Oil Prices Head for 4% Weekly Gain as U.S.-Iran Deadlock Drags On
Crude oil prices were on course to add 4% this week, as the United States and Iran indicated they are no closer to a peace deal than they were at the start of the war. At the time of writing, Brent crude was trading at $87.12 per barrel, and West Texas Intermediate was trading at $81.36 per barrel. The rise of both benchmarks was driven by low tanker traffic through the Strait of Hormuz, which…
Crude oil prices are projected to surge 4% this week, as the United States and Iran remain deadlocked, with no significant progress towards a peace agreement. Brent crude is currently priced at $87.12 per barrel, while West Texas Intermediate stands at $81.36 per barrel. The increase in prices is attributed to reduced tanker traffic through the Strait of Hormuz, which remains at a fraction of pre-war levels, and the United States' threat to maintain its naval blockade of Iran indefinitely, imposing further economic pressure on the nation.
Despite bearish crude stock data, the broader geopolitical environment is hindering a steeper price decline, according to Rystad Energy senior vice president for oil, Susan Bell. ING analysts also reported a significant rise in U.S. commercial crude oil inventories, amounting to over 17.4 million barrels for the previous week, which placed downward pressure on international benchmark prices.
However, this downward trend may not persist due to growing concerns about crude oil availability amidst the ongoing conflict between the U.S. and Iran. Earlier this week, the International Energy Agency and OPEC released their monthly reports, forecasting lower demand for crude oil, primarily due to the war's impact on prices. The IEA predicts a supply shortage of 1.8 million barrels daily for the current quarter, although this information did not significantly influence prices, as it was higher than the agency's 1.6 million barrels daily demand decline forecast.
OPEC also reduced its 2026 demand growth forecast to 580,000 barrels per day (bpd), down from the 780,000 bpd growth anticipated in the July report.
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