Since the Houthis announced their blockade of the Red Sea, several tankers have changed course to avoid the Bab el-Mandeb, heading north through the Suez Canal and potentially taking a much longer, more expensive route to reach Asian customers by sailing around Africa. Three oil tankers loaded with Saudi oil for China and India made U-turns in the Red Sea, heading towards the Suez Canal rather than transiting via the Yemeni coast. The Houthis told shipping companies not to load or discharge cargo at Saudi Arabian ports, or they ​may be targeted. Ships with links to Israel, the United States or Saudi Arabia are at a higher risk of being attacked ⁠by the Houthis and are being advised to avoid voyages through the Red Sea and Gulf of Aden until the threat level decreases.

Saudi Arabia has been using its Yanbu port as the outlet for its east-west pipeline via the Red Sea, where it was exporting about 5 million barrels of oil per day. Some 12% of global seaborne oil passed through Bab al-Mandeb before the war. Loadings at Saudi Arabia’s Red Sea port at Yanbu have averaged around 4 million barrels a day since the war began, up from around 1 million barrels a day before the war. Of those, about 2.5 million barrels a day head south through Bab al-Mandeb, toward Asia. Two Chinese supertankers carrying a combined 4 million barrels of oil were attempting to exit the Red ​Sea via the Bab el-Mandeb Strait on July 23, apparently escaping a blockade on shipments of Saudi oil by Yemen’s Houthi militias even as other Saudi vessels came under attack.

War risk insurance costs have risen with risk assessments for Saudi ports being re-evaluated, according to the insurance industry. Indicative war risk ​premiums rose to around 0.75% of the value of a ship, from around ⁠0.3% before the Houthi blockade announcement. The full closure of the Bab el-Mandeb strait, the southern gateway linking the Red Sea ​to the Gulf of Aden, would halt Saudi oil exports to Asia ​and could ⁠reduce global oil supply by 7%.

Re-routing cargoes from the Red Sea via the Suez Canal to reach buyers in Asia will add another 10,000 ​nautical miles and an extra 34 days en route to circumvent Africa, resulting in additional estimated freight costs of more than $5 million, ​excluding fuel or insurance costs. In addition, transit costs to cross the Suez Canal would be about $1 million per vessel, according to Reuters. Further, the Suez cannot handle Very Large Crude Carriers (VLCC’s), the largest class of oil tankers, which can carry upwards of 2 million barrels in a single load. The Saudis will be forced to source smaller ships to carry their oil.

Brent oil futures crossed the $100 per barrel mark for the first time since May 26 by late morning ET on July 23. The international benchmark was up about 7% at $100.70 per barrel by 11:41 a.m. ET. U.S. West Texas Intermediate oil advanced about 6% to $92.25 per barrel. Oil prices have risen more than 30% this month as fighting in the Middle East escalates.

Conclusion

Oil prices rose after Iran’s Houthi allies attacked two Saudi oil tankers in the Red Sea, after the militants declared a maritime embargo against Saudi Arabia on July 20. Shipping data showed both ‌tankers supply ⁠oil to Saudi power plants and local refineries. If the Bab el-Mandeb Strait – the “Gate of Tears” – that controls access from the Red Sea is effectively closed, it becomes a second chokepoint for oil leaving the Middle East that could halt Saudi oil exports to Asia and ⁠reduce global oil supply by 7%. An alternate route is through the Suez Canal, but it is much longer, takes longer, and is costlier, and it can only handle smaller tankers than VLCCs.

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One of the options the Chevron consortium is considering is rebuilding the pipeline from Kirkuk in northern Iraq to the Syrian port of Baniyas on the Mediterranean Sea that has been shut for more than two decades when it was damaged during the U.S. invasion of Iraq in 2003. The consortium plans to conduct technical studies to determine whether to build a new pipeline or update existing infrastructure to connect to pipelines through Turkey. The company has been in discussion with the Iraqi government for 12 to 18 months.

The Kirkuk-Baniyas Pipeline

Rehabilitation of the Kirkuk-Baniyas pipeline, if undertaken, is likely to take years and will have its own security and logistical hurdles. The pipeline is slated to have an initial transport capacity of 2 million barrels per day.

