Oil’s Oversupply Narrative Just Died
By Tom Kool - Jul 14, 2026, 11:00 AM CDT
Renewed U.S.-Iran hostilities have pushed Brent above $85, ending the oversupply narrative and reviving fears of a global oil shortage.
Much Anticipated 2026 LNG Oversupply Wave May Not Materialize
- According to industry analysts, the much-anticipated LNG oversupply wave of 2026 will fail to materialize, with BloombergNEF pushing out its first glut year into 2028 as the US-Iran conflict and recurring project delays impede commissioning.
- With Middle Eastern supply still capped, the blistering heat brought by this year’s Super El Niño has pushed Asian LNG buying to its highest level in July, with imports set to reach 23 million tonnes.
- Asia and Europe are now competing for every available cargo, creating a zero-sum game for European buyers as Asia’s benchmark JKM price jumped to $19.5 per MMBtu on Tuesday, the highest since early June.
- Due to unfavorable economics, Europe has been so far getting the short end of the LNG stick, with the Old Continent’s imports poised to decline this month to 6.90 million tonnes, a 2-year low, as European LNG prices trend consistently below JKM.
- One of the most gas-deprived countries globally, Pakistan has issued another tender to purchase prompt LNG for July delivery after Qatar’s LNG exports were cut short by last week’s attack on the Al Rekayyat LNG carrier.
Market Movers
- US midstream giant Williams (NYSE:WMB) said that a Blackstone-led consortium will invest $5.34 billion for a 49% non-controlling stake in five of its power generation projects in Ohio, providing it with further capital to expand its AI-driven expansion.
- Australian gold miner Genesis Minerals (ASX:GMD) has agreed to acquire peer mining firm Vault Minerals for a total consideration of $8.7 billion, in a deal that would create the country's third-largest gold producer.
- London-based energy giant Shell (LON:SHEL) has agreed to sell its Indian renewables business Sprng Energy to local trading firm Aditya Birla for $1.8 billion, having paid $1.55 billion for it in 2022.
- US utility firm Chesapeake Utilities (NYSE:CPK) said that it would develop, construct, and operate a natural gas pipeline project in Florida at a total cost of $1.2 billion, seeking to address regional supply constraints.
Tuesday, July 14, 2026
The July 2026 Battle of Hormuz is in full swing, with US missile strikes on Iranian infrastructure triggering Tehran’s retaliation on Middle Eastern countries hosting US bases. The closure of the Strait of Hormuz by Iran and the soon-to-be-official reinstatement of Iran’s maritime blockade by the White House have jointly pushed ICE Brent above $85 per barrel. The past weeks’ oversupply narrative immediately flipped back into a sentiment of global shortages, with all global benchmarks now in steep backwardation.
OPEC Lowers Demand Growth Outlook. OPEC dropped its forecast for world oil demand growth in 2026 to 780,000 b/d, down from 970,000 b/d predicted a month ago and marking the third straight downward correction, with its 2027 growth outlook boosted to a whopping 1.94 million b/d.
Trump Reinstates Iran’s Maritime Blockade. Donald Trump announced that he would be reinstating the blockade of Iranian shipping through the Gulf of Oman, calling the USA the ‘Guardian of Hormuz Strait’ and vowing to be reimbursed at a rate of 20% of all cargoes shipped via the waterway.
Here Comes a Separate Saudi-Houthi War. Accusing Saudi Arabia of launching air strikes at the international airport of Sanaa, the capital city of Yemen, the country’s Houthi rebels claimed that the period of ‘de-escalation with Riyadh is over’, claiming the aggression would not go unanswered. Related: U.S. Gasoline Prices Rise for First Time Since May as Iran Ceasefire Collapses
Iran Hits Two Transiting UAE Tankers. Two VLCC tankers chartered by the UAE's national oil company ADNOC were struck by Iranian cruise missiles while transiting the southern shipping lane of the Strait of Hormuz, leading to one fatality, paving the way for a surge in Gulf war risk premiums.
Chinese Crude Imports Fall Through the Cracks. China's June oil imports fell by 41% year-over-year to just 7.12 million b/d, the lowest monthly reading since October 2016, as buyers slashed their purchases amidst a nationwide ban on refined product exports and lower fuel demand domestically.
Iran Plays Down Impact of Trump's Blockade. As the US maritime blockade of Iran is set to come into effect the evening of July 14, Iran's Oil Ministry said that the country's exports are continuing as usual despite the sanction snapback, with loadings so far in July averaging 1.35 million b/d.
Nigerian Output Soars to 6-Year High. Nigeria’s upstream regulator NUPRC stated that the African country’s crude oil production soared to its highest levels since April 2020, averaging 1.56 million b/d in June as stable operations and improved pipeline safety allowed producers to ramp up output.
Europe Gorges on Russian LNG Before the Ban. The EU imported a record 9.97 million tonnes of LNG from Russia’s Yamal LNG in the first half of 2026, up 16% year-over-year, as looming phase-out deadlines prompted European buyers to absorb more than 97% of the Arctic plant’s output.
Kazakhstan Demands Billions for Too Much Sulphur. Kazakhstan’s Justice Ministry demands an environmental fine of $4.9 billion by July 20 from the operating company of the giant Kashagan oilfield, the culmination of a 2023 investigation that saw excessive sulphur stored at the site.
Riyadh Boosts Energy Ministry's Clout. Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman saw his responsibilities expanded after Riyadh added the industry and mineral resources portfolio to his remit, seeking to improve coordination between feedstock supply and industrial development.
Iraq Mulls Tripling Oil Flows to Turkey. Turkey's Energy Ministry said that Iraq has suggested sending 750,000 b/d of crude through the Kirkuk-Ceyhan pipeline under a temporary 12-month arrangement to keep it operating, currently transporting some 200,000 b/d of Kurdish crude.
Shell Gets Nigeria Oil Tax Relief. Nigeria has granted UK-based energy major Shell (LON:SHEL) a production-linked tax credit for the Bonga expansion project in the country's deepwater offshore, offering a rebate of $11.50 per barrel for every barrel, more than double the standard amount.
South Korea Turns Back to Nuclear for the AI Boom. Seoul plans new reactors and life extensions for its existing fleet as power demand from semiconductor hubs, data centers and electrification could rise by more than 50GW by 2040, just as the country retires 40.4GW of coal capacity.
Mexico’s Pacific LNG Era Begins. The first cargo from Sempra Infrastructure’s 3.25mn t/yr Energia Costa Azul terminal is heading to South Korea, opening a new US-fed natural gas export route to Asia that bypasses the Panama Canal and shortens delivery times to key Pacific markets.
New York Pulls the Plug on Data Center Boom. New York became the first US state to impose a one-year moratorium on new data centers consuming at least 50MW, citing rising electricity costs, pressure on water supplies and grid strain as more than 12GW of large loads await connection.
By Tom Kool for Oilprice.com
