What is moving the price right now?

The bet on diplomacy has not paid off. Our last issue described a market pricing in the Iran-Oman corridor concept and pushing Brent down to 89.31 USD/bbl. Two weeks later the front month stands at 104.61 USD/bbl, up 17.7 percent on the month, and on 14 September the November contract traded at 107.60 USD/bbl. The reason was visible the same day: the foreign ministers' meeting in Salalah, Oman, at which the corridor agreement was to be presented, was adjourned in the interest of reaching consensus, and Saudi Arabia pre-emptively shut the East-West pipeline that normally bypasses the strait after drone attacks (Handelsblatt).

In between sits an escalation that has earned the name tanker war. On 5 September US forces struck three Iranian oil tankers; the Revolutionary Guard reported counterstrikes on three tankers and three US-linked vessels, and Aramco's Jizan facilities were hit for the second time that month. Traffic through the strait has shrunk to a trickle: on 7 September Al Jazeera reported an average of ten commodity ships a day over the preceding ten days, with individual days of five, six and eleven transits. For comparison, before the war around 3,000 vessels passed through per month.

Supply is now split in two, and the IEA quantified it on 11 September. OPEC+ produced 33.11 million b/d in August, 7.26 million b/d below its own target, with Saudi Arabia alone 4.45 million b/d and Kuwait 0.62 million b/d short; Russia produced 8.36 million b/d, 1.53 million b/d below target, after intensified attacks on refining and export infrastructure. Quota policy has become predictable while actual output has not. Formally, seven OPEC+ states held October output at September levels on 6 September and set the next review for 4 October.

The stock side shows how long this has been running. The IEA reports global inventories drew 95 million barrels in August; since February the cumulative draw comes to 507 million barrels, averaging 2.8 million b/d. US crude stocks stood at 424.1 million barrels in the week to 4 September, down 0.4 million on the week. Iranian floating storage is running down too: from around 90 million barrels in mid-July to about 29 million barrels in early September, on loading rates of 220,000 to 255,000 b/d in August against roughly 2 million b/d in March.

On the demand side the two big forecasts continue to diverge, and both point down. The IEA expects global oil consumption to fall by 2.5 million b/d in 2026, concentrated in middle distillates and petrochemical feedstocks in Asia, with a 2.6 million b/d recovery in 2027. OPEC cut its 2026 growth forecast to 380,000 b/d in September, the fifth consecutive reduction. A market with shrinking demand and rising prices is a market driven purely by supply risk.

What we watch: whether the adjourned Salalah meeting is rescheduled, daily transit counts, the restart of the Saudi East-West pipeline, the OPEC+ meeting on 4 October, and how long Iranian floating storage lasts.

What does this mean for procurement in Europe?

The lesson of the last four weeks belongs in your hedging rule: diplomatic announcements are not a trigger, implementations are. Anyone who deferred cover at the end of August on the strength of the corridor concept is paying 17 percent more today. Define the trigger for your next tranche as a verifiable event, such as a first documented transit under the corridor agreement or a week with more than 50 transits, rather than as news of a planned meeting.

Cover oil-linked inputs in partial volumes now instead of waiting for a pullback. Plastics, lubricants, packaging and freight costs follow Brent with a lag; the increases off the September level are not in your prices yet, they arrive in the fourth quarter. Staged cover spreads the entry risk, and the alternative is the spot market in a market whose supply side depends on individual drone strikes.

Check every oil-indexed clause for symmetry and averaging now, in the opposite direction from August. Then, monthly averaging slowed the pass-through of the rise; now the same mechanism delays a price impulse that is already in the market. If you contracted on a single reference date, you should know today which date applies. The basis remains the ICE Brent monthly average with an expiry date, not the daily quote.

Negotiate fuel and freight surcharges against your supplier's cost base rather than as a flat figure. A surcharge calculated on August's 89 USD/bbl is too low today and will be reclaimed; one that permanently assumes the 107 USD/bbl of 14 September is too high. Agree a formula with a reference index, an adjustment interval and an expiry date, instead of arguing about amounts.

Treat the demand forecasts as what they are: an argument for the period after the war. The IEA and OPEC both see weaker demand, and the IEA expects an outright decline of 2.5 million b/d in 2026. Once the supply risk falls away, the price will fall faster than demand can support it. That argues for limiting hedges in time and not fixing beyond 2027.