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Bousso: The ROI-Oil Market begins pricing for a prolonged Hormuz Crisis
Oil market behavior is becoming more and more like a permanent reality. It's not just a temporary shock. The hopes of a diplomatic breakthrough are fading nearly six months after the war broke out between the U.S. The interim ceasefire that was agreed upon on June 17 is now effectively over, the 60 day negotiating period is finished, and neither Washington or Tehran appear willing to compromise about the future of Strait of Hormuz. Both sides have instead dug in. Iran warned that tensions would escalate if Washington did not fully implement the interim peace agreement within weeks. An Iranian senior official said to? A senior Iranian official told?that, if diplomatic efforts failed, Tehran would launch an "timely and exact" attack in order to break the U.S. navy blockade. ?U.S. On July 7, President Donald Trump declared that the agreement was "over." Since then, he has insisted that Washington is moving closer to defeating Iran. This stalemate could last for several months, forcing traders to deal with shipping restrictions through the Strait of Hormuz - the world's largest oil chokepoint. This shift in expectations may explain why crude oil has stabilized at around $90 per barrel. The price of crude oil has lost some of its premium for panic since the beginning of the conflict. However, it is still roughly 50% higher compared to the beginning of the year. Markets may not be concerned about an immediate collapse of supplies, but they do not expect a return to normality. MOUNTING PAIN The economic costs of both sides are increasing behind the political rhetoric. Iran is being put under increasing pressure by the conflict and U.S. Blockade. According to an ISNA report the inflation rate in July was over 80% higher than a year ago. Crude exports are down to 294,000 barrels a day from 1.7million bpd ten years ago, according to Kpler, whose analytics firm is based. U.S. citizens are also paying the price. Trump warned Americans that they should prepare for high fuel prices, a difficult admission for a President who ran on lower energy costs and faces congressional elections in the fall. According to the American Automobile Association, the average gasoline price was $4.06 a gallon on monday, a 29% increase from a year earlier. While diplomats are still deadlocked, oil markets continue to adapt. SMOKE AND MIRRORS The scale of disruptions to supply is the biggest uncertainty. Kpler reports that the flow of crude and refined product through Hormuz has fallen from 18 million barrels per day (bpd) before the war to just 4.8 million in July. It is now hovering around 2 million in August, despite Iranian attacks and an American blockade. This volume loss has been partially offset by increased exports to the United Arab Emirates from Fujairah and Saudi Arabia from the Red Sea coast. Even these alternative routes are now under pressure, after Yemen's Iran-backed Houthis imposed a ban on Saudi exports via the Bab el-Mandeb Strait at the southern entrance to the Red Sea. According to Kpler, the Middle East's exports this month averaged 9.6?million barrels per day, which is less than half of 21 million barrels in 2025. These figures could be under- or overstating actual exports, as more oil from the region is moving into shadows. There is increasing evidence that Gulf producers are relying on vessels that disable their tracking systems when transiting Hormuz or Bab el-Mandeb. The UAE in particular appears to have developed a network of dark tankers that transport crude oil through Hormuz and then transfer cargoes into the Gulf of Oman. It is a rare situation where traders are aware that supplies have been interrupted but can't determine the exact amount. UAE crude exports have averaged 3,38 million bpd since the beginning of August, compared to 3.2 million in 2025. These volumes may be under pressure, however, after Iran is reported to have hit several tankers associated with Abu Dhabi National Oil Company while they were traveling through Hormuz. The biggest unknown on the market is how much oil actually reaches consumers. Energy markets will be uncertain as long as the Hormuz impasse is not resolved. Even if crude oil exports stabilize, other indicators indicate that high oil prices may persist. The refined fuel market has become extremely tight. According to the International Energy Agency (IEA), global refinery output in July was almost 5 million bpd lower than the previous year, at 81,000,000 bpd. This reflects the loss of capacity for refining in the Middle East, and the damage caused to Russian facilities by Ukrainian drone attacks. The shortfall in fuel production has been?compensated by an increase in U.S. exports. American refineries are operating at or close to record levels of utilization. This support could soon disappear. The U.S. Gulf Coast