Global Oil Prices Flat as Iran Negotiations Stall

Ongoing geopolitical friction and restricted transit through the Strait of Hormuz have stabilized benchmark crude futures while threatening severe supply deficits across global energy markets. The International Energy Agency projects significant supply and refining contractions through 2026, exposing Mexico to elevated import costs for diesel, gasoline, and jet fuel despite domestic price stabilization mechanisms. This volatility directly impacts PEMEX, private energy operators, logistics providers, and industrial end-users, requiring corporate leaders to execute strategic contingency plans, hedge fuel exposure, and strengthen operational energy resilience.

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Global crude oil futures traded near flat levels on Monday as market participants assessed ongoing geopolitical tensions and a lack of progress in diplomatic negotiations surrounding the conflict involving Iran. 

Brent crude futures rose six cents, or 0.07%, to US$88.58 a barrel by 10:55 a.m. US West Texas Intermediate (WTI) crude futures fell 18 cents, or 0.22%, to US$82.22/b. 

Market movement followed statements from US President Donald Trump during an interview, calling for Iran to surrender and issuing statements regarding Oman. A senior Iranian official stated to Reuters that the country would escalate tensions in the Strait of Hormuz if the US fails to fully implement an interim peace deal within a matter of weeks. 

Monday marked the target date for Iran and the US to reach a final deal under a memorandum of understanding (MoU) agreed upon in June 2026. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said negotiations with Oman regarding the Strait of Hormuz remain ongoing, citing the involvement of multiple international actors as a factor prolonging the process. Iranian Foreign Minister Abbas Araqchi stated that Iran has not decided to resume direct talks with the United States. 

Both benchmark contracts gained more than 5% the previous week following attacks on a Saudi Aramco refinery and on tankers operated by the Abu Dhabi National Oil Company (ADNOC) in the Strait of Hormuz.

Data from tracking firm Kpler indicated a reduction in shipping traffic through the Strait of Hormuz over the weekend. Five commodity vessels passed through the waterway on Saturday, with no transits registered on Sunday, compared to 31 transits recorded during the previous weekend. 

To manage regional distribution, ADNOC sold at least 14MMb of spot crude to Asian refiners at premiums in its latest tender. Saudi Aramco also offered crude oil shipments from locations outside the Strait of Hormuz to select Asian refiners, according to Reuters.

IEA Outlook: Supply and Demand Shifts

According to the International Energy Agency’s (IEA) August 2026 Oil Market Report, global oil demand is forecast to contract by 1.6MMb/d in 2026, a downward revision of 510Mb/d compared to the agency's previous estimate. IEA cited the ongoing closure of the Strait of Hormuz and elevated fuel prices as key factors weighing on consumption. The annual contraction is projected to ease from 4.9MMb/d in 2Q26 to 2.8MMb/d in 3Q26, before returning to growth in 4Q26. Global oil demand is expected to expand by 2.4MMb/d in 2027.

Global oil supply rose by 2.4MMb/d in July to reach 101.5MMb/d, but remained 6.3MMb/d below year-earlier levels, with 8.3MMb/d of Gulf output still shut in. Renewed maritime disruptions in July and early August reduced the 3Q26 supply outlook by 1.7MMb/d compared to the previous report. The agency projects total global oil supply to decrease by an average of 4.3MMb/d in 2026 before rebounding by 8.3MMb/d to 110.3MMb/d in 2027. Production growth of 1.4MMb/d from the Americas is expected to only partly offset output losses in the Middle East and Russia.

On the refining front, global crude throughputs rose by 1.8MMb/d in July to 80.9MMb/d, though remaining nearly 5MMb/d below year-earlier levels. Continued product export disruptions in the Middle East and attacks on Russian refineries reduced the 3Q26 run estimate by 370Mb/d. Global throughputs are forecast to decline by 2.5MMb/d in 2026 and recover by 3.5MMb/d in 2027. Tight product markets pushed refining margins and cracks in the Atlantic Basin to all-time highs in July, with diesel exports from Russia, the Middle East, and Asia falling by 1.3MMb/d year-on-year, representing approximately 20% of global seaborne trade.

Global observed oil inventories plunged by 69MMb in July 2026, driven primarily by lower volumes of oil on water. Onshore stocks declined by 6MMb. Total observed oil stocks dropped below 7.9 billion b by the end of July, marking a cumulative draw of 410MMb since late February. IEA expects the global oil balance to show a deficit of 1.8MMb/d in 3Q26 before moving toward a surplus late in the year.

Preparedness for a Prolonged Energy Shock

Beyond baseline market forecasts, corporate leaders must build contingency plans for extended geopolitical friction in the Strait of Hormuz, said Andres Brugmann, Managing Director, SL Intelligence, in an MBN Expert Contributor piece. Brugmann outlined operational and fiscal frameworks for Mexican businesses navigating high energy volatility. Brugmann noted that if transit through the Strait of Hormuz remains restricted at 5% to 15% of normal capacity through late 2026, Brent and WTI prices could rise to US$120/b to 150/b and US$110/b to 140/b, respectively. While higher crude prices improve upstream economics for PEMEX and private operators, the Mexican economy faces heightened exposure through refined product imports, specifically diesel and jet fuel.

To mitigate supply chain and financial risks, Brugmann advises corporate leaders to manage energy volatility as a strategic contingency rather than a routine procurement function. Companies should establish war-room dashboards to track fuel and chemical inventory levels while setting explicit price thresholds and lead-time indicators to trigger emergency protocols. 

In addition, organizations need to map direct and indirect energy costs across freight and raw materials, reassess contract cost-pass-through mechanisms, and stress-test working capital against potential fuel subsidy reductions or delayed payment cycles from major state counterparties. Finally, companies can build operational resilience by securing fuel reserves, hedging price risks through fixed agreements or collars, and investing in onsite energy resilience, including solar installations, battery storage, and dual-fuel systems, to reduce overall dependence on refined fuels.