WTI rises as Hormuz risks offset surge in U.S. crude inventories

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WTI rises as Hormuz risks offset surge in U.S. crude inventories

U.S. inventory surge adds pressure on WTI

From the U.S. side, the main bearish factor was an unexpected surge in inventories. In the week ended August 7, U.S. commercial crude oil inventories increased by as much as 17.4 million barrels to 424.4 million, while the market had expected a decline of around 0.6 million. The increase was primarily explained by a rise in imports of 1.14 million barrels per day and a decline in exports of around 627,000 bpd.

Inventories at Cushing rose by another 1.6 million barrels, while U.S. production held near 13.8 million bpd. At the same time, refinery utilization remained high at around 96.2%, while gasoline inventories declined by 1.0 million barrels and distillate inventories were almost unchanged. Thus, the record weekly increase in crude oil inventories is putting pressure on WTI, although gasoline and distillate inventories remain around 6% and 12% below their five-year averages, respectively, which keeps the refined products market tight.

OPEC and IEA forecasts point to rising uncertainty

Medium-term forecasts are becoming increasingly mixed. In its August report, OPEC lowered its estimate of global oil demand growth in 2026 to around 0.6 million bpd, although it still expects growth to accelerate to around 2.2 million bpd in 2027. The organization also notes an increase in non-OPEC+ production of around 0.6 million bpd this year, primarily due to the U.S., Brazil, Canada and Argentina.

The IEA is noticeably more cautious and now expects global demand to fall by 1.6 million bpd in 2026 due to high fuel prices and the consequences of the closure of the Strait of Hormuz. At the same time, the agency estimates that global supply recovered to 101.5 million bpd in July, but still remained 6.3 million below the year-ago level, as a significant share of Middle Eastern production remains unavailable. This divergence between OPEC and IEA forecasts shows how strongly the further price trajectory depends not only on demand, but also on the duration of geopolitical restrictions.

Middle East tensions keep volatility elevated

The Middle East therefore remains the main source of volatility for WTI. Negotiations on restoring full shipping through the Strait of Hormuz have effectively reached a deadlock, although Iran continues consultations with Oman, while new attacks on vessels maintain the risk of a further decline in exports from the Persian Gulf. For now, the preservation of at least limited nighttime transit is preventing the oil premium from making another sharp jump, but a complete halt in traffic through Hormuz or the spread of disruptions to Bab el-Mandeb could quickly bring buyers back into the market.

For now, however, the bulls’ achievements look rather modest and are limited by local highs at $83.30 per barrel. Against the backdrop of selling from this level, another test of support around $82.20-81.80 is possible, but above these levels the outlook for WTI will remain moderately positive. A loss of the latter level will lead to a decline toward $81.30-80.90. A break above the aforementioned resistance will lead to growth toward $83.70-84.10.

In the absence of progress in negotiations between the U.S. and Iran, as I noted in WTI remains volatile as Middle East risks offset bearish U.S. inventory data, volatility in the oil market should be expected to remain elevated, with declines potentially giving way to rapid growth, and vice versa.

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