Key Moments
- Oil prices extended gains for a third consecutive session amid rising US-Iran tensions and continued pressure on tanker traffic through the Strait of Hormuz.
- Large second-quarter inventory drawdowns and the approaching end of global SPR releases have left the crude market more vulnerable to supply disruptions.
- Physical benchmarks such as Dated Brent and Mars crude have strengthened, highlighting tighter conditions in the physical oil market.
Persian Gulf Risks Drive Further Oil Price Gains
ING analysts Warren Patterson and Ewa Manthey report that oil prices continued to advance for a third straight day as geopolitical strains between the US and Iran intensified. They note that US forces have carried out additional strikes against Iran, while media accounts indicate that Washington is weighing a further expansion of military actions.
According to the analysts, these developments are occurring against a backdrop of already tightened fundamentals. They highlight that substantial inventory drawdowns during the second quarter have increased the market’s sensitivity to any fresh supply interruptions.
Impact of Inventory Drawdowns and SPR Releases
The analysts emphasize that the timing of geopolitical risks is particularly concerning given recent stock movements. They point out that sizeable inventory declines through the second quarter have left the oil market more exposed to shocks.
They also stress that releases from global strategic petroleum reserves (SPRs) – which have played an important role in supporting supply in recent months – are expected to conclude in the coming weeks. This, in their view, reduces an important buffer that had been cushioning the market.
Physical Market Signals Tightening Supply
The reduction in energy flows from the Persian Gulf is described as having a clear and direct impact on the physical oil market. The analysts highlight that the Dated Brent versus front-line Brent futures (DFL) structure has moved back to a premium of $1.30/bbl. This follows a period in late June and early July when Dated Brent had been trading at a discount to the front-month futures contract.
In the US, the tightening backdrop is also evident in regional pricing. The analysts note that Mars crude differentials have strengthened, reflecting firm demand for physical barrels in that segment of the market.
| Market Indicator | Recent Level / Change | Comment |
|---|---|---|
| Dated Brent vs. front-line Brent futures (DFL) | Premium of $1.30/bbl | Recovered from a discount seen in late June and early July |
| US commercial crude oil inventories (weekly change) | -1.69m barrels | Excluding SPR flows |
| Total US crude inventories including SPR releases (weekly change) | -4.68m barrels | Reflects combined commercial and SPR movement |
US Inventory Trends Highlight Structural Tightness
Citing data from the US Energy Information Administration (EIA), the analysts state that US commercial crude oil stocks fell by 1.69m barrels over the most recent week. When including barrels released from the strategic reserve, total crude inventories declined by 4.68m barrels.
They add that US commercial crude inventories are hovering close to their lowest levels since 2022. On a seasonal basis, they observe that these inventories are at their lowest point since 2018.
Middle Distillates Remain a Key Pressure Point
Beyond crude balances, the analysts underscore that middle distillate markets remain particularly constrained in both the US and globally. They note that this tightness is clearly visible in the strength of middle distillate cracks, signaling robust margins and persistent tension in this product segment.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
