WTI is trading around $83.6 per barrel on August 28 and is on track to end the week down by roughly 4.5%. After the sharp decline at the start of the week, the market has stabilized, although the recovery remains limited.
The main new feature is that traders are reacting less to the absence of a U.S.-Iran agreement itself and are focusing more on actual export volumes through the Strait of Hormuz.
According to Goldman Sachs estimates, current shipments from Gulf countries have already recovered to around 15-16 million bpd, which is 5-6 million bpd above the March low, although still 7-8 million bpd below pre-war levels. This is reducing concerns about a physical supply shortage and helps explain why oil is not rising more strongly even as negotiations remain deadlocked.
U.S. stock data offer limited support
The picture for U.S. inventories is currently more supportive. According to the latest EIA report, commercial crude inventories for the week ended August 21 increased by only 95,000 barrels to 428.91 million, effectively remaining unchanged after a 4.4 million barrel build a week earlier.
At the same time, inventories at Cushing increased by around 1.18 million barrels, while the Gulf Coast posted a decline of more than 2.2 million. Total crude held in the SPR continued to fall and reached around 289.7 million barrels. Overall, this suggests that headline stocks are not creating strong pressure on WTI, although the increase at Cushing is somewhat limiting near-term bullish potential. The next EIA report is due on September 2.
Global balance remains tighter than price action suggests
The medium-term fundamental balance remains much tighter. In its August report, the IEA expects global oil supply to decline by 4.3 million bpd in 2026, while demand is projected to fall by around 1.6 million bpd. The agency estimates the third-quarter deficit at roughly 1.8 million bpd, while observed global inventories fell by another 69 million barrels in July alone. Since the start of the conflict, the cumulative decline has reached around 410 million barrels.
This creates a certain imbalance: in the short term, the market is reducing the geopolitical premium as part of exports through Hormuz recover, but physical inventories are still too low to suggest a full transition into oversupply. The IEA expects the market to return to surplus only closer to the end of the year.
$85 remains key recovery threshold
Therefore, the near-term picture for WTI currently looks more like consolidation after a sharp correction. The $85 area remains important resistance: a sustained move above it would increase the chances of a recovery toward $86-87. Until that happens, the risk of another decline remains in place, especially if data on actual flows through Hormuz continue to improve.
Nearest support is located around $83-82.5, and a break below this zone would reopen the way toward $82-81. At the same time, renewed deterioration in the Strait of Hormuz or a decline in actual export volumes, as I already noted in the article WTI rebounds from recent lows as supply risks remain in focus, could quickly restore the geopolitical premium and shift the current balance back in favor of buyers.
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