is facing a threat from seasonal maintenance in preparation for winter and hurricane season. Low refining will hinder?efforts for rebuilding depleted fuel stocks, helping to sustain high prices and margins in the refining industry, which are at record levels. Inventory levels are particularly alarming. According to the IEA, Global observed that oil stocks dropped by 2.4m bpd during the second quarter. This is their biggest quarterly draw since at least a decade. U.S. Diesel inventories are the lowest they have been for this time of year since three decades. Meanwhile, gasoline stocks are their lowest seasonal level since 2012. The freight markets send a similar signal. According to LSEG, benchmark rates for large crude carriers that transport oil from the Middle East to China have risen from $300,000 a day at the beginning of July to $490,000. This is equivalent to $5 a barrel and almost 10 times more than the rate set up at the beginning of the year. These rates reflect the shipowners' unwillingness to enter conflict zones, and the growing demand for oil tankers that can transport fuel and oil from distant suppliers such as Brazil and the U.S. The longer the Hormuz impass continues, the less it looks like a temporary shock to the oil supply and the more this resembles an overall reshaping in the global oil trade. The markets are struggling to cope with a world of opaque flows, shrinking inventories, stretched refining capacities and no credible diplomatic pathway toward restoring the Gulf trade. This growing awareness, and not the battlefield developments, could ultimately keep oil prices high well into next. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. 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Russia shoots down 180 drones overnight in the Moscow region, says mayor
Sergei Sobyanin, the mayor of the Russian capital, announced on Telegram that Russia had shot down?180 drones overnight in the Moscow area. This was one of the largest Ukrainian air attacks against?the Russian Capital. Regional governor Andrei Vorobyov confirmed that drones had hit the warehouse of Russian ecommerce company Wildberries, as well as other facilities near Moscow. Wildberries, which is a frequent target for Kyiv attacks after Russia's full invasion of Ukraine 2022, said in a press release that drone debris had caused minor damage to one of its walls. Sobyanin said that '620 drones' were heading towards the area surrounding the Russian capital from?Monday night to 5 am (0200 GMT) and Moscow temporarily restricted flights at its airports. (Reporting and editing by Christian Schmollinger, Stephen Coates, and Jekaterina Glubkova from Tokyo)
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Board overseeing Washington Dulles Airport to vote on $19.9 Billion overhaul plan
Washington Dulles Airport's board of directors will vote Wednesday on a $19.9-billion overhaul plan. This includes $3.75-billion to build new underground tunnels and replace the slow vehicles that transport passengers along tarmac. In a summary posted on Monday, Metropolitan Washington Airports Authority stated that the $6.2 billion renovation of the main terminal of the Washington area's primary international airport is scheduled to begin late in 2027. The Metropolitan Washington Airports Authority said the construction of new?tunnels will begin in early 2020, to remove "People Mover' vehicles and extend to a new concourse. Construction of one new concourse planned would not be finished until at least 2039. Prior approval was given for $4.4 billion. Last month, President Donald Trump revealed the $22 billion plan. The $19.9-billion proposal that will be voted upon does not include the massive new parking garage and transportation center. This announcement is just the latest of a number of major projects Trump announced around and in the U.S. Capital. Plan includes 5,000,000 square feet of renovated or new airport space. This plan is one of the biggest airport renovations in U.S. history. It will be funded largely through municipal bonds. Many have asked how the plan will impact flight costs. Airport authority approved separate $7 billion capital plans?for Dulles. Dulles airport was the largest U.S. airport with the highest passenger traffic growth last year. In 2025, the?airport handled 29 million passengers total, an increase of 6.4%. This fall, it will get ?a new 435,000-square-foot (40,412-square-meter), 14-gate concourse serving United customers. Trump's Dulles project is the latest major reconstruction project in Washington. Dulles Airport is located about '25 miles (40km) from Washington, D.C. Eero Saarinen, a Finnish architect, designed the terminal building of the airport. It is a unique structure with a roof that slopes upwards on both sides. Reporting by David Shepardson, Editing by Mark Porter & David Gregorio
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Soybeans are on the rise as crude oil prices jump and there is a strong soybean crush
