Good morning, ladies and gents. Disruptions, diplomacy, earnings, and a construction crew — today's issue has range.

Yemen’s Houthis said on Telegram they hit a “Saudi target” at Najran airport — in response to alleged Saudi drone incursions over Saada and Hijaz, Reuters reports. Regional sources say operations were suspended, though Saudi authorities have not confirmed the attack.

And yet Washington thinks today could be the day this all eases. US Treasury Secretary Scott Bessent said that the US and Iran could reach an agreement to open Hormuz today. The proposed arrangement would allow freedom of movement in the waterway, Bessent said.

One thing isn't ambiguous: Who's benefiting from this war and who's paying for it. Aramco just posted its best quarter since 2022 on higher prices, not more barrels, while Milaha's earnings fell, with its offshore business taking the biggest hit.

Then there's DP World, playing an entirely different game. DP World is putting shovels in the ground on a 222-hectare special economic zone near the Port of Mombasa, with Kenyan firm GulfCap Africa.

Egypt's lifeline

Egypt bought a record 21 US LNG cargoes in July — more than any other destination worldwide — as war-driven disruption through Hormuz rerouted gas toward buyers willing to pay a premium, according to S&P Global Energy CERA data. The record cargo count outpaced major global buyers, including South Korea (15), Italy (14), Japan (12), and India (11).

The volume tells a different story: Egypt's actual July imports fell to 0.63 mn tonnes, down sharply from a record 1.06 mn tonnes in June, Reuters reports — even as it remained one of the largest single buyers of US cargoes.

A fragile defense: We learned last week that port bottlenecks and security threats can disrupt the supply chain in an instant. A drone strike knocked the newly deployed Energos Winter FSRU at Damietta out of service, forcing the country to divert an incoming LNG shipment to Jordan’s Aqaba port and draw backup gas via the Arab Gas Pipeline instead. Also, Egypt has already maxed out pipeline imports from Israel, leaving spot LNG as its main balancing tool.

Behind the scramble: The war is constraining roughly 20% of global LNG volumes that normally transit Hormuz — about 7 mn tonnes a month.

Fewer barrels out

Fujairah has become the UAE's primary oil export route, not just a backup: Crude bypassing the Strait of Hormuz via Fujairah — including through the Habshan-Fujairah pipeline — rose to 2.13 mn bbl / d in July, according to tanker-tracking data pooled by Bloomberg, and to 2.28 mn bbl / d on Kpler’s own count, up from 2.17 mn in June — putting Fujairah's share of total UAE exports at roughly 66%, up from 51% in June.

That shift tracks a sharp deterioration in the strait itself: Crude and condensate exports from the UAE overall fell to 3.4 mn bbl / d in July from 3.77 mn bbl / d in June, per the data. Kpler's separate Hormuz-only count is starker: exports through the strait fell nearly 53% to 950k bbl / d, from 2.01 mn bbl / d in June, the National reports. Daily crossings fell to 18.7 in July from 24.7 in June, with the drop-off steepening as a 17 June US-Iran framework meant to reopen the strait broke down within weeks over a dispute about who controls it.

The numbers likely understate the disruption: Most tankers crossing Hormuz now cut their tracking systems to dodge detection, so Vortexa and Kpler are reconstructing transits from satellite imagery with a lag — meaning real-time crossings often aren't caught until later revisions. Tanker congestion from the strait closures has eased, though, and only about 1 mn bbl of UAE crude is currently stranded.

Market watch

Oil prices edged lower this morning as investors awaited progress on restoring traffic through Hormuz, Reuters reports. Brent crude futures slipped USD 0.92 to USD 28.44 / bbl by 03.30 GMT, while West Texas Intermediate (WTI) declined USD 1.07 to USD 71.40 / bbl.

The Baltic Index nudges upward: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — was up 3.3% to 2,936 points on Tuesday. The capesize index jumped 4.7% to 4,778 points, while the panamax increased 2.4% to 2,187 points. The smaller supramax inched up 0.2% to 1,613 points.

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