Chevron is also discussing investments in two major Iraqi oil fields, West Qurna 2 and Nasiriyah. Chevron had entered into exclusive talks with state-run Basra Oil for a stake in West Qurna 2, one of the world’s largest onshore oil fields. Iraq removed Russia’s Lukoil as the operator of the oil field in the southern part of the country, about 40 miles north of Basra. The field produces some 460,000 barrels of oil a day. Chevron has been given exclusive negotiation rights for a year to secure the deal. Nasiriyah is a smaller oil field in southern Iraq. Chevron and Iraq signed an agreement in principle last August to develop the Nasiriyah oilfield, consisting of four exploration blocks, in addition to developing other producing oil fields.

Iraq is the Middle East’s second-largest oil producer behind Saudi Arabia. It normally produces 5% of the world’s oil, about 4.5 million barrels a day, but its exports have dropped during the conflict with Iran because of the closure of the strait. Iraq’s oil production fell from 4.2 million barrels per day in February to 1.45 million barrels per day in May. The country’s large southern fields depend almost entirely on exports through the Strait of Hormuz (about 90% flow through the strait); the northern pipeline alternatives to Turkey’s Ceyhan terminal are limited.

The Trump administration supports new Iraqi Prime Minister Ali Al Zaidi, who has been in Washington recently, meeting with President Trump and attending a U.S.-Iraq Business Summit with Energy Secretary Chris Wright and others where $60 billion in deals were signed. The United States is facilitating conversation between Iraq and Syria on future energy development projects and supports the growing diplomatic relationship between the two countries. “We’re going to be doing a lot of deals,” President Trump said. “We’re going to create a lot of jobs for both countries, and we’re going to be taking out a lot of oil. A lot of oil is coming out, and the American companies are doing it.”

Gasoline and diesel prices are rising again due to the military actions by both the United States and Iran. On July 18, American diesel prices rose above $5 a gallon, hitting an average price of $5.088, according to AAA, and regular gasoline prices hit $3.992 a gallon – below its peak of $4.56 in the spring. President Trump said this week that the strait is reopened for all nations except Iran, but safety concerns remain as Iran is still able to strike at commercial shipping vessels in the waterway.

Conclusion

Chevron is taking steps to construct a pipeline connecting Iraqi oil fields and reservoirs to the Syrian coast as oil majors seek alternate routes to the Strait of Hormuz. Chevron is considering rebuilding a pipeline from Kirkuk, Iraq, to the Syrian port of Baniyas on the Mediterranean Sea. The deals with Chevron are part of a larger plan for Iraq to shore up investment from the United States. Iraq wants to increase its oil production and diversify its export routes to avoid the strait, as do other Middle East oil producers. Nations across the Persian Gulf have poured billions of dollars into new pipelines, rail corridors and energy storage hubs.

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Beginning in 2027, the regulations require fossil-fuel imports into the EU to comply with monitoring, reporting and verification requirements to reduce methane emissions. By 2030, imports exceeding a methane-intensity threshold would face penalties, with the fine amounting to up to 20% of their annual turnover. Over the past few months, companies in the chemical, oil and gas, and energy trading sectors have called for a delay in the requirements, warning that importers risk being pushed into non-compliance. They cited verification as a major bottleneck, with too few recognized protocols and verification bodies. ⁠No EU ​country has established a verification body to enforce the legislation, so companies currently have no way to certify compliance.

The International Energy ​Agency (IEA) has warned that the EU’s methane emissions rules could limit the oil supplies available ‌to the bloc. According to the IEA, around 22.5 million barrels per day of global oil production ⁠is expected to comply with the criteria in 2027, but not all of it would be available ​to the EU. Reuters reports that the EU imported 9.3 million barrels per day of oil in 2025. According to the IEA, the oil that EU refiners can import legally could decline by more than 50% because some grades of oil cannot easily be substituted and certain producers may prefer to sell into more profitable ​markets outside Europe. For example, heavy oil used in asphalt production is supplied largely by ​countries such as Mexico and Venezuela, which do not meet the EU methane standard.

