Energy Market Briefing

UK military monitor UKMTO said a tanker was struck by a projectile early on Tuesday near Limah, Oman, hitting the port side as the vessel tried to head south out of the strait. No casualties or environmental damage were reported. Iranian state television said the LNG tanker, reportedly carrying gas from Qatar, was attacked after ignoring warnings, though Tehran stopped short of directly claiming the strike. US officials told Axios that Iran's military fired at least two missiles at commercial shipping in the strait, hitting a second vessel as well.

The strait has been effectively closed to ordinary commercial traffic since the US-Israel war on Iran began on 28 February, and remains so: commercial transit was running at around 32% of pre-crisis volume in late June, with several major container lines still rerouting via the Cape of Good Hope. A 14-point US-Iran settlement signed on 17 June was meant to reopen the strait toll-free for 60 days, but it has not durably held.

Talks between Iran and the US on a permanent end to the war are on hold until after the burial of former Supreme Leader Ayatollah Ali Khamenei, killed at the start of the war in February. His body was flown to Qom overnight, where large crowds gathered on Tuesday. Iran's warning last week that all tankers must use its approved routes forms the backdrop to the latest strike.

Seven OPEC+ members, including Saudi Arabia and Russia, agreed on Sunday to raise output by 188,000 barrels a day from August, the fifth consecutive monthly increase as the group unwinds earlier cuts. That kept Brent capped near its lowest levels since before the war began in February, even as today's tanker attack pushed the benchmark higher on the day.

European TTF gas jumped hardest on the tanker news given its greater sensitivity to LNG flows through the strait, while UK NBP gas and power had already firmed into Friday's close on the back of the standing Hormuz risk premium, before today's fresh attack.

Separately, EU data shows Russian pipeline and LNG imports into the bloc actually rose in early 2026 even as the formal phase-out proceeds, a reminder that today's headline risk sits alongside a slower-moving structural shift away from Russian supply.

South-east England has now had three consecutive days above 28C, with the heat expected to peak around 7 to 9 July before easing. The Met Office and health bodies have flagged higher power demand for cooling, alongside pressure on water and health services.

Wind supplied just over a quarter of British generation and solar close to a fifth this morning, with renewables together approaching half of the 29.75 GW national demand, easing some of the pressure that hot, still conditions can otherwise put on the system.

EU gas storage stood at 50.4% full as of 5 July, up from 49.1% a week earlier, a steady if unspectacular injection pace. The five-year seasonal norm for 7 July is 64.3%, leaving today's level 13.9 percentage points short, though the Gas Coordination Group said on 1 July that it sees no immediate concern for winter security of supply.

The EU's winter 2026/27 target remains 90% of capacity by 1 December, with Commission flexibility allowing member states to bring that down to a minimum of 80% where needed.