Analysts said that the Chicago Board of Trade soybean futures rose on Monday, as higher crude oil and a stronger crush rate of soybeans supported the market. Wheat prices fell after investors took profits on last week's gains. However, the continued disruption of Russian and Ukrainian exports via the Black Sea helped to support the market. The corn and soybean futures rose as well, boosted by caution about U.S. crop yield prospects ahead of a closely followed Midwest tour scheduled for this week. Chicago Board of Trade futures for soybeans, the most active contract, rose by 23-1/2 cents a bushel to $12.16. CBOT corn climbed 6-1/4 -cents a bushel to $4.89 1/2. National Oilseed Processors Association (NOPA) data shows that NOPA members crushed 216.647 millions bushels of soybeans last month. This is up by 1.1% compared to the 214.340 bushels in June, and 10.7% compared to the 195.699 bushels crushed a year ago. NOPA data shows that the total was based on a daily crushing rate of 6.989 millions bushels per day. This is down from 7.145million bushels?per day one month earlier. After the USDA cut its official forecasts for corn and soya yields last week, traders are waiting to see the results of the 'Pro Farmer field trip this upcoming week. The heavy rains that fell in the Midwest region last week have also led to uncertainty about whether certain crops will be affected by excessive moisture. After Monday's closing, the USDA will release its weekly crop ratings. These ratings provide a snapshot of field conditions. Chinese demand?continued support soybeans. Last week, traders reported that China has already purchased approximately 7 million metric tonnes of U.S. soya beans. The Chicago Board of Trade's most active wheat contract fell by 1/4 cent, to $6.89-1/4 a bushel. The recent attacks by Russia and Ukraine on shipping have curtailed shipments at Russia's major grain export hub, Novorossiysk. The disruption has caused the market to shift its attention away from the ample global?supplies, which were highlighted by the U.S. Department of Agriculture last week in a world crops?report -- and towards a possible shortage in export availability. According to traders, the number of cargoes arriving at Russia's Black Sea port has decreased while Ukraine relies on western neighbours such as Romania for shipments. Ukrainian authorities reported on Monday that a Russian attack had targeted the port infrastructure in Ukraine's Izmail District on the Danube River. Reporting by Heather Schlitz, Chicago; Additional reporting from Gus Trompiz, Paris; Ella Cao, Lewis Jackson and Subhranshu Sahu in Beijing; Editing and production by Subhranshu Sahu and David Goodman
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AirBaltic bondholders in Latvia agree to waive two interest payments
AirBaltic's bondholders agreed to allow the airline to?skip interest in?August?and November?as it?seeks?fresh investment?, the Latvian state-controlled airline announced on Monday. Holders of over 75% of the EUR380 million ($440 millions) in bonds issued by the airline with a coupon of 14.50%, voted to add the interest to principal rather than receive cash payments. The holders waived the?minimum liquidity requirement' until November. The company stated that "the approved resolutions ensure continuity of airBaltic operations. Passengers can book future travel with confidence. LSM, the national broadcaster, reported that Latvian Prime Minister Andris Kuulbergs stated that bondholders have not approved of the entire business plan proposed by the airline. He did not provide any details. He said that his government would ask the parliament to consider additional support for the airline. For example, converting its EUR50million bondholding into equity. AirBaltic announced last week that it is seeking approval from bondholders to raise EUR225 Million in interim financing for near-term liquidity requirements. The company is also proposing an even broader restructuring, whereby bondholders will swap part of their EUR380 million in debt for equity and the rest with up to EUR125 millions of new debt. The airline also said that other unspecified obligations will be converted into equity. According to the revised business plan, AirBaltic will reduce its fleet of Airbus A220-300 aircraft from 54 at present, to 36 by the end of 2026, and then gradually expand it to 40 by 2030. The plan, on a longer term basis, envisages a recapitalisation via EUR225?millions of new debt as well as EUR100?millions of fresh equity. Last month, Raman Singla, Fitch Ratings' director of ratings, said that airBaltic would need to deal with a projected cash outflow in 2026 of EUR156 million to continue to operate?as planned. Singla stated that the capital structure of the airline, which includes leased planes and "very costly" bonds due in 2020, is "not sustainable to our view".
