On June 20, August WTI crude oil closed down $5.33 (-7.22%) at $68.70 per barrel, while August RBOB gasoline decreased by $0.1114 (-4.82%) to $2.20 per gallon. This drop came after a brief surge in prices, as fears that Iran’s retaliation to US military actions would disrupt oil supplies were alleviated when Iranian missile strikes on US bases in Qatar caused no damage.
Despite initially rallying to a 5-1/4 month high following US airstrikes on Iran’s nuclear facilities, crude prices fell as reports indicated that Iran has not attempted to close the vital Strait of Hormuz, which accounts for 20% of global crude shipments. Energy research firm Kpler Ltd. warns that a temporary blockade could send oil prices soaring to between $120 and $150 per barrel.
For context, OPEC+ recently agreed to increase crude production by 411,000 barrels per day for July, reversing a two-year production cut. Current US crude oil inventories are 10.2% below the seasonal average, while active US oil rigs fell to a three-and-a-half-year low of 438 rigs.
