July WTI crude oil prices fell by $5.21 (-5.55%) to reach a five-week low, while July RBOB gasoline decreased by $0.0798 (-2.54%), marking a six-week low. This decline follows reports of a potential peace deal between the U.S. and Iran, which could reopen the vital Strait of Hormuz, responsible for about a fifth of the world’s oil transit. The International Energy Agency indicated that global oil inventories are severely undersupplied, exemplified by a 4 million bpd decline in March and April.
Concurrently, ongoing conflict in the region has led to significant production cuts, with estimates suggesting a reduction of 14.5 million bpd in crude output from the Persian Gulf due to troubles in the Strait of Hormuz. Goldman Sachs reported nearly 500 million barrels have been drawn down from global crude stockpiles, potentially escalating to 1 billion by June. OPEC’s crude production fell to a 35-year low of 20.55 million bpd in April as the group plans to increase output but faces systemic production cuts from regional conflicts.
In domestic updates, U.S. crude oil inventories are reportedly 1.7% below the seasonal five-year average, and gasoline inventories are down 4.6%. Baker Hughes noted an increase in active U.S. oil rigs by 10 to a 10.5-month high of 425 rigs, although the number remains significantly lower than highs in late 2022.
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