Hormuz on a Knife's Edge: The Week Oil Swung $20, Airlines Extended Suspensions Into 2027, and Trump Called Off a Strike

Executive Summary

The past week delivered the most volatile stretch yet of the five-month-old US-Iran war, with oil swinging more than $20 a barrel, the Strait of Hormuz alternating between near-closure and partial reopening, and airlines extending Middle East flight suspensions into October and even 2027. A "heavy wave" of US strikes on Iranian Revolutionary Guard Corps targets on July 29–30 triggered Iranian retaliation against US bases in Jordan and Kuwait, drone strikes on Egyptian LNG vessels at Damietta port, and a Houthi-declared naval blockade of Saudi Arabia in the Red Sea.

President Trump then abruptly called off a planned new offensive on August 2, citing an emerging deal with Saudi Arabia, the UAE, Qatar and Iran to reopen the Strait of Hormuz. In Ukraine, Kyiv intensified its campaign against Russian oil refineries and the e-commerce giant Wildberries, disabling an estimated 42–45% of Russian refining capacity this year and destroying roughly $2.2 billion in Wildberries inventory. The US Senate simultaneously advanced a sweeping new Russia sanctions bill carrying tariff threats of up to 100% on Russian oil buyers.

Sudan's civil war deepened further with a drone strike killing 35 people in Darfur, while Saudi Arabia's economy posted a 4.8% year-on-year GDP contraction in Q2 — a stark illustration of the real cost of six months of regional war on the Gulf's largest economy. For globally mobile professionals and the organisations that employ them, this week underscored how tightly career and workforce risk is now bound to conflict-zone shipping lanes, energy markets and corporate travel policy.

Office Closures and Corporate Evacuations

No large-scale, sustained office closures were confirmed across the Gulf this week, but multiple precautionary evacuations and emergency alerts underscored how quickly that calculus could change. On August 1, the US State Department issued a security alert covering the entire Middle East, warning that "US diplomatic facilities, including outside the Middle East, have been targeted" and urging Americans to "consider departing, or be prepared to depart should there be escalation." US embassies across Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the UAE all reposted the advisory.

Despite the warnings, essential services across the UAE continued to operate normally, with airports, ports and businesses functioning without major disruption even as diplomatic tension peaked. Gulf authorities reported no closures of critical infrastructure on the civilian side during the most acute escalation days of July 29–30.

In Russia, e-commerce company Ozon evacuated workers from its Zelenodolsk warehouse in Tatarstan moments before a Ukrainian drone strike hit the site on July 31. Wildberries — Russia's largest online retailer — evacuated staff from at least a dozen warehouses across Ryazan, Volgograd, Voronezh, Leningrad, Simferopol, Udmurtia and Penza regions as Ukrainian drones targeted its logistics network, destroying roughly 10% of its total storage capacity and an estimated $2.2 billion in assets.

A 7.1-magnitude earthquake in Japan's Kumamoto prefecture on July 28 prompted precautionary worker evacuations at TSMC's JASM chip plant, as well as at Sony and Fujifilm facilities. Tokyo Electron suspended two Kumamoto factories and Honda idled a motorcycle plant, though TSMC confirmed all personnel were safe and operations were gradually resuming by July 29. In Sudan, humanitarian organisation Islamic Relief reported that aid flights into the besieged city of el-Obeid had stopped entirely and supply convoys had been targeted by drone strikes, effectively cutting off the city under what one UN official described as a "functional siege" affecting nearly 400,000 people.

Travel Advisories and Flight Disruptions

Airline disruption across the Middle East deepened and extended further into the calendar this week, even as diplomatic optimism grew. The US State Department's August 1 alert warned Americans to be "prepared for flight cancellations, periodic airspace closures, and potential travel disruptions" and to "seriously reconsider travel to and through the region." The UK's Foreign, Commonwealth and Development Office maintained its advisory that "the security situation remains unpredictable and attacks could resume with little warning," while Canada continued advising against non-essential travel to the UAE. Australia's DFAT advised citizens to consider leaving while commercial flights remain available.

The European Union Aviation Safety Agency (EASA) extended its conflict-zone advisory over UAE, Bahrain, Qatar, Kuwait and Gulf of Oman airspace through August 31. The breadth of the advisory effectively kept large swaths of Gulf airspace off-limits to European carriers regardless of individual airline decisions.

Major international carriers pushed suspension timelines well beyond prior guidance. British Airways kept Dubai, Tel Aviv, Bahrain and Amman suspended until October 25, cut Doha frequency to once daily from August 1, reduced Riyadh service, and permanently withdrew its Jeddah route. KLM extended Riyadh, Dammam and Dubai suspensions to September 6. Singapore Airlines pushed its Dubai suspension from a planned August 2 resumption all the way to October 24. Lufthansa Group held Dubai suspended until September 13 and other regional routes until October 24. Cathay Pacific extended Dubai and Riyadh suspensions to October 24 and 25 respectively, and Air Canada extended Tel Aviv and Dubai suspensions to October 24.

