On August 4, September WTI crude oil closed up 1.15% and September RBOB gasoline rose 1.59%, driven by a 7-week low in the dollar and uncertainties surrounding an agreement between Iran and Oman to reopen the Strait of Hormuz. The two countries are reviewing a joint statement that would keep the route partially active for two to four months, contingent on the U.S. lifting its blockade on Iranian ports.
The oil market also reacted to geopolitical tensions as Yemen’s Houthi rebels targeted a Saudi oil tanker, escalating threats to shipping in the region. Meanwhile, Ukraine intensified drone attacks on Russian oil infrastructure, resulting in Russian crude-processing rates dropping to 3.51 million bpd, the lowest in 24 years. OPEC’s production in July increased by 1.16 million bpd, raising concerns about maintaining future production levels amidst conflicting geopolitical dynamics.
U.S. crude oil inventories as of July 31 remain 6.2% below the seasonal 5-year average, while active U.S. oil rigs rose to a 14-month high of 454. This volatility in supply dynamics, combined with robust Russian crude exports significantly over 4 million bpd, presents mixed signals for the global oil market.
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