Publications: Notes at the Margin

The Endless Disruption (July 27, 2026)

 

The wars driving the oil market disruption have intensified. The increase in threats has prompted crude oil buyers to begin hoarding. Diesel and gasoil buyers are also starting to hoard, fearing further price rises. The real threat comes not from the Middle East but from Ukraine because the diesel market disruption could push diesel prices to $2000 per metric ton or $20 per gallon.

 

The worsening situation is exacerbated by the US government’s erratic actions, which on one day declares more aggressive attacks against Iran and the next does nothing. Meanwhile, Iran continues to limit the oil shipments through the Strait of Hormuz, keeping the crude moving to market at a minimum. And then on July 22, Yemen's Iran-aligned Houthis attacked two Saudi tankers after threatening to blockade the country’s exports from its Yanbu terminal, potentially cutting global supplies further.

 

Meanwhile, Ukraine further crippled Russia’s ability to export oil by striking another refinery. In addition, Ukrainian attacks on ships loading oil at the Caspian Pipeline Consortium terminal forced oil companies in Kazakhstan to reduce production. The Ukrainian attacks were indiscriminate, hitting Russian ships and those chartered by companies such as Chevron.

 

Diesel markets remained particularly tight. Russian supplies remained depressed and its exports embargoed due to Ukraine’s successful destruction of Russian refining facilities.

 

The risk of a prolonged disruption due to the Russia and Middle East conflicts seems to have increased dramatically during July. As one authority on international affairs noted, these problems could persist for six months or longer. The consequences of such an outcome are worrisome.

 

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