On Wednesday, September WTI crude oil (CLU26) rose 5.20 (+6.56%), while September RBOB gasoline (RBU26) increased by 0.0815 (+2.59%).
Crude oil and gasoline prices surged sharply on Wednesday amid renewed Middle East hostilities that jeopardize global energy supplies. The rally intensified after President Trump pledged a strong response to Iran’s recent attack on a U.S. base in Jordan, and after the U.S. Energy Information Administration reported a surprising decline in weekly crude inventories to a 7.75‑year low, with Cushing supplies dropping to their lowest level in nearly 12 years.
Crude oil prices jumped Wednesday following the Islamic Revolutionary Guard Corps’ claim that it struck a U.S. airbase and command center in Jordan with ballistic missiles and halted three tankers transiting the Strait of Hormuz. In response, the United States and Saudi Arabia conducted a joint operation against Iran‑aligned militants in Iraq after the IRGC instructed them to target U.S. forces and Saudi energy assets.
Tensions remain high in the Middle East as the United States continues its blockade of Iranian oil shipments in the Persian Gulf, while diplomatic efforts to reopen the Strait of Hormuz have stalled. Iranian Deputy Foreign Minister Gharibabadi stated that Oman’s proposal—a 50‑50 split of control in the Strait—fails to meet Iran’s demands, insisting that both the inbound and part of the outbound routes must be wholly under Iranian jurisdiction.
Global crude oil supplies are tightening as reduced traffic through the Strait of Hormuz hampers flows. The International Maritime Organization warned that navigating the Strait is currently too hazardous, and visible tanker transits have dropped sharply as Iran continues to target vessels attempting to pass.
Crude prices find support amid Ukraine’s intensified drone campaign against Russian oil infrastructure. Russian crude output fell to 8.928 million bpd in June—the lowest in 2.5 years per OPEC monthly data. EA Analytics projects July crude processing at 3.51 million bpd, the lowest in 24 years, as drone and missile strikes damage Russian refining facilities. Bloomberg reports Ukrainian forces have struck Russian fuel facilities over 50 times this year, affecting at least 24 of the country’s 34 major refineries. By the end of June, roughly 90% of Russian regions faced fuel rationing or supply disruptions as refining capacity collapsed, prompting the government to ban most gasoline, jet fuel, and diesel exports. Russia, the second‑largest diesel exporter after the United States, according to Vortexa, is thus impacted.
Increased Russian crude exports add to global supply, putting downward pressure on prices. Bloomberg data indicate that the four‑week average of Russian crude exports stayed above 4 million bpd until July 26 and rose to 4.13 million bpd by June 28—the highest level since Russia’s 2022 invasion of Ukraine. This surge may reflect reduced refining capacity caused by ongoing drone and missile attacks on Russian facilities.
OPEC delegates signaled a bearish outlook on Tuesday, indicating they will pause additional production hikes at their upcoming Sunday meeting after a 188,000‑bpd increase in September. The organization has already restored roughly two‑thirds of the 1.65 million‑bpd cut implemented in 2023 and intends to raise output targets further, with the final portion to be reintroduced in three successive monthly steps. On July 5, OPEC+ announced a 188,000‑bpd production increase for August, a move that may be complicated by renewed U.S.–Iran military actions in the region. OPEC’s June output rose by 2.34 million bpd to 18.75 million bpd.
Vortexa reported that crude oil held on tankers for at least seven days increased by 3.5% week‑over‑week to 102.84 million barrels in the week ending July 24.
Wednesday’s weekly EIA report presented mixed signals for crude oil and products. Bullishly, crude inventories fell unexpectedly by 7.17 million barrels, reaching a 7.75‑year low versus forecasts of a 1.0 million‑barrel increase. Cushing crude supplies also dropped 771,000 barrels, marking a near‑12‑year low. Conversely, gasoline inventories rose 7,000 barrels, defying expectations of a 1.09 million‑barrel draw, while distillate stockpiles increased by 1.06 million barrels, exceeding the forecasted 500,000‑barrel rise.
The EIA report indicated that as of July 24, U.S. crude inventories were 6.4% below the five‑year seasonal average, gasoline inventories 6.6% lower, and distillate stocks 8.5% below the same benchmark. Crude production remained steady at 13.796 million bpd for the week ending July 24, slightly under the record 13.862 million bpd set in early November.
Baker Hughes reported that the count of active U.S. oil rigs fell by two to 450 in the week ending July 24, just below the 1.25‑year high of 452 rigs recorded the prior week.
