Oil extends rally as Hormuz supply uncertainty deepens

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Oil extends rally

Highlights

Brent futures rose 0.90% to $91.84 a barrel.
WTI futures gained 1.08% to $84.97 a barrel.
Hormuz shipping remains far below normal levels.
Supply uncertainty keeps an oil risk premium intact.

Brent crude futures rose 0.90% to $91.84 a barrel, while West Texas Intermediate futures advanced 1.08% to $84.97, according to the latest market data. The moves extended a rally that has pushed both benchmarks to their strongest levels since late July. Reuters reported that traffic through Hormuz remained well below normal as uncertainty over safe passage persisted.

Hormuz disruption supports oil premium

The Strait of Hormuz remains the central risk for energy traders. Before the U.S.-Israeli war with Iran began in late February, roughly one-fifth of global oil and liquefied natural gas supplies passed through the waterway.

Shipping activity has since fallen sharply. Many commercial operators continue to avoid the route because the conditions governing maritime traffic remain unclear.

Political signals have done little to ease those concerns. President Donald Trump said Tuesday that no negotiations with Iran were taking place and maintained that Hormuz was open. Tehran has disputed that assessment.

The temporary ceasefire arrangement expired Monday without a broader settlement. The absence of progress has increased the likelihood that disruption to regional energy flows could persist.

Iraq, meanwhile, is seeking additional routes for its crude. The government approved mechanisms allowing specialized international and domestic companies to handle exports through multiple outlets. Contracts under the plan are scheduled to run for three months beginning Sept. 1.

Supply risks keep traders defensive

Oil markets are also watching U.S. inventories for indications of near-term supply conditions. Industry data showed crude and distillate inventories declined last week, while gasoline stocks increased.

Official figures from the U.S. Energy Information Administration are due Wednesday. Analysts expect U.S. crude inventories to have fallen by about 600,000 barrels in the week ended Aug. 14.

The inventory data may influence short-term trading, but Hormuz remains the larger price driver. The waterway's importance to global energy flows means even limited disruption can affect freight costs, tanker availability, and expectations for future supply.

Brent holding above $91 shows that traders continue to price a substantial geopolitical premium into crude. A prolonged disruption could increase the risk of another move higher, while a credible agreement restoring normal tanker traffic would remove some of that support.

For consumers and central banks, sustained oil prices at these levels would also complicate the inflation outlook by raising transportation and energy costs.

We have previously highlighted that Hormuz tensions rise after U.S.-Iran talks expire.

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