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US Oil Update: Crude Extends Gain Following US-Iran Ceasefire Expiry

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Crude oil prices extended gains on Monday, driven by escalating geopolitical frictions following the expiration of the US-Iran ceasefire and fresh vessel attacks in the Strait of Hormuz over the weekend.

Front-month West Texas Intermediate crude futures rose by 0.4% to $82.73 per barrel, while Brent futures advanced 0.7% to $89.10/bbl.

Commerzbank analysts noted that stalled bilateral negotiations and Washington's preparations for fresh sanctions are heavily driving the market, compounded by weekend security incidents that saw a bulk carrier struck by a projectile and multiple Abu Dhabi energy vessels hit in the disputed waterway.

Sentiment remained heavily weighed down by widening regional conflict, underscored by the deadliest day of fighting in Lebanon in months after Israeli forces struck Hezbollah targets in the south.

"This situation could keep the risk of renewed targeting of oil production and export infrastructure across the region high if escalation returns, in addition to the continued targeting of oil tankers, which could keep prices elevated for a prolonged period," said Samer Hasn, senior market analyst at XS.com.

Despite these ongoing maritime disruptions, upward price pressure was partially contained by offsetting supply factors.

Saxo Bank analysts said that Middle Eastern producers continue to move large volumes of crude out of the Persian Gulf, with daily flows reportedly exceeding market estimates at around 4 million barrels per day.

Russia's key Novorossiysk port, which suspended loadings on Friday after a drone strike, has commenced operations, Reuters reported Monday, citing two trade sources.

Furthermore, Reuters reported that Russia's key Novorossiysk port resumed operations on Monday after temporarily suspending loadings due to a drone strike on Friday.

Last week, global oil benchmarks logged weekly gains as persistent Middle East supply risks and Strait of Hormuz bottlenecks overshadowed bearish demand revisions.

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Global oil benchmarks logged weekly gains on Friday as persistent Middle East supply risks and Strait of Hormuz bottlenecks overshadowed bearish demand revisions.West Texas Intermediate settled at $82.40 per barrel, up from $77.08/bbl the previous week, while Brent closed at $88.73/bbl, up from $82.35/bbl a week earlier.The rebound broke a two-week losing streak as markets navigated a tug-of-war between enduring Middle East supply threats and mounting downward pressures from weak global demand and higher US crude stockpiles.Supply anxieties intensified following a wave of regional security incidents.The Abu Dhabi National Oil Company reported that two of its vessels were attacked while trying to cross the Strait of Hormuz, while Houthi drone strikes targeted Saudi Aramco's Jazan refinery on the Red Sea coast.Furthermore, stalled diplomatic talks between the US and Iran, compounded by mutual demands for financial compensation and ongoing naval blockades, left the critical Hormuz waterway effectively restricted.Analysts noted that while alternative bypass pipelines and modest traffic increases have helped partial flows, persistent disruptions continue to command a heavy risk premium."Oil prices are currently being pulled in two opposing directions: supply risks in the Middle East continue to provide support, while weakening global demand, a sharp increase in US crude inventories, and the prospect of higher OPEC+ production are exerting downward pressure," said Linh Tran, Market Analyst at XS.comOn the demand side, major energy agencies delivered sharply bearish revisions.OPEC lowered its global oil demand growth forecast for 2026 to 600,000 barrels per day in its monthly oil market report.Simultaneously, the International Energy Agency projected that global consumption would contract by 1.6 million barrels per day this year, a steeper drop than previously estimated as elevated prices and regional supply bottlenecks weigh heavily on usage.Meanwhile, domestic US supply metrics added to the market's complexity.The Energy Information Administration reported that US commercial crude inventories surged by 17.4 million barrels to 424.4 million barrels in the week ended Aug. 7, marking the largest weekly build since 2023 and driven largely by a jump in imports and a slowdown in exports.However, analysts pointed out that steep draws in refined products such as gasoline and diesel signaled tighter global product markets.Looking ahead, the EIA's latest Short-Term Energy Outlook expects US crude inventories to remain below the five-year low through the end of 2026.Due to ongoing constraints in the Strait of Hormuz, the EIA forecasts Brent spot prices to average around $85/bbl in Q3 of 2026.The US oil rig count increased by one from 454 the previous week to 455 in the week ending Aug. 14, according to data from Baker Hughes (BKR) released Friday. The US had 412 oil rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, increased by eight to 812 from 804 the previous week.Money managers in the WTI crude futures and options markets maintained their net long positions in the week ended Aug. 11, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.

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