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US Oil Update: Crude Climbs as US-Iran Escalation Offsets Bearish Inventory Build

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Crude futures climbed over 2% in midday trading on Wednesday as escalating US-Iran hostilities stoked fears of disruptions across key Middle Eastern energy supply routes, while threats to shipping by Yemen's Houthis further boosted prices.

Front-month West Texas Intermediate crude futures rose 2.6% to $86.50 per barrel, while Brent futures climbed by 3% to $93.77/bbl.

Soojin Kim, research analyst at MUFG, said the widening geographic scope of supply disruptions suggests oil prices are being driven by global transportation risks, leaving the market vulnerable to further upside if geopolitical tensions persist.

US commercial crude oil inventories increased by 2 million barrels to 411.7 mmbbls in the week ended July 17, the Energy Information Administration said in its weekly report on Wednesday.

Crude inventories are now about 6% below the five-year average for this time of year, the EIA said.

President Trump on Wednesday vowed to blow up an Iranian bridge or power plant, including those in the country's capital city of Tehran, every time Iran shoots at a vessel in the Strait of Hormuz.

"From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by missile, rocket, drone, or any other device or weapon, the United States will bomb and destroy one bridge or power plant," Trump said in a post on Truth Social.

Saxo Bank strategists said the US-Iran conflict entered an 11th day, with Washington and Tehran exchanging strikes and Trump downplaying the prospect of near-term talks, while vowing to respond if the Houthis disrupt Red Sea shipping.

On Wednesday, US Secretary of State Marco Rubio also said that Iran was not serious about reaching a deal to end the fighting, while vowing to continue to protect shipping via the Strait.

Speaking at the ASEAN Foreign Ministers' meeting in the Philippines, Rubio said the US remains willing to negotiate an end to the Middle East conflict.

The US remains open and willing to engage in positive, constructive negotiations and talks so long as the commitments that are made are kept, Rubio said.

US Central Command said that American forces carried out the eleventh consecutive night of strikes against Iran on Tuesday, targeting Iranian military operations centers, maritime capabilities, aircraft hangars, drone storage facilities, and military logistics infrastructure.

Commercial shipping activity across key Middle East waterways remains subdued, with 22 confirmed transits through the Hormuz and 73 through Bab el Mandeb, as operators continue to exercise caution amid heightened regional security risks.

Confirmed maritime attacks continue around the Strait of Hormuz, Kpler said in a post on X, noting that this reinforced concerns that uncertainty across both regional chokepoints could reshape routing decisions.

This could also increase freight costs and sustain higher geopolitical risk premiums for energy markets, Kpler said.

