On July 26, 2026, global energy markets saw sharp turbulence. International oil prices plunged over 5% after OPEC+ unexpectedly announced a larger output increase, with Brent crude breaking below the $70 per barrel psychological mark, the lowest since February this year. On the natural gas side, with inventories continuing to climb in the U.S. and Europe, Henry Hub gas futures fell below $3 per million British thermal units, and Asia spot LNG prices also softened. Thailand's domestic energy prices followed the decline, with diesel retail prices cut by 0.5 baht per liter, the second consecutive weekly drop.
OPEC+ Output Hike Exceeds Expectations, Oil Supply-Demand Balance Loosens
At a ministerial meeting on July 25, OPEC+ resolved to raise the daily output increase from the original 400,000 barrels to 650,000 barrels starting August, far exceeding market expectations. This move was mainly due to dissatisfaction among some members (e.g., Saudi Arabia, Iraq) with previous quota limits and concerns that rising U.S. shale output would erode market share. The post-meeting statement said that global oil demand recovery is slowing but supply-side competition is intensifying, so early capacity release was decided.
Hit by the news, Brent futures sank as much as 5.8% to $68.42 in Asian trading on the 26th, with WTI falling to $65.30, a six-month low. Analysts said the move breaks the "gradual increase" rhythm of the past two years, signaling loosening discipline within the alliance and potentially triggering a new price war.
Supply Pressure Complements Demand Concerns
- U.S. shale growth: The latest EIA report shows U.S. crude output reached 13.2 million bpd in July, up 800,000 bpd from a year ago, curbing oil price rebound.
- Slowing China imports: China's crude imports in June fell 4% year-on-year, with refinery utilization down to 75%, as weak economic recovery momentum dampens demand.
- Iran nuclear talks progress: Reports suggest the U.S. and Iran are close to a deal that could lift oil export sanctions, adding about 1 million bpd of supply.
Gas Inventory Glut, Prices Fall to Cost Levels
Natural gas markets also faced headwinds. U.S. gas stockpiles reached 3.2 trillion cubic feet, 18% above the five-year average; Europe's inventories exceeded the 90% storage target ahead of schedule. Despite peak summer cooling demand, industrial demand was weak, leading to oversupply. Henry Hub futures closed at $2.85 on the 26th, the lowest since December 2024; Asia JKM spot fell to $7.8 per mmBtu, down over 40% year-to-date.
Chevron and Shell have announced cuts in U.S. gas drilling, but the oversupply pattern is hard to change short-term. Thailand's PTT said imported LNG long-term contract prices, linked to Brent, will be delayed in reflecting the decline, and retail gas prices may be reduced in the next three months.
Thailand Domestic Oil and Gas Prices Follow Drop
Thailand's Energy Ministry announced on the 26th that starting July 27, diesel retail reference price will be cut by 0.5 baht to 29.8 baht per liter. Gasoline (91/95) prices, due to wider international gasoline crack spreads, were adjusted only slightly by 0.1 baht. LPG cylinder prices remained unchanged, but the minister said the subsidy mechanism would be reviewed. The SET energy index fell 2.3% today, with PTT down 1.8% and PTTEP down 2.5%, reflecting market concerns about energy company profit outlook.
Outlook: Short-Term Bearish Volatility, Focus on OPEC+ Next Steps
Multiple investment banks cut oil price forecasts. Goldman Sachs lowered its Q3 Brent estimate to $75, while Morgan Stanley sees $70 as a new range floor. On gas, with Europe entering winter storage season, prices may find support around $3. Domestically, if international oil prices continue to fall, the government may introduce additional tax cuts to stabilize livelihoods.
Investors should closely watch U.S. employment data and the Fed rate decision in the first week of August. If recession signals appear, energy demand may suffer further. For Thai stock investors, high-dividend energy stocks like PTT and BANPU offer attractive yields, but short-term volatility is increasing; it is advisable to stagger positions and set stop-losses.
Overall, the oil and gas double blow on July 26, 2026 marks a new weak cycle for energy markets. The fuel oil market will remain constrained by oversupply and demand uncertainty in the near term. Investors should stay cautious and wait for rebalancing signals.