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Russia's Far East will test drones and unmanned vehicles for trade with China
A Russian regional official stated that self-driving vehicles and drones could be used to transport goods between China and Russia's Far East. The brisk trade across the border has prompted a search for?new forms of cargo transportation?to avoid congestion. The Amur region of Russia, which?shares? a long border between China and Russia, is developing trial programmes with Chinese authorities in partnership, said the deputy chairman of the regional government, Pavel Puzanov. He was speaking at a business conference in Kazan. China is providing a lifeline for Russia's economy after it was sanctioned following the invasion of Ukraine by Russia in February 2022. It has bought Russian coal and gas, as well as selling its neighbour everything from cars to electronic goods. Rapid growth puts pressure on existing infrastructure and border checkpoints. PROJECTS INCLUDE DRONE BRIDGE OVER BORDER RIVE In one of the trials, the 'drone bridge' will be built between Blagoveshchensk in Russia and Heihe in China. Both cities are located across the Amur River. Puzanov stated that the drones would be used to transport high-margin goods such as electronic components up to 50 kg. According to a presentation at the forum, a second project developed by Russian autonomous driving company Navio would allow Chinese trucks without drivers to transport heavy freight between two cities. According to a presentation made at the forum, cross-border tests with a safety pilot in the cabin will be conducted in 2027. Fully autonomous operations are possible by 2028. The Chinese ambassador to Russia Zhang Hanhui stated that the trade between China and Russia rose by 26% from January to July. This could be a record-breaking year. Chinese data from January showed that China's trade with Russia in 2025 had dropped from a record high in 2024, and was the lowest it has been in five years. In 2027, passengers will be able to travel between Blagoveshchensk, Russia and Heihe, China, in just five minutes, without border checks. Reporting by Alessandra Prente and Helen Popper; Editing by Helen Popper and Alessandra Prente
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Germany's BASF CEO: Low river levels are preventing BASF from fully supplying some products.
The low water levels of the Rhine River have made it impossible for a German chemical company, BASF, to supply certain products, according to CEO Markus Kamieth. A prolonged drought is threatening to harm Germany's economy. Kamieth stated that although the drought has not had a significant impact on financial results, the risk that production will be disrupted is increasing every week. Despite the challenges, 'Kamieth' said that the situation was under control. He added that the group had been'significantly better prepared for extreme weather conditions than in 2018 when the Rhine water levels were depleted due to?drought. "Everything remains within manageable boundaries and, in comparison to?2018 this is a much smaller challenge for BASF," Kamieth said on the sidelines at the groundbreaking ceremony for an expansion of a rail and road terminal at the company's headquarters in Ludwigshafen. On Monday, the water level gauge at the Chokepoint of Kaub near Koblenz was around 6 cm (2.36 inches), well below the previous low of 25 cm (9.84 inches) set in 2018. Early August, analysts said that the Rhine's record low levels could halt German growth and drag Europe's largest economy back to stagnation. This is just when it was showing signs of a long awaited recovery. In order to maintain supplies at its main plant in Ludwigshafen - which gets about 40% of its raw materials from the river -?the company relies more and more on trucks, rail transport and low water vessels. Reporting by Patricia Weiss, Writing by Friederike Weine and Linda Pasquini, Editing by Ludwig Burger & Helen Popper
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Fuel shortages in Russia force Russia to receive Indian gasoline cargo
Three industry sources and LSEG data revealed that at least one cargo of fuel?from India? has entered the Russian domestic market as Moscow tries to alleviate fuel shortages caused by a?Ukrainian drone swarm on refineries. Russia has taken a number of measures to help support its domestic fuel market following repeated Ukrainian attacks against oil refineries that caused shortages and price spikes. These measures include the import of gasoline by rail from Belarus and Kazakhstan, as well as a ban on fuel sales. In July, Deputy Prime minister Alexander?Novak announced that Russia would import oil products in order to stabilize the domestic market. Sources said that an Oman-flagged ship loaded 68,000 metric tons of fuel at the Port Said Anchorage as part of a ship to vessel transfer from the tanker Agni which was loaded in India's Vadinar Port. Shipping data revealed that the tanker unloaded its cargo in early August at Vitino, a Russian Arctic port. Sources said that the gasoline was being transshipped to domestic buyers via rail and that shipments had already begun. Industry sources have previously said that traders sold Russia gasoline produced from Indian refiner Nayara Energy. LSEG data indicates that 'at least two additional gasoline cargoes are expected to arrive in Russian ports over the next two weeks. Last week, it was reported that Russia began seaborne imports from Asia of diesel into its Far East port. Reporting by Mark Potter Mark Potter (Editing by Mark Potter).
