Oil Daily | Middle East Tensions Prompt Eni Staff Reduction in Iraq, Hormuz Traffic Concerns Grow

【Global Oil Supply and Demand】

LNG shipping costs have surged to the highest level in eight months due to Middle East risks and reduced vessel availability. Shipowners are delaying chartering, leading to increased freight demand, particularly for Pacific cargoes. Rising Asian LNG prices compared to European benchmarks further exacerbate the situation.

U.S. wholesale electricity prices are rising amid summer heat forecasts, with prices in Boston reaching $400 per MWh. The Energy Information Administration forecasts record electricity demand driven by IT sector growth. Natural gas generation remains the primary source, although its share in total generation may slightly decrease.

China has reduced coal imports and increased exports due to ample domestic supply. Weaker coal-fired power generation and record coal production have lowered demand for imports. China's solar and wind generation growth has also impacted coal demand, despite last year's record coal generation levels.

【Oil-Producing Countries Dynamics】

Amid Middle East tensions, Eni reduced staff at Iraq's Zubair oil field. The Iran-Israel conflict, exacerbated by U.S. airstrikes on Iranian nuclear sites, could impact regional energy infrastructure. Iranian proxies might target Iraqi oil facilities, affecting supplies from OPEC's second-largest producer.

Qatar's LNG production remains steady despite Gulf geopolitical concerns. Shipping data shows consistent LNG vessel departures, although market behavior reflects buyer hesitation. Analysts note potential risks to Qatar's LNG infrastructure, but supply remains unaffected for now.

【Latest Oil Policies】

President Trump urged U.S. oil producers to maintain stable prices after strikes on Iran's nuclear sites escalated Gulf tensions. Although crude prices briefly rose, there has been no major supply adjustment from producers. Analysts warn of potential price spikes if Hormuz traffic is disrupted.

【Industry News】

China installed a record 93 GW of solar capacity in May, surpassing other nations' annual installations. However, new government policies may slow future growth. Solar manufacturers face overcapacity and price wars amid changing market conditions.

The EU plans a strategic reserve of rare earth elements to avoid supply disruptions from China. This aims to strengthen resilience against potential export restrictions affecting critical industries. The EU is also approving strategic projects for raw material extraction to enhance self-sufficiency.

【Others】

Following U.S. airstrikes on Iran, some oil tankers are avoiding the Strait of Hormuz or waiting nearby. Greece advised caution for vessel passage due to potential Iranian retaliation. Analysts warn that disruptions in the Strait could significantly increase oil prices.