Oil Dives 9% as US, Iran Pause Attacks
Get the Energy newsletter
Daily energy & climate — solar, EVs, oil, the policy fights and tech bets shaping the transition. Free.
- Brent crude sank more than 9% to $87.59 a barrel at one point, a sharp reversal from last week when it had risen above $100 for the first time since May.
- US Ambassador to the UN said attacks on Iran had been halted for a second night in a row to give "talks some space," and an Iranian army spokesperson confirmed Tehran had stopped "retaliatory" attacks in the region.
- The Strait of Hormuz, which carries about 20% of the world's oil and LNG, was effectively closed by the conflict; Houthi militia attacks on Red Sea tankers added to supply fears, threatening Saudi Arabia's bypass route.
- European gas storage is at a historic low, with Wood Mackenzie warning that if the Strait of Hormuz stays closed for two more months, storage will fall below 70% by 1 November — versus a five-year average of 90%.
- The European Central Bank lifted its key eurozone rate in June for the first time in nearly three years, explicitly citing the conflict as "generating inflation pressures."
- The Bank of England is expected to hold its key rate at 3.75% this week, but financial markets now predict a rate rise toward year-end — a reversal from earlier expectations of cuts.
Why it matters: The 9% oil drop signals markets are pricing in a de-escalation, but the underlying supply risks persist: Wood Mackenzie projects elevated LNG prices through winter and into 2027, and a Bank of England rate hike is now back on the table where cuts had once been expected — meaning consumers and central banks still face inflation pressure even as headline crude eases.
