Key Moments
- WTI trades near $81.30 per barrel during Asian hours on Thursday after slipping from modest prior gains.
- Iran-Oman agreement over Strait of Hormuz waters and revenues, along with softer-than-feared U.S. Iran sanctions, eases immediate supply risk concerns.
- U.S. crude inventories rose by 95,000 barrels to 428.9 million, well below the 597,000-barrel build forecast in a Reuters poll.
Middle East Diplomacy Softens Risk Premium
West Texas Intermediate (WTI) crude prices are weaker after a modest advance in the prior session, with the U.S. benchmark trading around $81.30 per barrel during Asian hours on Thursday. The move lower accompanies signs of easing near-term supply concerns tied to developments in the Middle East.
Diplomatic engagement between Iran and Oman over the Strait of Hormuz has reduced some of the market’s anxiety about potential disruptions to crude flows. The two countries reached an understanding on how to divide control of the strait’s waters and associated revenues. However, Tehran signaled that reopening the vital shipping route would require steps beyond its agreement with Oman.
Against this backdrop, U.S. President Donald Trump said 10 million barrels of oil had passed through Hormuz on Tuesday and repeated assertions that mines in the waterway had been cleared.
Softer U.S. Sanctions on Iran Add Downward Pressure
WTI has also been weighed down this week by the market’s reaction to new U.S. economic sanctions on Iran. The measures were less stringent than many participants had anticipated, particularly as the White House has not, so far, imposed tougher actions on Iran’s trading partners. This outcome has eased immediate concerns about a sharp drop in Iranian-related supply, contributing to the pullback in prices.
Inventory Data Offers Partial Support
Oil prices recovered from deeper intraday losses after official U.S. data indicated a smaller-than-expected increase in stockpiles. The Energy Information Administration (EIA) reported that crude inventories rose by 95,000 barrels to 428.9 million barrels in the week ended August 21. That compared with expectations for a 597,000-barrel build, based on a Reuters poll, helping to temper the downside pressure on WTI.
| Indicator | Latest Value | Expected (Reuters poll) |
|---|---|---|
| Change in U.S. crude inventories (week ended August 21) | +95,000 barrels | +597,000 barrels |
| Total U.S. crude inventories | 428.9 million barrels | N/A |
Eastern European Supply Risks and Geopolitics
While near-term Middle East risks have eased somewhat, broader geopolitical tensions continue to shape the longer-term outlook for global energy markets. Supply concerns have intensified in Eastern Europe following fresh disruptions to Russian refining capacity.
Russia’s fourth-largest oil refinery and second-largest gasoline producer, NORSI, halted crude processing on Wednesday after being hit by a Ukrainian drone strike. The outage adds to worries about product availability and overall market tightness.
At the same time, Bloomberg News reported that Russia is weighing an escalation of ballistic missile strikes on Kyiv, potentially targeting the city center and critical infrastructure elsewhere. According to the report, sources close to the Kremlin indicated that efforts to pursue peace negotiations have stalled.
These developments, combined with ongoing geopolitical uncertainty, keep longer-term supply risks elevated even as some immediate fears around the Strait of Hormuz and Iran sanctions have eased.
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