The EU methane regulation could also be difficult for American LNG exporters to comply with. The EU requires importers to provide data “at the level of the producer,” which is likely to be particularly challenging for American LNG exporters. Unlike most of the world, U.S. LNG export facilities source natural gas from a vast pipeline network. Supplies are commingled, including volumes sourced from different production basins from many different companies with varied methane intensities.

According to the Energy Information Administration, in 2025, U.S. LNG exports to Europe reached a record 10.3 billion cubic feet per day, up from 6.3 billion cubic feet per day in 2024, and accounted for 68% of LNG export volumes. Exports to Italy and Poland rose the fastest in Europe.

Halfway through 2026, the United States remains the EU’s dominant LNG supplier, shipping it about 31.6 million metric tons, or 59% of the EU’s imports of LNG so far this year. By the same point in 2025, the U.S. had met about 55% of the EU’s year-to-date LNG imports.

Conclusion

Although 17 of the 27 EU member states requested specific adjustments to the import-related clauses of the methane rule, the European Commission has refused to change the regulations and is instead offering non-binding recommendations. The regulations target methane emissions within the EU and impose new requirements on fossil fuel importers. It highlights the difficulties the EU encounters when applying more rigorous environmental regulations to products from non-EU nations. As Europe moves to be free of Russian gas imports by 2027, it will become more dependent on imports from the United States and other countries, and how the methane regulation gets implemented will determine the future of LNG flows to Europe and oil as well. These regulations could have a detrimental effect on Europe’s ability to supply natural gas and oil to its people in the future, threatening EU energy security. The EU’s continued adherence to its climate change and net-zero orthodoxy is creating significant problems as EU economies are confronted with policy-driven energy costs and limits to availability.

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Brent oil prices rose above $90 a barrel on July 20, their highest level in over a month, before falling to around $88 a barrel after Iran’s foreign ministry said negotiations with the United States could be pursued based on national interests. According to Secretary of State Marco Rubio, the United States was still willing to pursue diplomacy, and Iran had signaled directly and through mediators that it wanted to negotiate. U.S. gasoline prices rose back to $4 per gallon on July 20, according to AAA, rising 13 cents over the past week. Prices at the pump were last at that level on June 17, when the U.S. and Iran signed an interim agreement that would reopen the strait during a ceasefire.

Iran’s Houthi allies in Yemen declared a maritime embargo against Saudi Arabia on July 20, which could exacerbate the oil supply disruption triggered by Iran’s tanker attacks in Hormuz. The Houthis have repeatedly threatened to close the Bab el-Mandeb Strait, which connects the Red Sea to global markets where the Saudis have diverted millions of barrels of oil per day through a pipeline to an export terminal. Those exports have added about 5 million barrels per day to the global market. Iran has also pressed the Houthis to close the Red Sea route if the U.S. attacks Iranian power infrastructure.

Putting further pressure on the oil market, exports from the Caspian Pipeline Consortium (CPC) terminal off Russia’s Black Sea coast were suspended on July 20 following drone attacks on two tankers reportedly by Ukraine. The CPC terminal in the port of Novorossiysk, while in Russian territory, is the main export hub for Kazakhstan’s 2 million barrels per day of oil.

Beyond oil market pressures, the refinery sector is under immense strain as it works to produce the fuels the public needs. Gasoline and diesel inventories are near multi-year lows, refining margins are at record levels, and refinery throughput remains severely curtailed across key producing regions. China has limited oil imports to its private teapot refineries and has cut exports of refined products. The Chinese even started using electric taxis instead of personal cars, and its petrochemical sector also ​reduced its oil demand. China’s reduction in oil imports is one of the major reasons that oil prices have remained somewhat contained on the global market.

U.S. inventories of diesel have been tight due to refinery closures ​in the West. Disruptions to Middle Eastern exports due to the war in Iran have tightened the market. A temporary ban on Russian ​exports announced this month exacerbated the global diesel shortage even more as Russia loses refining capacity due to Ukraine intensifying attacks on its energy ⁠infrastructure. U.S. and global refiners have lowered gasoline output in favor of higher diesel and jet fuel yields, which could become a concern.

