Crude Prices Ease on US Crude Oil Inventory Surge

September WTI crude oil (CLU26) is down -0.19 (-0.23%), and September RBOB gasoline (RBU26) is down -0.0276 (-0.88%).

Crude oil and gasoline prices are trading lower today on the surge in US oil inventories seen in the weekly EIA inventory report. 

Oil prices found support today after the International Energy Agency (IEA) said in its monthly report that the global oil supply deficit will worsen, even as oil demand is taking a hit from the war and high prices. The IEA said global oil inventories will fall in Q3 at twice the previously estimated rate because of ongoing disruptions from the US-Iran war.

Oil prices are underpinned as there appears to be little progress toward a US-Iran agreement to open the Strait of Hormuz.  Iran's state-owned Islamic Republic of Iran Broadcasting (IRIB) said Tuesday afternoon that the Strait of Hormuz would remain shut until all its conditions are met.

Nevertheless, Pakistan on Tuesday suggested the US and Iran were close to an arrangement that could reopen the Strait of Hormuz.  Meanwhile, Al Jazeera said that talks between Oman and Iran to reopen the Strait of Hormuz have reached an advanced stage.

President Trump late Tuesday told reporters that the US has “total control over the Hormuz Strait” and that “we own it.”  He added, “At some point, maybe they’ll do something, and then they get blown away.”

Traffic through the Strait of Hormuz remains slow, tightening global crude supplies and boosting oil prices.  Energy Aspects said on Monday that only an average of five vessels are transiting through the strait, far below the 14 ships a day seen after the US and Iran reached a memorandum of understanding in June.

Crude prices have support as Ukraine intensifies drone attacks on Russian oil infrastructure.  Ukraine has attacked Russian refineries, oil tankers, and major pipeline infrastructure at least 30 times in July, the second-highest monthly number of attacks since the war began in 2022.  According to EA Analytics, Russian crude-processing rates will average 3.51 million bpd in July, the lowest in 24 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine.  As of the end of June, around 90% of Russian regions have imposed some form of fuel rationing or reported supply issues, as refining capacity has plunged following damage to facilities.  The strikes have deepened a nationwide gasoline shortage, with several major refineries shut down and the government banning almost all gasoline, jet fuel and diesel exports.  Russia is the world's number two diesel exporter, after the US, according to Vortexa. 

Stronger Russian crude exports are adding to global oil supplies, which is bearish for prices.  Russia may be boosting its crude exports as the country's refining capacity has plunged due to damage at its refining facilities from Ukraine's drone and missile attacks.

As a bearish factor for crude, OPEC delegates on August 2 approved their final increase of +188,000 bpd in crude production for September.  The group has now restored all of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to hold output steady for the rest of the year after the September hike.  The production increases by OPEC+ might prove difficult to achieve amid renewed US-Iran military attacks in the region.  OPEC's July crude production rose by +1.16 million bpd to 19.44 million bpd. 

Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -0.7% w/w to 119.28 million bbl in the week ended August 7.

Today’s weekly EIA crude inventories rose by 17.4 million bbl, the largest increase in more than three years. The increase was mainly due to a sharp drop in US crude oil exports. Meanwhile, gasoline inventories fell by -968,000 barrels, slightly less than the expected -1.15 million bbl decline.

Wednesday's EIA report showed that (1) US crude oil inventories as of Aug 7 were -1.8% below the seasonal 5-year average, (2) gasoline inventories were -5.8% below the seasonal 5-year average, and (3) distillate inventories were -11.9% below the 5-year seasonal average.  US crude oil production in the week ending Aug 7 rose +0.01% w/w to 13.805 million bpd, just below the record high of 13.862 million bpd posted in the week of November 7, 2025.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ended August 7 rose by +3 to a 14-month high of 454 rigs.