On Thursday, October WTI crude oil (CLV26) closed higher by $6.43 (+6.69%), while October RBOB gasoline (RBV26) advanced $0.18 (+5.69%).
Prices jumped dramatically on Wednesday, with crude oil reaching a three‑month high and gasoline hitting a two‑week milestone. The surge stems from mounting worries over the prolonged U.S.–Iran conflict, which threatens to suppress Middle‑Eastern energy output and tighten worldwide oil availability. Despite a bearish weekly EIA inventory finding, spot prices retained their upward pace.
Iran indicated readiness to heighten combat intensity, warning that it could launch retaliatory strikes should the United States persist in its attacks on Iranian land and infrastructure. The specter of a protracted war that could limit crude supply from the Middle East propelled benchmarks higher. Shortly thereafter, Saudi Arabia conveyed to OPEC that its August crude production settled at 6.238 million barrels per day—the lowest level since 1990.
The security situation adds further pressure: Houthi rebels launched attacks on Saudi energy installations, shutting down several production facilities. Their capture of the Red‑Sea port city of Mokha, located about fifty miles beyond the narrow Bab al‑Mandab Strait, strengthens their capacity to jeopardize maritime traffic. With the Strait of Hormuz already constricted, Riyadh has redirected most of its crude exports to the Red Sea, though recent clashes have once again interrupted that corridor.
Analysts note that global oil markets remain under strain, underscoring roughly a two‑million barrel‑per‑day shortfall from the Middle East complemented by an additional two‑million lost amid Russian output curtailed by Ukrainian drone assaults. Data aggregated by Bloomberg, Kpler and Vortexa confirmed that Saudi crude exports plunged to approximately 3 million barrels daily in August—the deepest decline in nine years.
President Trump emphasized that continued naval embargoes on Iranian ports are intensifying regional pressure, with no soon‑term horizon for a resolution to the U.S.–Iran standoff.
Additional support arrives from assessments that Israel may become involved in the broader confrontations, prompting senior defense officials to state that an Iranian incursion aimed at Tel Aviv would lift Israel from any residual constraints on strike capability.
The Israeli defense brief stated that attacking Hezbollah in Lebanese waters diminishes prospects for accelerating the release of the Horniman Strait, while simultaneous strikes on Hamas in Gaza and relentless Houthi vessel attacks in the Red Sea sustain turbulent conditions sectorwise.
The International Energy Agency raised early warnings that the global oil supply gap will widen, even as war‑induced demand weakens, forecasting inventory declines in the third quarter at twice the previous rate due to ongoing unrest over the U.S.–Iran narrative.
Ukrainian forces have stepped up drone missions against Russian oil installations, precipitating a sharp contraction in refine output; EUA analytics recorded average processing rates of 3.51 million barrels per day in July—the lowest level in twenty‑four years—while Russian crude dipped to 8.89 million barrels daily, the lowest in six years. Consequently, Russian gasoline production collapsed to roughly 80,000 tons a day in August, covering only 70 percent of domestic demand and sparking nationwide shortages.
These dynamics weigh on crude pricing, despite OPEC’s decision earlier in August to lift production by 188,000 barrels per day for September. The cartel had reinstated a full recovery of its 2023 reduced output and intends to maintain steady volume movements thereafter, though continued geo‑political volatility makes further expansions uncertain.
Vortexa highlighted a troubling trend: crude barrels aging in storage fell 16 percent, pulling total crude on long‑delayed tankers to 92.64 million barrels for the week ending September 4.
The weekly EIA update reflected a predominantly cautious tone: refined crude declined by 391,000 barrels, a slight softness versus the previously expected 1.35‑million barrel cut; gasoline supplies rose 1.27 million versus outlooks predicting a draw. Distillate stocks surged 2.09 million, offsetting a baseline depletion of 700,000, and U.S. refinery output climbed 0.6 percent week‑over‑week to a record 13.947 million barrels per day.
US crude inventory stood marginally above the five‑year seasonal median, gasoline stocks trailed the seasonal benchmark by 5.5 percent, and distillate inventories lagged by 14.0 percent. Refining activity, meanwhile, recorded a 0.6 percent gain, driving total production to a historic peak.
Baker Hughes reported last Friday that active U.S. oil rigs climbed by two units to 449 rigs during the week ending September 4, falling short of the four‑year high of 455 rigs achieved in late August.