Regional carriers including Etihad, flydubai, Air Arabia, Gulf Air, Saudia and Qatar Airways all cancelled selected Bahrain, Kuwait, Abha and Doha routes through the week, with Saudia updating its cancellation system through the end of October. Turkish Airlines resumed Abu Dhabi, Dubai, Damascus, Beirut and Amman flights but kept Iran service suspended. Travel technology company Amadeus reported a 7.6% decline in quarterly bookings tied to the war, though its CEO stated on July 31 that "the worst has happened already" and that bookings were progressively improving.

Airport and port infrastructure also saw direct attacks. A drone strike ignited fires aboard two LNG-carrying gas vessels at Egypt's Damietta port on July 29–30, marking the first attack on Egyptian soil since the conflict began. Egypt's cabinet confirmed the port continued operating at full capacity the following day.

Infrastructure Strikes and Shipping Disruption

The Strait of Hormuz

The Strait of Hormuz, which handled roughly one-fifth of global oil supply before the war, saw traffic collapse and only partially recover during the week. Iran's Khatam al-Anbiya military command announced it would shut the strait to traffic on August 1, alleging ceasefire violations by the US and Israel. By July 31, traffic had recovered to roughly 30–35% of pre-war levels; analysts noted a rebound to 50–60% would be needed to meaningfully ease global supply conditions.

A tanker was reportedly struck by an unidentified projectile near the strait's entrance off Oman on August 1, and another vessel reported an explosion near Khasab, Oman, on August 2, according to UK Maritime Trade Operations (UKMTO). The US Treasury sanctioned two Iranian entities — Persian Gulf Marine Insurance Company and HormuzSafe Marine Services Authority — accused of running an extortion scheme forcing vessels to purchase "insurance" to transit the strait. Oman and Iran separately advanced talks on a new arrangement to manage shipping through an alternate route.

The Red Sea and Bab el-Mandeb

The Red Sea emerged as a second active shipping front. Yemen's Houthi movement, having declared a naval blockade of Saudi Arabia on July 20, claimed missile attacks on multiple Saudi oil tankers — including the NCC Ghazal, Encelia and Layla — during the week. Reports indicated the Houthis were considering charging commercial vessels transit fees through Bab el-Mandeb, potentially generating up to $180 million per month. Saudi Arabia responded by proposing a naval defence coalition to protect Red Sea and Gulf of Aden shipping.

Egypt's Suez Canal and Sumed pipeline remained open and were not yet subject to market-priced disruption risk despite the Damietta attack. However, maritime security firm Dryad Global warned that any strike inside the Suez Canal region would "substantially increase war risk insurance premiums" and alter the region's overall security assessment.

Russian Energy Infrastructure

Ukraine dramatically escalated its campaign against Russian energy assets. Ukrainian drones struck a Lukoil refinery in Perm — damaging its CDU-5 unit, representing roughly 34% of the plant's capacity — along with Rosneft facilities in Ryazan and Saratov, Lukoil refineries in Volgograd, three refineries in Bashkortostan, an oil-loading terminal at Rostov-on-Don, a maritime terminal in Krasnodar, fuel depots in Crimea, and 37 electricity substations in a single week. Ukrainian officials and a Financial Times satellite-imagery analysis estimate that these cumulative strikes have disabled 42–45% of Russian refining capacity in 2026. Russia extended a domestic fuel export ban from end-August to end-January in response to the resulting fuel crisis.

Workforce Impacts

The Philippine government confirmed it has repatriated more than 12,000 Filipino overseas workers (OFWs) since the Middle East conflict began, with over 140,000 OFWs still in the region receiving emergency food, financial, medical and shelter assistance. President Marcos outlined follow-on support for returning workers, including livelihood grants through the Department of Migrant Workers' AKSYON Fund and dedicated job fairs to help repatriated staff find new overseas placements.

In Russia, Wildberries paid out roughly 40 million rubles (approximately $508,000) in a second tranche of compensation to families of workers killed or injured in Ukrainian drone strikes on its warehouses. The Kremlin acknowledged discussions around potential state-backed financial support for the company — likely channelled through state-controlled bank VTB — given the scale of disruption to its network of nearly 100,000 third-party sellers. Researcher Natalya Kovaleva of Chatham House noted that Russian firms have absorbed a cumulative set of pressures: "Western sanctions fractured supply chains. Tax increases squeezed margins. Internet blackouts disrupted operations."

In Sudan, the humanitarian workforce itself has come under direct threat. Aid convoys and flights into el-Obeid have been halted by drone strikes, cutting off assistance to displaced populations and severely limiting the ability of NGO personnel to operate. No major corporate layoff announcements directly tied to the conflicts were identified this week; the dominant workforce story across all three theatres remains evacuation, repatriation and hazard-pay compensation rather than structural job losses.