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Oil & Energy

US Oil Update: Crude Advances as Middle East Conflict Fuels Supply Risk Concerns

Crude futures gained in after-hours trading on Tuesday as intensifying retaliatory exchanges between the US and Iran and fresh threats to key Middle Eastern energy chokepoints heightened concerns over potential supply disruptions.Front-month West Texas Intermediate crude futures rose 2.4% to $84.34 per barrel, while Brent futures climbed by 2.6% to $91.56/bbl.Futures are currently trading at a five-week high. Saxo Bank strategists said that WTI settled near $83/bbl on Monday, its highest close since mid-June, after swinging through a five-dollar range.The US Central Command said as of Monday it had redirected eight commercial vessels as part of its ongoing naval blockade against Iranian ports, as disruptions in the Strait of Hormuz and Bab el-Mandeb continued to constrain global oil shipping."As of July 21, US forces have redirected 8 commercial vessels and disabled 1 to fully enforce the blockade," Centcom said in an X post on Tuesday.On Monday, the US military said that it launched another round of strikes on Monday night, targeting Iranian military command centers, launch sites and air defenses, to "further degrade" Tehran's capabilities to attack ships in the Strait of Hormuz.The tenth round of air strikes follows President Trump's vow that Iran "will pay" for killing American soldiers.Iran, in response, said it struck two oil tankers in the strategic waterway, as well as US military assets in Bahrain, Kuwait and Jordan, according to Iranian media reports.Kuwait said that multiple crew members were injured in Iranian strikes on a Kuwaiti tanker passing through the Hormuz on Monday night.According to a Kuwait Ministry of Foreign Affairs' statement on Tuesday, the country renewed its demand for Iran to immediately cease its illegitimate attacks, emphasizing Kuwait's reservation of its right to take necessary measures, and holding Iran fully responsible for this aggression and its ongoing assaults against Kuwait.The UK Maritime Trade Operations said two vessels reported being struck by unknown projectiles in and near the Strait.Soojin Kim, research analyst at MUFG, said that risks to regional energy supplies remain elevated as attacks on vessels in the Hormuz disrupted shipping traffic, while Yemen's Houthis threatened Saudi maritime exports through the Red Sea.Meanwhile, two tankers that loaded Saudi crude bound for China and India this week reportedly made U-turns and were headed toward the Suez. Kpler said in a post on X that the diversions could be an early indication of broader changes in tanker trade flows.The course reversal comes a day after Yemen's Houthis threatened a maritime embargo against Saudi Arabia, warning that any further escalation by Riyadh would be met with a broader response.On the supply front, the International Energy Agency said on Monday that it is "closely monitoring the situation in oil markets" as escalating hostilities in the Middle East increase concerns over security of supplies.IEA executive director Fatih Birol said that markets "continue to benefit from several cushioning factors," including significant supplies from Persian Gulf producers such as Saudi Arabia and the UAE.Meanwhile, data from the American Petroleum Institute revealed Tuesday that US crude oil inventories increased by 2.603 million barrels in the week ended July 17, following a 564,000-barrel draw the previous week, and compared with analysts' estimate of a 1.5-mmbbl decline according to a Bloomberg-compiled survey.

Oil & Energy

US Centcom Redirects 8 Vessels; Hormuz, Bab el-Mandeb Disruptions Strain Oil Shipping

The US Central Command said as of Monday it had redirected eight commercial vessels as part of its ongoing naval blockade against Iranian ports, as disruptions in the Strait of Hormuz and Bab el-Mandeb continued to constrain global oil shipping."As of July 21, US forces have redirected 8 commercial vessels and disabled 1 to fully enforce the blockade," Centcom said in an X post on Tuesday.The development comes as shipping through two of the world's most important oil chokepoints remains under severe pressure. MarineTraffic said that simultaneous disruptions in the Strait of Hormuz and Bab el-Mandeb could have a major impact on global crude supply.US forces have helped facilitate the movement of about 900 commercial vessels carrying about 450 million barrels of crude oil through the region's key shipping lanes since May."A simultaneous and prolonged disruption of Bab el-Mandeb and the Strait of Hormuz could affect maritime routes carrying approximately one-quarter of global oil supply," MarineTraffic said.MarineTraffic data showed that verified transits averaged about 41 vessels per day between July 15 and July 20, about 43% below the 2023 peak of 72 transits per day.Loadings through Bab el-Mandeb declined 34% in two weeks, from 29.58 million barrels to 19.50 mmbbl, MarineTraffic said.Any confirmed strikes are likely to push dirty tanker freight higher, raising war-risk premiums and disrupting near-term crude deliveries, MarineTraffic said, noting that crude is the main commodity at risk."Crude flows through Bab el-Mandeb reached 193.78 mmbbl in June 2026, as Saudi Arabia redirected more exports from Ras Tanura to Yanbu," it said.Additionally, Saudi Arabia's "Hormuz workaround" sends up to 17.5 million metric tons per month through the Bab el-Mandeb Strait, which the Houthis are threatening to close.According to MarineTraffic data, the first operational response to heightened security risks in the Red Sea is now visible. Two laden crude tankers, a Singapore-flagged vessel initially sailing to China and a Liberia-flagged vessel bound for India, altered their planned voyages after departing Saudi Arabia.According to Kpler, these diversions could be an early indication of broader changes in tanker trade flows ahead."If Saudi crude exports from Yanbu to Asia increasingly avoid the Bab el Mandeb Strait, cargoes would likely transit via the Suez Canal and the Cape of Good Hope, substantially increasing voyage distances and almost tripling tonne mile demand," Kpler said in an X post.Kpler strategists noted that Suez draft regulations would favor Suezmax tankers, forcing many Very Large Crude Carriers to transit with partial loads.Longer voyages would, in turn, tighten tanker availability, push freight markets higher and increase delivered crude costs for Asian refiners."If diversions become more widespread, freight economics could begin to reshape global crude trade flows," Kpler said.Asian countries face the greatest risk. India received 15,378 kilotons through the strait in June, while South Korean and Japanese liquid imports rose to 38.6 mmbbls and 26.8 mmbbls, respectively, MarineTraffic data revealed.MarineTraffic strategists noted that while the Bab el-Mandeb Strait remained open, traffic was operating well below normal.Meanwhile, traffic through the Strait of Hormuz remained subdued on Tuesday, with 15 confirmed crossings recorded, according to Windward Maritime data.The subdued traffic comes after the UK Maritime Trade Operations reported two separate incidents involving commercial vessels in the region.UKMTO said a tanker in the Strait of Hormuz, off the Omani coast, had reported being struck by an unknown projectile, forcing its crew to abandon the vessel and board lifeboats.The UK maritime agency said in a separate incident that a vessel reported being struck by an unknown projectile, causing damage to its steering gear.Iran's Islamic Revolutionary Guard Corps also claimed to have stopped "two non-compliant oil tankers" attempting to pass through the "unsafe southern route of the Strait of Hormuz" after explosions caused fires on the vessels.The incidents add to growing uncertainty among ship operators navigating the Persian Gulf region amid heightened military tensions between the US and Iran.