Conclusion

Hostilities are escalating in the Middle East as the United States and Iran continue their attacks, raising oil and gasoline prices. On July 20, Brent oil prices, the international benchmark, rose over $90 a barrel but later settled at $88 a barrel after Iran’s foreign ministry said negotiations with the United States could be pursued. U.S. gasoline prices returned to $4 a gallon on July 20, increasing 13 cents over the past week. Iran’s Houthi allies in Yemen declared a maritime embargo against Saudi Arabia on July 20, which would cut off oil exports from the Red Sea, where Saudi Arabia is exporting about 5 million barrels of oil per day via a pipeline to its port on the Red Sea. Refinery margins are high as refinery capacity is tight due to refinery closures, attacks on Russian refineries by Ukraine, China’s reduction in refined product exports, and the effective closure of the Strait of Hormuz, limiting refined products from the Middle East.

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The settlement states, in part, that the federal government will not limit oil and gas leasing in ANWR by artificially reducing the amount of surface disturbance permitted. Under the 2017 Act, surface disturbance is limited to 2,000 acres in the 19.3-million-acre ANWR. The settlement makes “a clear admission that the … Lease Sale ‘violated the 2017 Tax Act by preventing meaningful leasing, exploration, and development of oil and gas on the Coastal Plain, as Congress mandated.’” The Alaska Beacon notes that the new settlement agreement increases the odds that ANWR will stay open to drilling even when a new president is elected.

The Biden administration did everything it could to shut down energy development in ANWR despite federal law requiring it. It canceled leases under a 2021 ANWR lease sale and then attempted to resell the affected land during the 2025 sale. AIDEA had bought the leases in the 2021 sale and, along with the state, is still suing over the result of that lease sale. The 1002 Area in ANWR has a mean estimate of 7.8 billion barrels of technically recoverable oil and encompasses the northern reaches of the area.

National Petroleum Reserve-Alaska

More focus has been on the National Petroleum Reserve-Alaska (NPR-A), due to interest from oil companies and existing infrastructure. The NPR-A consists of approximately 23.5 million acres, about the size of Indiana. It is located to the west of Alaska’s Prudhoe Bay oil fields, while the Arctic National Wildlife Reserve lies to the east and is about the size of South Carolina. NPR-A holds an estimated 8.8 billion barrels of oil. Under the Trump administration, nearly 82% of the reserve has been reopened for oil and gas leasing.

ConocoPhillips’ Willow Project, approved during the Biden administration, was the first major project to take place in the reserve, and others are planned. The Willow project could produce about 180,000 barrels of oil per day by 2029 and inject more oil into the Trans-Alaska Pipeline System (TAPS)—a system that needs more oil throughput to remain operational. To move the oil southward from the Arctic Ocean, Alyeska Pipeline Company operates the 800-mile Trans-Alaska Pipeline System (TAPS), which terminates at the ice-free port of Valdez. The pipeline is only transporting about one-quarter of its capacity, and as throughput declines, costs increase. During 2024, ConocoPhillips’ Nuna project became operational and contributed to higher oil proved reserves in Alaska.

President Trump Encourages Energy Development in Alaska

Under President Trump, federal policy changes aim to increase Alaskan production. On January 20, 2025, President Trump issued an Executive Order, Unleashing Alaska’s Extraordinary Resource Potential, which expedites the permitting and leasing of energy and natural resource projects in Alaska and prioritizes the development of Alaska’s liquefied natural gas (LNG) potential. The order highlights the sale and transportation of Alaska’s LNG to other regions of the United States and allied nations within the Pacific region. The North Slope is rich in natural gas produced alongside oil but cannot be transported to markets because no pipeline exists. On March 18, 2026, the Bureau of Land Management awarded 1.3 million acres in a National Petroleum Reserve lease sale. The One Big Beautiful Bill Act of 2025 requires the Bureau of Land Management to hold at least four more lease sales in the NPR-A over the next 10 years, offering a minimum of 4 million acres at each sale.

