West Texas Intermediate crude oil and gasoline futures surged on Monday as renewed Middle East tensions raised fears of disruption to flows through the Strait of Hormuz. August WTI crude oil closed up 6.73, or 9.42%, and August RBOB gasoline finished higher by 0.1817, or 6.09%, with both contracts hitting multi-week highs.
Price gains accelerated after the U.S. said it was reinstating measures aimed at Iranian shipping in the strait, following further attacks over the weekend. The rally also drew support from ongoing strikes affecting Russian refining and supply, even as several reports pointed to improving global supply conditions that could cap further upside.
Key takeaways
- WTI crude jumped with August futures closing up 9.42% on Monday, while RBOB gasoline rose 6.09%.
- Catalyst: Middle East risk—the U.S. said it is reimposing a blockade posture toward Iranian vessels transiting the Strait of Hormuz.
- Additional support: reports of damage to Russian oil and refining infrastructure intensified concerns about tighter product availability.
- Offsetting factors: supply signals—the International Energy Agency warned of weaker demand, and other data cited higher Russian crude export levels.
- Implication: investors are pricing near-term geopolitical disruption risks even as demand and supply outlooks remain mixed.
What drove the move
Crude prices surged as geopolitical developments raised the probability of supply constraints at one of the world’s most important oil chokepoints. According to the report, the U.S. said it launched fresh missile attacks targeting Iran’s air-defense, radar, and missile and drone capabilities, and that Iran retaliated with drone and missile strikes on multiple countries in the region and attacked vessels attempting to transit the Strait of Hormuz.
Further driving the rally, President Trump said the U.S. is reinstating the Iranian blockade and stopping Iranian ships from using the Strait of Hormuz. The report also said the strait would remain open “with or without Iran,” with the U.S. describing itself as a “guardian” of the waterway and seeking reimbursement at a rate of 20% of all cargo shipped for protection in the area.
Beyond the Middle East, the market also found support in reports of intensified attacks on Russian energy infrastructure. According to Bloomberg, Ukrainian forces have attacked Russian fuel-producing facilities more than 50 times this year and hit at least 24 of Russia’s 34 largest refineries. The report said those strikes have contributed to a refining slowdown and pushed Russia toward fuel rationing and restrictions on exports of gasoline, jet fuel, and diesel.
Market reaction: crude and gasoline both bid higher
Monday’s move extended to refined products alongside crude. Gasoline futures rose in tandem with oil as the reported refining disruptions in Russia deepened supply concerns. The report also cited that Russia is the world’s second diesel exporter after the U.S., underscoring how damage to refining and product output can ripple across global fuel markets.
At the same time, not all signals pointed in the same direction. The report said stronger Russian crude exports could add to global supply, a factor that investors may weigh against near-term disruption risk. Data compiled by Bloomberg, as cited in the report, showed Russian crude exports rising to a four-week average of 4.13 million bpd through June 28—the highest since Russia invaded Ukraine in 2022—suggesting Russia may be compensating for reduced refining capacity by shipping more crude abroad.
Bigger picture: demand warnings and production plans
While geopolitics supported prices, multiple demand and supply inputs complicated the outlook. The report referenced an International Energy Agency monthly assessment that warned the Iran-related impact on global oil demand would be deeper than previously expected, calling for a decline in world oil consumption of 1.1 million bpd this year, larger than a prior estimate of 420,000 bpd.
On the supply side, the report pointed to expectations around higher U.S. production. The U.S. Department of Energy, according to the report, raised its 2026 crude output estimate to 13.78 million bpd from 13.72 million bpd in a prior estimate, which could weigh on prices if production growth persists.
OPEC-related statements also remained a factor in the broader tape. As cited in the report, OPEC delegates said in May they aim to continue quota increases over the coming months, completing the return of previously halted production by the end of September. The report further said OPEC+ indicated it would boost crude output by 188,000 bpd in August, while noting that Middle East producers may face challenges restarting output curtailed by regional conflict.
Supply and inventory signals investors are monitoring
The report highlighted a mix of inventory and production indicators. It cited Vortexa data showing crude stored on tankers that have been stationary for at least seven days fell 32% week over week to 82.85 million bbl in the week ended July 10, a change that could be interpreted as easing in one segment of stored supply.
It also referenced the latest U.S. EIA figures: crude, gasoline, and distillate inventories as of July 3 were below their seasonal five-year averages, with crude 6.6% below, gasoline 6.9% below, and distillate 13.4% below. The report said U.S. crude production in the week ending July 3 rose 0.4% week over week to 13.860 million bpd, just shy of the record high of 13.862 million bpd reported in the week of November 7.
On the near-term drilling outlook, the report cited Baker Hughes data indicating the number of active U.S. oil rigs for the week ended July 10 stayed unchanged at 445, remaining at a 13-month high, though still well below the 5.5-year peak of 627 seen in December 2022.
Next for oil markets, investors are likely to focus on developments that could further affect shipping and refining capacity—especially in and around the Strait of Hormuz and in relation to Russian infrastructure—as well as incoming inventory data and forecasts for demand. With production guidance from OPEC+, demand assessments from the IEA and other agencies, and upcoming U.S. data releases expected to shape the trajectory, the balance between geopolitical risk premia and supply/demand fundamentals remains the key swing factor.
