September WTI crude oil (CLU26) is up +0.80 (+0.95%) today, and September RBOB gasoline (RBU26) is up +0.0232 (+0.71%).
Crude oil and gasoline prices extended Monday’s sharp rally today and posted 3-week highs as the US and Iran remain deadlocked over control of the Strait of Hormuz, limiting crude supplies from the Middle East.
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Crude prices rose today after a vessel was struck by an unknown projectile heading out of the Strait of Hormuz. Also, Iran’s Fars news agency reported that a tanker belonging to a UAE company was detained by Iran in the strait, saying ships must pay to transit through Hormuz.
On Monday, President Trump said he’s not interested in extending the expiring agreement with Iran, dimming prospects for a swift reopening of the Strait of Hormuz. Also, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans for de-escalation of the conflict, potentially limiting crude supplied from the Middle East.
Crude prices also have support amid fresh Israeli attacks on Iran-backed Hezbollah in Lebanon, dampening the prospects of ending hostilities in the Middle East and a quick reopening of the Strait of Hormuz. In addition, Israel has struck Iran-backed Hamas in Gaza, the Yemen- based Houthis have attacked ships in the Red Sea, and several vessels have been hit by projectiles in the Strait of Hormuz.
Gains in crude prices are contained as many Gulf countries can successfully transit crude shipments through the Strait of Hormuz despite Iran’s attacks on shipping through the strait. Last week, US Energy Secretary Wright said that 9 million bpd crossed through the strait over the past seven days, higher than expectations of 4 million bpd. According to vessel-tracking data compiled by Bloomberg, Kpler and Vortexa, the UAE, Qatar, Iraq and Kuwait have all been shipping crude oil out of the Persian Gulf by turning off the transponders on their oil tankers, or “dark” transits.
Treasury Secretary Bessent said last Friday that the administration will soon announce unprecedented economic measures against Iran that “have never been seen in the history of economic isolation of a country.” The economic measures would add to the current US naval blockade of Iranian ports.
There have been no signs of progress toward a US-Iran agreement to fully open the Strait of Hormuz. An Iranian military spokesperson said last Thursday that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision and that President Trump’s claims of control over the Strait are “nothing more than lies.” The Iranian statement was in response to President Trump’s comment last Tuesday that the US has “total control over the Hormuz Strait” and that “we own it.”
In a supportive factor, the International Energy Agency (IEA) said in its monthly report, released last Wednesday, 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.
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 averaged 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 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 -5.8% w/w to 108.02 million bbl in the week ended August 14.
Last Wednesday’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.
Last 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 November 2025.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ended August 14 rose by +1 to a 1.25-year high of 455 rigs.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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