Conclusion

The federal government under President Trump has agreed to permanently loosen rules for oil and gas lease sales in ANWR as part of a lawsuit over the 2025 oil lease sale, which drew no bids because the Biden administration restricted the available acreage. The Alaska Industrial Development and Export Authority (AIDEA) and the state of Alaska sued over the Biden-era limits. The draft settlement agreement indicates that the federal government will not artificially limit oil and gas leasing in ANWR to levels below those allowed by law. The settlement agreement increases the odds that ANWR will remain open to drilling, even after a new president is elected. President Trump has encouraged energy development in Alaska and has reopened nearly 82% of the National Petroleum Reserve for oil and gas leasing that the Biden administration had effectively removed from exploration.

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EPA will also remove the requirement that truck engines automatically operate at reduced power, down to 5 miles per hour, if their emissions-reduction systems are not working, which is disruptive to truckers and other heavy-duty vehicle operators. Under the Biden rule, if a failure in the diesel exhaust fluid (DEF) system is detected, whether it is an actual failure or a sensor problem, the equipment would lurch to a speed of 5 miles per hour. The EPA proposes to replace that requirement with an alert to drivers via visual and audible warnings, allowing them to reach a repair shop while retaining the truck’s normal power. With more than 200 possible failure codes, the deratements could leave truckers stranded on the side of the road, farmers losing hours or days of productivity during critical work like harvesting, and even create safety issues.   The new system attempts to more rationally address emissions reductions and balance them with safety and other considerations.

The EPA estimated that the combined changes could save the trucking industry up to $12 billion, including as much as $6,000 off the sticker price of a new vehicle. The proposal provides some near-term cost relief for manufacturers and buyers. It would also reduce supply chain costs, making goods more affordable for Americans.

The proposal is now open for public comment. EPA plans to hold a virtual public hearing on Zoom for the proposed rule, scheduled for Wednesday, July 29th through Thursday, July 30th. An additional session may be held on Friday, July 31st, if necessary to accommodate the number of commenters who register by July 22, 2026.

According to the American Trucking Association, the Biden policies would require “a premature rollout of commercial motor vehicles with unproven engine technologies onto our highways.” The group requested that the EPA allow truck manufacturers to pay penalties instead of complying with the rules, as long as the industry was working to develop compliant engines, a provision the EPA included in the proposal. Allowing that option avoids supply disruptions during the transition to newer vehicles with more environmental controls. Heavy-duty trucks make up only about 5% of vehicles on the road.

This proposal regarding heavy-duty trucks follows a May proposal delaying emissions standards for model year 2027 light- and medium-duty vehicles. In April 2023, the Biden EPA proposed — and in 2024 finalized — what it called “multi-pollutant emission standards” for model year 2027 and later light-duty and medium-duty vehicles. The rules were designed to be so stringent that the only practical path to compliance was mass electrification of the vehicle fleet. Biden’s Energy Secretary even suggested that the United States could transition to an all-electric military fleet by 2030.  The Biden EPA projections assumed that electric vehicles would account for between 56% and 67% of new car sales by 2030-2032. That projection is not materializing. As of 2025, electric vehicles accounted for less than 10% of new U.S. vehicle sales — well short of the trajectory the agency assumed when setting these standards.

Conclusion

Trump’s EPA is scaling back or postponing Biden-era rules regarding heavy-duty trucks, including buses, large trucks and farm equipment. The change would cut the warranty period for emissions-control components from 10 years to 5 and delay the Biden-era useful-life rules from 2027 to 2030. The Trump EPA also proposes replacing the deratement requirement with an alert to drivers, giving them time to make repairs while retaining the truck’s normal operating power, thereby allowing truckers and farmers to remain productive. EPA is also granting the American Truckers Associations’ recommendation to allow non-conformance penalties to give heavy-duty manufacturers additional time to conduct real-world testing on their new emission control systems. According to the EPA, the changes would save the trucking industry between $4,130 and $6,152 per affected diesel engine, thereby helping keep goods more affordable for Americans.

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