August WTI crude oil (CLQ26) on Thursday closed down -0.65 (-0.82%), and August RBOB gasoline (RBQ26) closed down -0.0162 (-0.49%).
Crude oil and gasoline prices gave up early gains on Thursday and settled lower, as a stronger dollar sparked profit-taking and long liquidation. Crude prices are supported by heightened US-Iran tensions, which have reduced crude oil flows through the Middle East, tightening global oil supplies.
Crude prices have support after the US launched fresh airstrikes against Iran on Thursday and struck a sanctioned Iranian oil tanker in the Persian Gulf. Iran responded by firing upon American bases in Kuwait and Jordan, with the Jordanian government saying it intercepted eight missiles. President Trump pledged to intensify the bombardment until Iran stops attacking ships in the Strait of Hormuz and agrees to open the waterway. The Wall Street Journal reported Thursday that President Trump is leaning toward expanding military operations and discussed the seizure of Kharg Island, Iran’s main oil export terminal.
Global crude oil supplies are tightening due to reduced flows through the Strait of Hormuz. The International Maritime Organization warned on Wednesday that it’s too dangerous to cross the Strait of Hormuz at the moment, and visible transit through the strait has fallen sharply in recent days.
According to Bloomberg calculations based on vessel-tracking data and information from Kpler and Vortexa, the seven-day moving average of oil flows through the Strait of Hormuz, including Iranian supplies, has slumped to about 5.5 million bpd through Wednesday from 9.4 million bpd before the collapse of the US-Iran ceasefire.
Crude oil and products also have support from strength in the crude crack spread. The crack spread soared to a record high on Thursday, potentially persuading refiners to boost their crude oil purchases and refine it into gasoline and distillates.
Crude prices also have support as Ukraine intensifies drone attacks on Russian oil infrastructure. Russian crude production fell to 8.928 million bpd in June, the lowest in 2.5 years, according to monthly OPEC data. According to EA Analytics, Russian crude-processing rates averaged 3.91 million bpd in the first 10 days of July, the lowest in 21 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine. According to Bloomberg, Ukrainian forces have attacked Russian fuel-producing facilities more than 50 times this year, hitting at least 24 of Russia’s 34 largest refineries. As of the end of June, around 90% of Russian regions have imposed some form of fuel rationing or reported supply issues, as refining capacity has plunged following damage to facilities. The strikes have deepened a nationwide gasoline shortage, with several major refineries shut down and the government banning almost all gasoline, jet fuel and diesel exports. Russia is the world’s number two diesel exporter, after the US, according to Vortexa.
Stronger Russian crude exports are also adding to global oil supplies, which is bearish for prices. Data compiled by Bloomberg show the four-week average of Russian crude exports rose to 4.13 million bpd through June 28, the highest since Russia invaded Ukraine in 2022. Russia may be boosting its crude exports as the country’s refining capacity has plunged due to damage at its refining facilities from Ukraine drone and missile attacks.
Signs of mounting global supplies are negative for crude prices, after the International Energy Agency said in a monthly report last Friday that the United Arab Emirates boosted crude oil production to an all-time high of 4.1 million bpd in June.
The International Energy Agency (IEA) warned on June 17 that the Iran war’s impact on global oil demand will be much deeper than previously anticipated, saying world oil consumption will decline by -1.1 million bpd this year, a larger drop than a previous estimate of -420,000 bpd.
The outlook for higher US crude output is negative for oil prices. The Department of Energy (DOE) last Tuesday raised its US 2026 crude production estimate to 13.78 million bpd from a June estimate of 13.72 million bpd.
As a bearish factor for crude, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September. The group already formally agreed to restore about two-thirds of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to raise output targets further and to revive the final portion in three more monthly stages. On Sunday, OPEC+ said it will boost its crude output by 188,000 bpd in August, though that increase might prove difficult, as Middle East producers are still restarting output curtailed by the war in the region. OPEC’s June crude production rose by +2.34 million bpd to 18.75 million bpd.
Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -32% w/w to 82.85 million bbl in the week ended July 10.
Wednesday’s EIA report showed that (1) US crude oil inventories as of July 10 were -6.2% below the seasonal 5-year average, (2) gasoline inventories were -8.4% below the seasonal 5-year average, and (3) distillate inventories were -11.1% below the 5-year seasonal average. US crude oil production in the week ending July 10 was unchanged w/w to 13.861 million bpd, just below the record high of 13.862 million bpd posted in the week of November 7.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ended July 10 remained unchanged at a 13-month high of 445 rigs, up from the 4.25-year low of 406 rigs posted in December 2025. However, the number of US oil rigs remains sharply below the 5.5-year high of 627 reported in December 2022.
