August WTI crude oil (CLQ26) today is down -0.67 (-0.91%), and August RBOB gasoline (RBQ26) is down -0.0534 (-1.85%).
Crude oil and gasoline prices are under pressure today, with crude oil falling to a 3.5-month low. Today’s rally in the dollar index ($DXY) to a 13-month high is weighing on energy prices. Also, the resumption of crude supplies through the reopened Strait of Hormuz is easing global oil supply concerns and is weighing on crude prices. In addition, today’s sell-off in global equity markets is bearish for economic growth and prospects for energy demand.
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Crude prices are under pressure amid signs the US-Iran peace deal is progressing after Iran on Monday said there had been “major progress” in all-night discussions with the US over a peace deal following the interim agreement last week that led to a 60-day ceasefire extension and Iran opening the Strait of Hormuz. The US also authorized a temporary, 60-day license allowing Iran to sell crude oil and petroleum products through August 21.
The resumption of vessel traffic through the Strait of Hormuz could lead to the release of more than 100 laden ships carrying oil from Middle Eastern countries other than Iran that are stuck in the Persian Gulf, effectively releasing stockpiles into the market.
The International Energy Agency (IEA) last Wednesday warned that the Iran war’s impact on global oil demand will be much deeper than previously anticipated, saying world oil consumption will decline by -1.1 million bpd this year, a larger drop than a previous estimate of -420,000 bpd.
Goldman Sachs last Tuesday cut its Brent crude price forecast to $80 a barrel in Q4 of this year, down from $90, and said it expects Persian Gulf crude exports to return to pre-war levels by the end of July, one month earlier than previously expected.
The outlook for higher US crude output is negative for oil prices. The Department of Energy (DOE) on June 9 raised its US 2026 crude production estimate to 13.72 million bpd from a May estimate of 13.65 million bpd.
Crude prices have support from the continued Ukrainian drone attacks on Russian oil infrastructure. According to EA Analytics, Russian crude-processing rates averaged 4.32 million bpd in the first 10 days of June, the lowest in 20 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine. According to Bloomberg, Ukrainian forces have struck three Russian fuel-producing facilities this month, following a record 17 attacks in May. US and EU sanctions on Russian oil companies, infrastructure, and tankers have also curbed Russian oil exports.
The IEA said in a monthly report released in May that global oil inventories declined at about 4 million bpd in March and April, and that the market will remain “severely undersupplied” until October, even if the conflict ends soon. Goldman Sachs estimates that crude output in the Persian Gulf has been curtailed by about 14.5 million bpd, and that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, which could hit a billion bbl by June.
As a bearish factor for crude, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September. The group already formally agreed to restore about two-thirds of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to raise output targets further and to revive the final portion in three more monthly stages. On May 3, OPEC+ said it will boost its crude output by 188,000 bpd in June after raising production by 206,000 bpd in May, although any production hike now seems unlikely given that Middle East producers are being forced to cut production due to the Middle East war. OPEC’s May crude production fell by -3.36 million bpd to a 40-year low of 16.33 million bpd.
Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -4.1% w/w to 90.86 million bbl in the week ended June 19.
Last Wednesday’s EIA report showed that (1) US crude oil inventories as of June 12 were -6.1% below the seasonal 5-year average, (2) gasoline inventories were -6.4% below the seasonal 5-year average, and (3) distillate inventories were -12.9% below the 5-year seasonal average. US crude oil production in the week ending June 12 rose +0.1% w/w to 13.806 million bpd, mildly below the record high of 13.862 million bpd posted in the week of November 7.
Baker Hughes reported last Thursday that the number of active US oil rigs in the week ended June 19 was unchanged at an 11-month high of 433 rigs, up from the 4.25-year low of 406 rigs posted in December 2025. However, the number of US oil rigs remains sharply below the 5.5-year high of 627 reported in December 2022.
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. This article was originally published on Barchart.com