Crude Oil Forecast: Brent Still Bullish Despite $76 Short-Term Target
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Key Points:
- Iran and Oman have drafted a document that sets out the new traffic lanes and passage for the Strait of Hormuz. This plan excludes all traffic from US, Israeli and sympathetic countries ships.
- Diesel crack spreads remain high while SPR (Strategic release oil) is diminishing in this first IEA coordinated release. This may put further upwards pressure on US stocks and global diesel stocks. Higher prices at the pump to probably follow.
- Evidence that China is returning to the importing oil table has not provided fuel for buyers to lift the market aggressively yet. However, as US munitions stocks dwindle, the market is starting to price in the inability of The US to act in a meaningful way in The Straits.
A peace deal is far from being struck between the US and Iran, regardless of the talking heads and political murmurings. The Houthis have just attacked Saudi Red Sea refining ports as of Sunday afternoon. Bullish action in the face of bearish political tones. Let’s focus on The Iran/Oman agreement and the global stocks picture.
Iran and the U.S. are not engaged in talks and Tehran will not start them as long as Washington breaches an interim deal signed in June
Iranian Foreign Minister Abbas Araqchi, Mehr news Aug 9th
According to this draft plan under parliamentary review:
- The passage of vessels belonging to the United States, Israelis and other hostile countries through the Strait of Hormuz will be prohibited.
- Ships related to Israel, whether military or civilian, will not have the right to transit through this area.
- Vessels or cargoes that play a role in actions against the Resistance Front will also be subject to the ban.
- Countries and individuals that have caused damage to Iran will not receive permission to pass through the Strait of Hormuz and the Persian Gulf until compensation is paid.
- Heavy fines, including up to 20% of the value of the goods, will be imposed on violators. The cargo is anticipated.
- The government will be required, in cooperation with the armed forces, to assume responsibilities such as guiding navigation, monitoring vessel traffic, and protecting the security and environment of the Persian Gulf.
- This plan is still in the expert review stage, and the parliament has asked experts to submit their suggestions for completing it.
An informed source in the Foreign Ministry told Fars: According to the framework of the negotiations between Iran and Oman,
- The entry to the Strait of Hormuz is to be carried out through the northern corridor of the strait near the Iranian coast, and the exit of ships will be through the southern corridor near the Oman coast.
- After the specified deadline, the passage of ships through both the northern and southern corridors will be stopped and all traffic will take place through the middle corridor, with the difference that the entry of ships will be managed by Iran and the exit will be jointly managed by Iran and Oman.
- The determined fees for ships to pass through the strait will be determined in the form of various service prices.
- The news that Iran and Oman disagree on the percentage of the value of ships’ cargo [a tariff of 7 or 3 percent of the cargo value] as payment is not true, and the receipts from ships are a function of many variables from Including the amount of services we can provide.
- Insurance, refueling, environmental costs and such are among the services that ships must pay for.
Whenever the American side accepts the conditions of the Islamic Republic of Iran and abandons its interventionist approach, the conditions for reopening the Strait of Hormuz will certainly be provided
Mohebbi added in comments relayed by Tasnim Aug 9th.
Situation in the Red Sea
So it’s no surprise that loadings at Yanbu are ncow redirected almost fully north to Suez.
Southbound Red Sea & Gulf of Aden seaborne crude/condensate liftings peaked at dataset high of 4.3mbd (14dMA) on 27 June, with over 95% loaded at Yanbu as Saudi Arabia rerouted exports away from the Strait of Hormuz. Houthi attacks in the Bab el-Mandeb on 19 July have renewed security concerns along the route and curtailed southbound flows, which fell 2.2mbd (70%) between 19 July and 5 August (14dMA), though the decline had already begun before the attacks. Total Yanbu loadings/liftings are down just ~1.8mbd over the same window, to 3.5mbd (14dMA). Volumes have rerouted northbound. Via Vortexa
Runway & EIA Data
Global onshore stocks fall a further 0.5% w-o-w, at 0.4% higher y-o-y. Total crude held in tanks and tankers extends losses w-o-w, down 2.6%, widening the 4-week decline to 5%. In short, the slack provided by strategic reserves, China’s break from importing and the short reopening of SOH, has been a short lived relief. It would not surprise me in the slightest if the IEA plan another smaller strategic release.