Oil & Energy

India's Russian Oil Buying Reportedly Holds Near Record as Gulf Supply Risks Deepen

India intensified its reliance on Russian crude as Gulf supply disruptions intensified despite US sanctions pressure, according to multiple media reports on Tuesday.Russian crude deliveries to India topped 2.3 million barrels per day in June, while July arrivals have remained close to that pace after trade between the two countries expanded sharply following Moscow's 2022 invasion of Ukraine, according to a Bloomberg report.Trading intermediaries have enabled Russian crude to continue reaching overseas buyers despite US sanctions targeting several major producers, the report added.Indian refiners reportedly increased purchases from Russia as Middle East supplies tightened and lower Russian prices improved their appeal, while renewed security threats disrupted shipping through the Strait of Hormuz.Russia's four-week average seaborne crude exports eased for a second consecutive week to 4.16 million b/d through July 19, remaining close to the record level reached earlier this month.Ukrainian drone attacks have reduced Russia's refining capacity, leaving more crude available for export while July refinery runs fell to their lowest level in over 21 years, deepening domestic fuel shortages.Russian crude has become steadily cheaper over the past 13 weeks, with four-week average prices falling to little over half the levels recorded in mid-April, encouraging additional buying from Indian refiners.Proposed US legislation imposing tariffs of up to 100% on major buyers of Russian energy, including India, could curb Indian demand, although President Donald Trump's support for the measure remains uncertain.Russia loaded 27.73 million barrels of crude onto 37 tankers in the week ended July 19, or 3.96 million b/d. Seaborne volumes waiting at sea climbed to about 137 million barrels, according to Bloomberg, citing vessel-tracking data and port-agent reports.India imported a record 2.64 million b/d of Russian crude in June, up 37.4% over the month and representing about half of the country's total crude imports of 5.24 million b/d, Reuters reported.Russian crude accounted for almost 41% of India's oil imports during the April-June quarter, up from about 38% from a year earlier, while the Middle East's share declined to 31% from 41.4%.Indian refiners also increased purchases from Brazil, Venezuela and Angola as fighting resumed after the collapse of the Washington-Tehran truce, disrupting traffic through the Strait of Hormuz.Indian refiners expect to source more crude from Russia, West Africa and the Americas if disruptions in the Strait of Hormuz continue and Houthi threats expand, although shipping Saudi crude via the Cape of Good Hope would significantly increase transportation costs, Reuters reported.India's Ministry of Petroleum and Natural Gas did not immediately respond to' request for comment.