Something is happening in the oil market that veteran traders say they have almost never seen: three of the biggest arteries of global crude are damaged at once. The Gulf’s exports are hostage to a war-torn shipping lane. Russia’s refineries are being knocked out one by one. Venezuela is inching back from near-collapse. Any one of these alone would rattle prices. All three together should, by every old rulebook, have sent oil to the moon.
It hasn’t — quite. Brent crude touched $85.92 a barrel on Tuesday, its highest since mid-June and up 19% from where it sat before the war began in late February, after a third straight day of US-Iran fighting. That is a serious move, but it is not the $120 spike that we have witnessed around April-May. The reason is not that the damage is small. It is that the world went into this crisis sitting on an unusually deep cushion of spare oil, and that cushion is buying time. But it is draining, and the wounds beneath it will take a long time to close. And that is the story: even if every conflict ended tomorrow, the oil would not simply flow back.
Those on the trading floor expect the pressure to keep building. “Tempers are rising and prices in the crude market are exploding,” Peter McGuire, CEO-Australia of Trading.com, told Timesnownews.com. “The hostilities and the situation between US and Iran is tense again, I am therefore expecting crude oil prices to spike over the next few days, Brent Crude could touch as much as 83 dollars per barrel if the retaliatory nature of the situation continues, the next 48 hours are very critical for how this situation pans out and for the energy market.” One caveat readers should note: by Tuesday evening Brent had already traded past McGuire’s $83 marker, touching $85.92 — a measure of how quickly the tape is outrunning even the bullish calls.
The Gulf: A Fifth of the World’s Oil, Back Under Fire
Start where it began. Before the war, roughly 20 million barrels a day passed through the Strait of Hormuz — about a fifth of all the oil the world uses. When the fighting between the US, Israel and Iran shut that lane at the end of February, the International Energy Agency called it the largest supply disruption in the history of the global oil market. By the trade-tracking firm Kpler’s estimate, the world has lost more than a billion barrels of oil since the conflict began.
The price chart since then reads like a heart monitor: a spike toward $120 in the spring, a collapse below $70 on July 1 as a June truce briefly let tankers stream back out, and now another surge as that truce falls apart. This week the violence returned with a vengeance. Iran’s Revolutionary Guard said it attacked two supertankers crossing the strait, and the UAE’s state oil company ADNOC reported two of its tankers were hit by projectiles in transit – one mariner was killed and several injured. The US bombed Iran’s coast for a third consecutive day and ordered its Navy to reimpose the blockade.
The policy signals have been just as chaotic as the fighting. On Monday, Trump demanded a 20% fee on all cargo crossing the strait — a charge that would have worked out to about $32 million for a single supertanker, against the $2 million or so Iran used to levy. By Tuesday he had abandoned it, saying he would replace the fee with trade and investment deals from Gulf states instead. A major shipping policy floated and withdrawn inside 24 hours tells you how unsettled this is.
And here is the part that matters most for the months ahead: reopening Hormuz is nothing like flipping a switch. Traffic through the strait has already cratered — just 57 transits over Friday to Sunday, more than a 50% drop from the week before, against the roughly 130 vessels a day that crossed before the war. “Traffic through Hormuz is grinding to a halt,” Rory Johnston of the research firm Commodity Context told Al Jazeera. Insurers and the big shipping lines flee a war zone fast and return slowly. When ships first ventured back in June, Kpler’s Matt Smith noted the floodgates had not opened and there was no mass exodus. Even a signed peace would leave the lane reopening on paper long before the oil moves at full volume.
Russia: The Most Catastrophic Wound, and the Slowest to Close
If Hormuz is the shock, Russia is the deep injury – largely infrastructure damage that no ceasefire can quickly undo. Ukraine’s drones have spent months hammering Russian refineries, and the campaign is escalating almost daily. Russia’s largest refinery, at Omsk, halted operations after a July 6 strike. The Saratov refinery stopped days later. And overnight into Tuesday, Ukraine hit two more sites — the Afipsky refinery in the south and the Salavat petrochemical complex, described by Ukraine’s special operations forces as the last major gasoline producer in Russia not yet struck this year.
