Gulf Oil Exports in July 2026: A 40% Supply Gap, a Failed Hormuz Deal, and Aramco’s 18-Month Warning

Iraq’s Export Recovery: From Near-Zero to 1.5 Million bpd

Iraq, OPEC’s second-largest producer, saw a significant recovery in July after its exports had fallen to just ~500,000 bpd in May–June . By July, Oil Minister Bassem Mohammed Khudair reported average shipments of about 1.5 million bpd via the Strait of Hormuz and the Ceyhan pipeline . Iraq raised output at three key southern fields — West Qurna 1, North Rumaila, and Artawi — to full capacity as tankers began arriving again, according to an order from state-run Basra Oil Co. . OPEC also began restoring Iraq’s pre-war production allocation to 4.378 million bpd for July, though actual output remained well below that level due to the Hormuz disruption .

The Failed U.S.-Iran Framework: How the Hormuz Deal Collapsed

The foundation for July’s brief recovery was a U.S.-Iran memorandum of understanding (MoU) signed in June, intended to guarantee safe passage through the Strait of Hormuz . But the deal backfired in July. Critics charged that its language effectively gave Iran official power in the strait and was too vague on enforcement mechanisms . On July 1, indirect U.S.-Iran talks in Doha concluded with "no sign they had made headway" on lasting peace or Hormuz shipping safety . Then on July 11, Iran declared the Strait of Hormuz closed after striking a vessel that had "jeopardized maritime security," warning of a "severe response" to any retaliation . On July 14, the U.S. military reimposed a blockade on Iranian ports and launched sustained airstrikes on Iranian infrastructure . Iran retaliated with drones and missiles at U.S.-allied Gulf states, and the cycle of escalation was fully reignited .

Vessel Attacks and Military-Assisted Transits

In early July, Iran attacked at least three tankers navigating the strait . On July 11, it struck a vessel that had "switched off its systems" on an unapproved route . Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that Hormuz was a "red line" and threatened to strike all infrastructure across the Gulf region if the U.S. hit Iranian infrastructure . The U.S. responded with multiple consecutive nights of strikes through mid-July .

The U.S. Energy Department reported that more than 8 million barrels of oil transited the Strait of Hormuz on July 13 with U.S. military assistance . Still, overall Strait traffic fell to roughly 10% of pre-war levels by late July, per Aramco’s CEO .

Saudi Aramco’s 18-Month Inventory Warning

On August 4, Saudi Aramco CEO Amin Nasser delivered a stark assessment: the conflict with Iran had removed 2.6 billion barrels of crude from global supply since February 2026 . Nasser warned that even if the Strait of Hormuz reopened immediately, the world would need 18 months at an average rate of 2.1 million bpd to replenish depleted inventories . He also noted that the world was losing more than 100 million barrels for every week the route stayed closed .

Red Sea Threats and Yanbu Loadings

The disruption was not limited to Hormuz. Reuters’ August 5 report on July's data specifically cited "Red Sea threats" — referring to Houthi attacks near the Bab el-Mandeb strait — as a factor slowing crude loadings at Saudi Arabia’s Yanbu terminal on the Red Sea coast and forcing tankers to reroute . This added a second chokepoint disruption on top of Hormuz, compounding the pressure on Saudi crude flows normally routed via the Red Sea to European and North American markets .

Global Crude Market Context

The interim ceasefire in June had pushed benchmark crude prices sharply lower: North Sea Dated fell by $31/bbl over June to $68/bbl by early July, according to the IEA . The collapse of the framework and renewed hostilities in July reversed that trend, putting supply disruption risk firmly back at the center of market pricing. On the surface, July's monthly average of 10.7 million bpd looked stable, but it masked a sharp intra-month spike followed by a collapse that left exports more than 40% below the pre-war baseline by month-end .