October WTI crude oil (CLV26) is up +3.46 (+3.72%) on Tuesday, and October RBOB gasoline (RBV26) is down -0.0419 (-1.29%).
Crude oil and gasoline prices are mixed today, with crude oil climbing to a 3.25-month high. Crude prices are soaring amid concerns that escalating attacks across the Middle East will further disrupt global oil supplies.
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Crude oil prices found support today on the latest escalation of hostilities in the Middle East. The US late Tuesday destroyed five Iranian tankers carrying crude in response to two attempts by Iran to hit US Navy ships with ballistic missiles. Iran responded by firing missiles at a US air base in Jordan and warning ships in the Persian Gulf that they would be attacked.
Crude also has support as Yemen’s Houthi rebels target energy facilities in Saudi Arabia, forcing several oil facilities to halt production. Saudi Arabia’s 400,000 bpd Jazan refinery, which had halted operations in July after an earlier attack, was attacked again on Tuesday with missiles and drones from Yemen’s Houthi rebels. In addition, the rebels launched attacks at Saudi Aramco facilities in Abha and Najran, causing fires and injuring several people.
Vitol Group said that global oil markets are continuing to tighten, with the loss of about 2 million bpd from crude exports in the Middle East, and a further 2 million bpd from Russia as a result of Ukraine’s drone attacks. Data compiled by Bloomberg, Kpler and Vortexa showed that Saudi Arabia’s Aug crude exports dropped to about 3 million bpd, the lowest amount in 9 years.
President Trump recently said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict.
Crude prices also have support on concerns that Israel could be dragged back into the US-Iran conflict. Israeli Defense Minister Katz said last Thursday that an Iranian attack on Israel would free Israel from any existing restrictions in a response against the regime in Iran. Israel has ramped up 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, while the Yemen- based Houthis have attacked ships in the Red Sea.
In a supporting factor, the International Energy Agency (IEA) said in its monthly report, released on August 12, 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.
Ukraine has intensified drone attacks on Russian oil infrastructure, curbing Russian crude production and exports. 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. The attacks on Russian oil infrastructure knocked Russia’s crude production in July to 8.89 million bpd, the lowest in six years, according to secondary source estimates published by OPEC. Meanwhile, Reuters reported on August 28 that Russia’s gasoline production fell to about 80,000 tons a day in August, only 70% of domestic demand, causing shortages across the country.
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 1.65 million bpd of the supply cutback it made in 2023 and said it plans to hold output steady for the rest of the year after the September hike. OPEC+ production increases may prove difficult to achieve amid renewed US-Iran military attacks in the region. OPEC’s Aug crude production fell by -900,000 bpd to 19.91 million bpd.
Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -16% w/w to 92.64 million bbl in the week ended September 4.
Last Wednesday’s EIA report showed that (1) US crude oil inventories as of Aug 28 were +0.7% above the seasonal 5-year average, (2) gasoline inventories were -6.1% below the seasonal 5-year average, and (3) distillate inventories were -14.0% below the 5-year seasonal average. US crude oil production in the week ending Aug 28 rose +0.1% w/w to 13.862 million bpd, matching the record high first posted in November 2025.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ended September 4 rose by +2 to 449 rigs, modestly below the 1.25-year high of 455 rigs from the week of August 14.
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