Oil Nears $100 as Trump’s ‘Economic D-Day’ Raises the Stakes

The Strait of Hormuz remains congested as President Trump's "Economic D-Day" campaign drives Brent crude closer to $100 per barrel. Transits through the narrow passage have been scarce, with Trump's announcement intensifying market risk. Brent is currently trading at $94 per barrel, while Asian LNG prices hover around $24 per MMBtu. Freight rates for very large crude carriers (VLCCs) are also high, indicating a gradual rise towards the $100 mark throughout the remainder of August.

President Trump has threatened severe penalties and consequences for nations trading with Iran, targeting China's imports of Iranian oil. Iraq aims to increase its output to 810 million barrels per day within six years, aiming for a larger OPEC quota and alternative export routes. Despite current restrictions limiting production to around 2.9 million barrels per day, Iraq projects expansion.

US refiners are now importing more than 500,000 barrels per day of Venezuelan crude, as the country's output approaches 1.25 million barrels per day.

Baghdad has approved three-month contracts permitting local and international firms to market crude through multiple export outlets, reducing dependence on the Strait of Hormuz. Recent pirate attacks on tankers near the Gulf of Oman highlight ongoing security concerns in the region. Iran's crude has shed its discount over Brent, as US sanctions limit new shipments to Asia and strain floating storage.

Meanwhile, ExxonMobil anticipates that Kazakhstan's Tengiz field will reach peak production of 1 million barrels per day in 2027, after which output will decline to 500,000 barrels per day by 2035. Japan has doubled its imports of US crude to a record 891,000 barrels per day, accounting for 36% of its total oil inflows. The Panama Canal is preparing to restrict transits due to lower water levels, which could cause delays and higher costs.