The cumulative toll is severe, though the estimates diverge, and readers should know it: the IEA puts more than 20% of Russia’s refining capacity offline, most independent analysts land between 20% and 40%, and Ukraine’s General Staff claims nearly 43%. What is not in dispute is the direction. The Kyiv School of Economics, in a Financial Times analysis, estimates Russia processed about 4.1 million barrels a day in June — the IEA’s own reading is lower still, at 3.8 million — and the FT finds fuel restrictions have spread to most of the country, hitting some 50 million people. Moscow has been reduced to emergency steps: it banned diesel exports until at least the end of the month – from a country that supplied roughly a tenth of the world’s diesel last year – and even signed off on lowering fuel-quality standards just to keep pumps running.
The squeeze is external too. The US has sanctioned Rosneft and Lukoil, which together make up more than half of Russia’s oil output by Kpler’s count, and a US sanctions bill carrying 500% tariffs on buyers of Russian oil won White House backing on July 10, aimed squarely at China and India, which absorb more than 80% of Russia’s seaborne crude.
But read the fine print, because it cuts both ways. So far the pain has been financial more than physical. Russia’s flagship Urals crude averaged about $63 a barrel in June, down 26% in a single month, yet production has held up — output is only around 2.5% below its 2021 level. Moscow keeps selling; it just earns less. The catastrophe is in the refineries, and that is exactly the kind of damage measured in many months of rebuilding, even after the last drone falls silent.
Venezuela: Recovering, But at a Crawl and From Almost Nothing
The third wound is the one people misread. Venezuela is not collapsing further — it is climbing. After the US captured Nicolás Maduro in January and took effective control of the industry, the country’s exports rose to a seven-year high of about 1.25 million barrels a day in May, up 61% on the year. Kpler’s Naveen Das wrote that the recovery is no longer speculative, with output aiming for 1.3 million barrels a day this year and 1.5 million by 2027.
The trouble is what that recovery is worth. It is a crawl off a shattered base. Venezuela still pumps under 1% of the world’s oil, down from about 3.5 million barrels a day at its peak, and rebuilding the industry to real relevance would take over $100 billion and at least a decade. With American capital, Caracas will keep nudging production up — but “up” here means inching, not surging, and nowhere near enough to fill the hole the Gulf left behind.
Put the three together and the picture is not calm — it is fragile. This is the core of it. Even in the best case — the Iran war ends, Russia begins patching its refineries, and Venezuela ramps up with US help — none of it normalises the market fast. Each is a slow build off damaged capacity. Reopening a mined shipping lane, rebuilding a bombed refinery, reviving a hollowed-out oil giant: these are jobs measured in seasons, not headlines.
What has kept prices from exploding is a one-time buffer that is now draining. The world entered this crisis with a surplus of nearly 4 million barrels a day and 8.2 billion barrels in storage, and China — the largest importer — slashed its crude buying by 40% between February and May. South America, led by Brazil and Guyana alongside a US-run Venezuela, added more new export supply this year than even the record-setting United States. On the demand side, OPEC has just trimmed its 2026 growth forecast to 800,000 barrels a day, another reason a full-blown price shock has held off. That is the cushion. But every month of drawing it down eats into a finite reserve while the damaged capacity limps back.
What about the Indian Markets?
For Indian markets, one number now stands between calm and correction. “From the market perspective, particularly for India, price of crude is the crucial factor. There is no panic in the oil market like in March,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. “So long as Brent trades below $90, the market won’t be impacted significantly. But if Brent shoots up to above $90, there can be a significant correction in the market. So, watch out for the price of crude.” At $85.92 and climbing, that threshold is no longer an abstraction — it is four dollars away.
So, the honest read is a market walking a tightrope: propped up by a glut that is quietly shrinking, and one Hormuz headline away from the next violent spike. Citigroup, which not long ago saw Brent drifting toward $60 by year-end, now warns the opposite risk is rising that Iran could walk away from the peace framework until after the US midterm elections, a scenario it says points to “higher for longer” prices. History says supply shocks rarely heal on schedule. The world’s oil map has been torn in three places at once. The tear is real. And it will not close fast.