in the week ended July 17, the Energy Information Administration said in its weekly report on Wednesday.The US oil rig count dropped by two from 452 the previous week to 450, in the week ending July 24, according to data from Baker Hughes (BKR) released Friday. That compares with 415 oil rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, increased by 5 to 791 from 786 the previous week.Money managers in the WTI crude futures and options markets maintained their net long positions in the week ended July 21, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.The data showed that money managers reported 189,485 long positions, up 6,602 from July 14, while short positions were up 6,080 to 102,580.Meanwhile, OPEC+ producers are expected to approve another oil output increase for September at their August 2 meeting, Reuters reported on Thursday.

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US Oil Update: Futures Settle Lower After US-Iran Talks Report, Red Sea Flows Hold

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Oil & Energy

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Saudi Arabia's East-West Pipeline, also known as Petroline, with capacity of about 5 million b/d, and the UAE's Habshan-Fujairah pipeline, or Adcop, with capacity of roughly 1.5 to 1.8 million b/d."The catch is that Petroline only solves half the problem in this dual-disruption scenario, since Yanbu-loaded cargo bound for Europe still has to run the Bab el-Mandeb/Red Sea gauntlet (or go around the Cape) to get there," Das said, noting that Adcop is considered more "safe."Those routes provide combined bypass capacity of only 6.5 million b/d to 7 million b/d, well below the Gulf's crude and condensate exports of over 17 million b/d to 18 million b/d through Hormuz, while Europe-bound cargoes still face Red Sea risks."We could direct all Red Sea flows via the Mediterranean, but it adds time and costs to transits," the analyst said, adding that he expects "pick up in 'dark transits' which could support the functioning of the two existing bypasses."He added that the likely scenario looks like a return to 2023-2025, when shipping firms routed around the Cape of Good Hope.Kpler expects shipping companies to expand Cape of Good Hope rerouting after crude and product flows around the route climbed to 8.7 million b/d during the first five months of 2024 from an average of 5.9 million b/d in 2023."Given the current disruption spans both chokepoints rather than just one, expect transit-time extensions in that same 10-15+ day range for Gulf-to-Europe cargo, plus new knock-on effects for some Gulf-to-Asia routings that previously threaded both straits," Das said.The longer route could extend Gulf-to-Europe voyages by 10 to 15-plus days or roughly double transit times, while rising war-risk insurance and freight costs continue to lift delivered crude prices, contributing to Brent's roughly 35% to 40% monthly gain, Kpler data showed.Fabian Ng, Argus' head of crude pricing, toldthat Brent traded at a discount to Murban in 2025 as well as in January-February 2026.In 2025, the 4.30 p.m Singapore marker price for front-month ICE Brent futures averaged a $1.53/bbl discount to Murban futures, and a 19 cents/bbl discount in January-February 2026, before the war, Ng said.However, Brent's discount to Murban on Thursday was much wider, although still below earlier peaks. 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Most exports depart for Asian markets, and so any halt in flows through the Bab el-Mandeb Strait will only cause "minimal logistical disruptions for Asian buyers."Kpler's Das said Bab el-Mandeb carries only a small share of UAE crude exports, with flows totaling about 17,000 b/d in April, 65,000 b/d in May, 63,000 b/d in June and roughly 39,000 b/d in July.Those shipments represented less than 2%-3% of the UAE's total crude exports of roughly 2.5 million b/d to 3 million b/d, while most Murban cargoes destined for Asia bypass the Red Sea entirely, Das said.Kpler data estimated that combined Middle East crude imports into China, India, South Korea, Japan, Singapore and Thailand fell from about 13.4 million b/d in January to below 7 million b/d in April before partially recovering by July.China's imports alone dropped from more than 5 million b/d in January to roughly 1.4 million b/d to 2.4 million b/d during the worst months, before dark-routing capacity helped restore some lost flows, according to Das.In a normalization scenario, Das said that a verified US-Israel-Iran ceasefire, a Houthi halt to attacks and a recovery in visible Strait of Hormuz traffic would provide the clearest signal for prices to normalize.Murban's premium could narrow within one to three weeks, while Brent and West Texas Intermediate may need four to eight weeks to stabilize, Das added.Argus also expects clear commitments from the US and Iran to end hostilities, restore safe navigation and increase shipping traffic before Brent-Murban spreads and crude prices return to more typical levels.On any signals that Murban-Brent spreads are normalizing, Ng said that, given the uncertainty surrounding broader risks tied to the Middle East, de-escalation would require clear statements from the US and Iran.