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Watch: Market Movers Europe, July 22-26: Middle East tensions keep oil markets on edge

In this week's Platts Market Movers, oil markets remain on edge after Iran seized a UK-flagged tanker in the Strait of Hormuz. Steel scrap freight costs are expected to skyrocket, and the petrochemicals markets monitor water levels on the Rhine. Meanwhile, the European heatwave sparks concerns among power traders regarding nuclear reactors in the south of France.

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In this week's highlights: The effect of high freight rates on scrap imports by Turkey will be eyed by steel traders; and hot, dry weather across Europe will preoccupy broad swathes of the commodity complex.

Oil markets remain on edge after Iran seized a UK-flagged tanker in the Strait of Hormuz on Friday. About 30% of the world's seaborne crude travels through the strait. Foreign Secretary Jeremy Hunt is expected to outline the UK government's response on Monday. He has already ruled out a military response. In the meantime, the government has asked ships with UK interests to stay out of the area for an interim period. The tanker seizure is the latest in a series of security incidents involving Iranian forces and shipping in the Persian Gulf. Iran has denied any wrongdoing.

Hours before seizure of the Stena Impero, the US announced it is setting up a maritime coalition to protect shipping in the region and sending troops to Iran's regional rival, Saudi Arabia. The tensions in the region have been pushing up oil prices, but rises have been capped by what many see as a slightly bearish demand side.

And that brings us to our social media question: Do you think it is the threat to supply or demand which is greater in the oil market? Tweet your replies under the hashtag #PlattsMM.

In addition to geopolitics, oil and gas markets will be watching what major oil and gas companies have to say in their quarterly results. Total and Norway's Equinor will be leading the pack on Thursday, and Italy's Eni on Friday. The earnings statements will be sifted through for updates on some specific issues, including Total's plans to buy Anadarko Petroleum's African assets for nearly $9 billion. The assets include a prized LNG project in Mozambique, but the deal is conditional on Occidental Petroleum first buying Anadarko, then selling the African portfolio to Total.

And while the oil markets are steeling themselves for the news flow, steel scrap markets expect to take a hit this week as freight costs skyrocket in the Mediterranean and Black Sea.

As you can see from the chart, Supramax time charter rates have almost doubled since the start of July as long-term time charter deals have reduced the numbers of spot ships available to scrap exporters. Already, some sellers are gearing up to increase their offers for cargoes into Turkey and other deep-sea import markets to pass on the higher costs.

And shipping costs will also be on the minds of the petrochemicals and barges markets as they monitor water levels on the Rhine. Levels at Kaub, a key chokepoint in Germany, have recently fallen below 200 centimeters to hit 172 centimeters on Friday.

They are expected to fall to 145 centimeters by Tuesday. Barges are unable to load fully when levels at Kaub fall to around 100 centimeters. When the Rhine is that low there is usually an oversupply of imported petrochemicals such as methanol in the Amsterdam-Rotterdam-Antwerp port hub as it becomes a struggle to take volumes up the river to the inland market.

Concern about the level of the Rhine has also driven up barge freight rates on the river because demand from traders transporting diesel, gasoline and jet fuel inland has grown as they try and pre-empt potential transport bottlenecks.

Staying on the river bank, but moving to France, the availability of nuclear reactors along the Rhone and Garonne in the south of the country will be on the minds of European power traders as a heatwave is forecast. Reduced flows and rising water temperatures could mean restrictions being placed on their operating rates. Utility EDF has said one reactor may have to ramp down 30% this week and has warned of restrictions elsewhere in the region. Any reduction in nuclear supply will come against the backdrop of an expected heatwave boosting demand. System operator RTE is forecasting peak demand close to record highs for three days this week.

And finally, moving on to dry land, in fact very dry land, the European Commission's crop monitoring unit MARS will release its July Bulletin Monday. Market participants will be closely watching for any downward revisions in crop yield estimates following the recent dry, hot weather in Europe. A downward revision could support prices for both rapeseed oil and the RME biodiesel derived from it.

Thanks for kicking off your Monday with us, and have a great week ahead!