WTI Pulls Back as Iran Threats Challenge Gulf Flows

Key Moments

Middle East Tensions Pressure, But Do Not Halt, Oil Flows

West Texas Intermediate (WTI) futures slipped below $90.50, with prices edging lower to around $90.40 per barrel during Asian trading on Tuesday. The modest retreat comes after a sharp rally, yet the backdrop remains highly sensitive as Iran has pledged to target energy infrastructure across the Middle East if the United States carries out further attacks on its assets. This escalation is linked to a broader conflict that has already significantly reduced regional oil supplies.

Last week, crude benchmarks jumped nearly 10% as renewed hostilities intensified worries about deeper disruptions to energy flows. Over the weekend, both sides increased attacks on ships and military vessels in waters around the Strait of Hormuz, a critical chokepoint for global oil shipments. On Monday, facilities operated by Saudi Aramco in Jazan, near the Red Sea, were targeted again, although reported damage remained limited.

Iran also stated that an agreement with Oman on managing shipping through the Strait of Hormuz is close to being finalized. That announcement has added to market concerns over Tehran’s growing influence over one of the world’s most strategically important waterways.

Tight U.S. Fuel Inventories Add to Supply Concerns

Supply risks are being compounded by tight product stocks in the United States, which is described as both the largest oil producer and consumer. According to analysts at PVM Energy cited by Reuters, U.S. gasoline and distillate inventories are well below levels seen a year ago and also below the five-year seasonal averages. The analysts indicated that the inventory backdrop appears “slightly direr” than just a few weeks earlier.

Despite the elevated geopolitical risk and constrained inventories, flows from the Persian Gulf have not stopped. Approximately 7 million barrels per day of crude and refined products are still moving through the Strait of Hormuz, underscoring that physical supply from the region continues to reach the market even as risk premiums remain elevated.

Brent Outlook: Societe Generale Sees Limited Downside

Analysts at Societe Generale maintain a constructive view on Brent crude’s technical setup. They contend that the existing upward trend in Brent remains in place, emphasizing that “signals of a large pullback are not yet visible.” The bank’s analysts further note that “last week’s low near $89 could provide short-term support,” suggesting that downside risks appear contained for the moment.