US railroad Union Pacific made money by charging fuel costs for the Iran war to cover its costs.
U.S. railroad Union Pacific collected more than $91.1 million in fuel surcharges during the second quarter compared to what it paid for fuel, a filing made with the Surface Transportation Board and first reported by.
These excess surcharges increased Union Pacific's profits, highlighting criticisms from some shippers who believe that surcharges intended to recoup the rising costs of petroleum due to U.S.-Israeli war against Iran can be excessive.
The only U.S. transport companies to report fuel costs as well as fuel surcharge revenues to regulators is railroads. This rare insight provides a unique look at how fuel surcharges improve company profits.
Union Pacific says its fuel surcharge increases are in line with industry standards. STB filings revealed that only Norfolk Southern, CSX, and BNSF had excesses of $3.6 and $8.4 millions respectively during the second quarter.
Union Pacific stated that fuel surcharges were a part of the total cost they negotiate with their customers. They also take this into consideration when choosing Union Pacific.
Union Pacific reported last month that fuel surcharges increased earnings by 14 cents per share during the second quarter. Based on the number of shares outstanding, this amounts to $83.2 millions in profit.
NORFOLK NORTHWEST MERGER
Union Pacific seeks regulatory approval for the $85 billion purchase of Norfolk Southern in order to create the first railroad operator that spans?the entire continental United States.
According to the company, the merger will result in a 36% market share on carloads. This estimate does not include the double count of interline shipments.
The Stop the Merger -Coalition includes six state attorneys general as well as rival railroads, unions, and groups representing agricultural and chemical industries. They claim that creating a railroad which has a 50% share of the domestic rail freight market would decrease competition and increase shipping costs, ultimately affecting consumers.
The coalition didn't immediately respond to an inquiry about the surcharges.
In a STB filing made this month, BNSF-owned by Berkshire Hathaway said that only Union Pacific would benefit from the proposed merger. The company noted that the resulting firm "will have all the incentives and opportunities to apply UP’s long-standing high-price strategy on a nationwide scale." BNSF declined comment.
U.S. transportation industry charges fuel surcharges based on benchmarks like the Department of Energy On-Highway Diesel Fuel Price and a proprietary formula known as a “trade factor.” Surcharges are a long-standing practice that has survived legal challenges and regulatory scrutiny for decades.
"Rail fuel charges have increased 43 cents per?mile overall since March, and are now above the previous record set in September 2008. This is not a mistake," said Kyle Henzel. He's the president and chief operating officer of shipping platform Ship.com.
There's usually a delay of up to 2 months between changes in fuel prices and surcharges on railroads. The March fuel surcharge for this year, for instance, was based off the January diesel prices, before the Iran War began.
Union Pacific's STB filing revealed that in the first quarter it collected fuel surcharges of $607.6 millions, which was $34.8 million more than what it had paid for fuel.
Union Pacific's fuel costs were $56.4 million higher than the surcharge revenue in both the first and second quarters.
Union Pacific is the only major railroad that reported fuel surcharges exceeding?fuel prices for the first half 2026.
Union Pacific and BNSF competed for dominance in the west of the United States. STB filings show that BNSF surcharges for the first half of this year were $658.1 million less than fuel costs.
The company's STB documents showed that Union Pacific generated $2.3 billion in fuel surcharges last year. This was $48 million more than it spent on fuel. (Reporting and editing by Timothy Gardner and Rod Nickel; Additional reporting and editing by Sabrina Valle and Lisa Baertlein)
(source: Reuters)