August WTI crude oil rose by $1.75 (+2.10%) today, reaching a five-week high, influenced by geopolitical tensions in the Middle East, particularly the ongoing US-Iran conflict. October 2023 saw crude prices climb as the US increased military presence in the region, including the deployment of F-35 and F-16 jets, while Houthi rebels threatened to blockade Saudi oil shipments through the Red Sea.
Global crude oil supplies are tightening due to reduced flows through the Strait of Hormuz, with the International Maritime Organization advising against transit due to safety concerns. Furthermore, Russian crude production plummeted to 8.928 million barrels per day in June, the lowest in 2.5 years, while the United Arab Emirates ramped up output to an all-time high of 4.1 million bpd. The US Energy Information Administration reported that US crude oil inventories are currently 6.2% below the seasonal five-year average.
As of July 17, crude oil stored on stationary tankers surged by 31% week-over-week to 90.03 million barrels, indicating potential supply strains. Active US oil rigs also increased for the first time in months, rising to 452, yet remain significantly below the highs seen in December 2022.
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