Crude benchmarks rallied this week as robust domestic demand drained US crude and gasoline reserves, while persistent chokepoint vulnerabilities in the Strait of Hormuz and evolving supply dynamics kept markets on high alert heading into the weekend OPEC+ ministerial meeting.
West Texas Intermediate settled at $91.24 per barrel, up from $83.44/bbl the previous week, while Brent closed at $95.83/bbl, down from $89.37/bbl a week earlier.
The global crude benchmarks, including both Brent and West Texas Intermediate, gained 5% and 7% each on a weekly basis so far this week, supported by supply concerns stemming from geopolitical friction between the US and Iran.
Geopolitical tensions dominated market sentiment as military exchanges between the US and Iran rattled the Persian Gulf, analysts said.
Reports of strikes hitting regional targets and defensive interceptions over the Gulf states reignited anxieties about maritime transit through the Strait of Hormuz.
Although daily shipping volumes have occasionally attempted recoveries, persistent threats and localized attacks on commercial tankers have left flows constrained, leading analysts to warn that prolonged disruptions could drive risk premiums much higher.
"Escalation is propping up crude, but the rally may lose traction if Hormuz shipments keep moving smoothly," ING analysts said.
On the supply side, according to the official US Energy Information Administration report for the week ending August 28, commercial crude oil inventories fell significantly by 4.5 million barrels down to 424.5 million barrels, remaining about 1% above the 5-year seasonal average.
Simultaneously, data from the Strategic Petroleum Reserve showed inventories decreasing to 286.6 million barrels.
Attention has focused squarely on the upcoming OPEC+ ministerial meeting to evaluate output paths and baselines.
Ahead of the meeting, Saudi Aramco announced its official selling prices for October, keeping flagship Arab Light crude flat at a $2 per barrel discount to the Oman/Dubai average for Asian buyers.
However, October OSPs to Asia for Arab Medium and Arab Heavy were each raised by $1 a barrel, while pricing for Northwest Europe and the Mediterranean remained unchanged.
In Latin America, Venezuela captured major market focus following landmark energy agreements finalized with US oversight.
These agreements, which assign greenfield development rights in the Orinoco Belt's Carabobo and Ayacucho areas, aim to modernize infrastructure and double Venezuelan crude production to roughly 600,000 barrels per day.
"The binary nature of the near-term oil price outlook and any changes in geopolitical relations can create significant volatility. We also expect oil prices to ease towards [$]70/bbl over the next 12 months as transit conditions normalise, alongside a sizeable supply surplus expected in 2027," Standard Chartered said in a note dated Friday.