The strategic release oil runway is diminishing, but we must be contextually aware that OECD stocks sit at about 2.5billion. There is plenty of relief oil should it be required. I would just be concerned at how fast IEA could get the band back together to do a 2nd release.
Distillates really showed some worrying signs with a draw of 3.7mb WoW as we come into harvest season. Is Diesel going to get pricier (new highs on year) at the pumps? I’m 75% convicted, it will within 20 days.
China
Last week, I pointed out that China was indeed back on the import market for crude. As late as Friday in the week gone, this started to get more airing across social media and news outlets. Shame they are about 2 weeks late with the information…
I think the market buying that you would suppose to follow has remained largely on the sidelines as the Trump/ Iran tennis match still dominates the tape. The COT analysis section below looks into this in granular detail. But in short, just because we haven’t seen a massive green candle last week, does not mean the buying isn’t happening.
#China: crude imports were at 8.45mbpd in July vs 7.15mbpd in June, 11.16mbpd in July25, 10.01mbpd in July24, 10.33mbpd in July23, 8.83mbpd in July22 and 9.75mbpd in July21 – customs office data #oott
Giovanni Staunovo🛢@staunovo
The Net-Net
The Strait of Hormuz is an international waterway, not one party controls the lanes or transits through them
US official Thursday 6th Aug 2026, source -Newsquawk.
It comes at a great cost to try and save face when the reality of your errors become clear.
My thinking is that Iran has now placed all the upside risk on Trump and Netanyahu’s shoulders. Iran has warned Gulf neighbours that it will target regional energy facilities and infrastructure, if the U.S. launches new attacks on its territory, using the vulnerability of regional allies as leverage. This stance updates a previous policy where Tehran stated it would not strike neighbours unless attacks against Iran originated from their soil.
This has been a smart move, cornering Trump into a raise or fold… where Trump neither has the cards nor the chips left. The US is all in!
So where does this put trade? Obviously, a deal is an extremely bearish event on the front of the price curve. But from Houthi bombings of Red Sea refining facilities on Sunday, I see a deal far from getting done. The risk remains tilted to the upside for crude price.
In next week’s report, I’ll look at the surplus that IEA and OPEC are looking at for 2027. But long story short, it’s looking at a 5mb/d surplus overhang with only a 2mb/d in demand.
Commitment Of Traders Report
Brent-Money Manager net long fell 20,361 to +164,722 (-11.0% WoW), and the trim came from both sides – 9,955 longs cut, 10,406 shorts added. MM shorts now sit at the 88th percentile of the 2yr range.
The commercial book is shrinking fast: Producer / Merchant shorts dropped 101,613 and longs 67,970, leaving both gross books at or near 2yr lows, with open interest down 2.5% at 3,455,146. Other Reportables added 20,300 shorts, a +2.5 sigma 4-week swing.
What’s the Next Move?
I remain bullish, regardless. As always, direction is the easy part, timing is the grail! Before I saw the Sunday night Houthi attack in The Red Sea, I presumed that we would have a lazy drop to discover buyers waiting again on the lower risk premium floor. Brent $73-$78.
However, the market needs to price new risk here, so on the electronic reopen I say up. If this situation does not escalate further over Monday, we will test back down at the lower risk floor and load the boat with buyers. The falsifier to this (what breaks this thesis) is that this Sunday attack does not lead to further attacks AND there is a material change in talk on the Iran/Oman deal going through.
My simple read on this is:
- Sunday attacks – bid up
- No follow through from Houthis – offer down
- Trump talks alongside Iran and Oman on Monday- ‘deal can get done immediately’ – market trades sideways, with probes to downside bought up.
- Wednesday-we wait for new catalyst.
That’s the report folks! If you have not yet had a chance to watch my interview with Patrick Rutty from Enverus, it is well worth a watch. We go in-depth into E&P as it is laid out for 2026 and beyond. It is perhaps the most insightful piece I’ve done to date on where the majors and minnows are acquiring acreage, drilling, and how successful they are on a global scale. A must-watch if you are looking to invest in some oil names in 2026 and 2027.
About the Author
Tim Dugganauthor
Tim Duggan is a commodities trader with more than 20 years of experience. He focuses on crude oil and energy spreads, combining technical tools with macro and fundamental analysis. He runs a private fund and writes The VWAP Report and The Oil Report newsletters — both widely read by institutional players and energy professionals.