Economic Ripple Effects

Oil Market Volatility

Oil markets experienced one of the most volatile weeks of the war. Brent crude fell to roughly $84 per barrel after the initial ceasefire pause on July 27–28, then spiked more than 7% above $90 on July 29 following Iran's ballistic missile attack on US forces in Jordan, climbed further toward $92 on July 30 after the US "heavy wave" of strikes, before settling near $88–89 by July 31 as tanker traffic showed tentative signs of recovery. By August 3, following Trump's decision to cancel the planned strike, both benchmarks dropped sharply again — WTI fell 4.5% to $80.89 and Brent fell 4.4% to $84.10 as the geopolitical risk premium unwound.

ExxonMobil and Chevron both warned that retail fuel prices — particularly gasoline, diesel and jet fuel — are likely to remain elevated even if crude falls further, because significant global refining capacity in Russia and the Middle East has been knocked offline by strikes. Chevron nonetheless posted its highest quarterly profit in six years, directly benefiting from price volatility.

Shipping Insurance and Trade Logistics

War-risk shipping insurance costs rose further during the week. Insurance broker Gallagher confirmed that war-risk premiums have increased substantially from historical norms, with only "a handful" of ship owners currently willing to transit the Strait of Hormuz. UAE's ADNOC began acquiring additional tankers as the dual Red Sea and Hormuz crises forced a structural reshaping of regional oil trade logistics.

Broader Macro Indicators

Saudi Arabia's real GDP contracted 4.8% year-on-year in the second quarter — described by analysts as reflecting the direct economic fallout on the world's top oil exporter from six months of regional conflict. Gulf stock markets whipsawed through the week, falling on escalation days and recovering on de-escalation news, including a 1% gain in Dubai's DFM index on August 3 after Trump paused the planned strike. Most GCC currencies remain pegged to the US dollar, tying regional monetary policy to Federal Reserve decisions even as war-driven inflation risk complicates the outlook.

Inside Iran, the rial continued sinking to new lows against the dollar, with food inflation running near 90% and the government reducing manufacturing power supply to two blackout days per week. India flagged renewed fiscal risk from the Middle East impasse, and state refiner Indian Oil Corp reported that its spot crude purchases jumped from 50% to nearly 84% of total volume as it pivoted away from disrupted Hormuz and Red Sea routes toward West African and Latin American sources. South African retailer Woolworths explicitly cited the Middle East conflict and higher interest rates as headwinds weighing on consumer demand and profit growth.

Other Active Conflicts Affecting Business

Ukraine and Russia

The US Senate voted 86–12 to advance the "Lindsey O. Graham Sanctioning Russia Act of 2026," which would authorise tariffs of up to 100% on the top five importers of Russian oil and gas — likely China, India and Turkey — and up to 500% on direct Russian imports into the US, alongside sanctions on Russian officials, banks and the shadow tanker fleet. The bill faces significant headwinds in the House, which remains in recess until August 31, and some lawmakers and industry groups have raised concerns about the tariff provisions' trade-war implications.

The European Union separately finalised a package sanctioning more than 1,600 companies accused of aiding Russia's war effort, with combined annual turnover exceeding $20 billion and more than 265,000 employees collectively. Despite the sanctions environment, Forbes Russia reported that Russian billionaires' collective wealth grew 11% over the past year to an all-time high of $696.5 billion.

Sudan

A Sudanese army drone strike killed at least 35 people at a traditional court in North Darfur on August 2, according to rights group Emergency Lawyers. UN figures indicate more than 1,000 civilians were killed in drone strikes during just the first five months of 2026. A UN report due for September publication found that Boeing 727 aircraft, linked to a US military contractor's business network, transported mercenaries, weapons and drones for Sudan's Rapid Support Forces via an N'Djamena–Nyala air corridor, with an estimated 1,500–2,000 Colombian mercenaries reportedly hired through a UAE-based company. The conflict, now in its fourth year, remains the world's largest humanitarian crisis according to the UN.

Venezuela

Seven months after the US ousted President Nicolás Maduro, major oil companies have struggled to convert the diplomatic opening into concrete deals. ExxonMobil, Chevron and other majors are competing for a limited number of attractive drilling blocks, but talks have hit an impasse. Fully rehabilitating Venezuela's three main refineries — described by industry sources as deteriorated relics — would require at least $20 billion in investment, likely pushing large-scale output into 2027 or beyond.

Chevron confirmed its Venezuelan joint ventures are producing approximately 280,000 barrels per day, with plans to grow output by a further 15% over the next 18–24 months. Eni signed an agreement to revive its Junin 5 heavy-oil project and oilfield services firm Halliburton entered commercial talks on resuming Venezuelan operations. South Korean refiners are exploring Venezuelan crude imports as a diversification strategy away from Hormuz-exposed Middle East supply. In a compounding cross-conflict effect, Cuba suffered a nationwide grid failure after the loss of Venezuelan oil supplies — its primary energy source — combined with a US oil blockade imposed following Maduro's removal.

Myanmar

Coverage this week was comparatively limited. Reports indicated continuing disruption to China–Myanmar border trade, with local traders forced to move goods informally after border crossings were shut following military operations. The EU announced new sanctions against the Democratic Karen Buddhist Army (DKBA) and its leadership over money laundering allegations. No major new multinational corporate disruption events specific to Myanmar were identified in the sources reviewed this week.