September WTI crude oil finished higher on Tuesday, closing up 1.07, or about 1.30%. September RBOB gasoline also edged up, rising slightly by 0.0012, or about 0.04%, after settling at a more modest pace than crude. The oil complex moved higher as Middle East supply risks resurfaced, though gains were capped by signs of potential progress toward reopening the Strait of Hormuz.
Key takeaways
- Price move: September WTI crude rose about 1.30%, while September RBOB gasoline gained about 0.04%.
- Catalyst: Iran-linked headlines kept pressure on Middle East shipping through the Strait of Hormuz, supporting crude supplies.
- Market implication: Even as shipping disruptions tighten expected flows, competing signals—talks about reopening and rising supply indicators—are limiting the upside.
- Watch next: Traders are turning attention to U.S. inventory data ahead of the latest EIA update and to ongoing developments around Middle East and Russia energy disruptions.
What drove the move
Crude oil’s rally was powered by renewed concerns over regional chokepoint risk. According to Tuesday reports, Iran’s state broadcaster said the Strait of Hormuz would remain shut until Tehran’s conditions are met. The comments came after earlier price swings on a mix of headlines, with crude moving lower and then regaining strength in the afternoon.
Still, the market’s ability to sustain gains appeared constrained by signals that the dispute could be easing. Al Jazeera reported that talks between Oman and Iran to reopen the Strait of Hormuz had reached an advanced stage. In parallel, Pakistan’s defense minister Khawaja Asif said recent signals over the “last two to three days” suggest the sides are close to an agreement.
Tuesday’s tone also built on Monday’s sharp advance, following a hardening of the U.S. stance toward Iran. The report noted that President Trump indicated he would demand compensation from Iran related to past conflicts and fatalities, a stance that the market read as reducing the likelihood of an imminent deal to reopen the strait.
How the Middle East supply picture is being priced
Beyond political messaging, the physical flow of vessels through the Strait of Hormuz remains a central input for crude traders. Energy Aspects said on Monday that only an average of five vessels were transiting the strait—well below the roughly 14 ships a day seen after a June memorandum of understanding between the U.S. and Iran.
Geopolitical risk did not stop with the Iranian strait. The report cited additional disruptions, including a missile attack targeting a UAE tanker while it transited the Strait of Hormuz and Houthi claims of an attack on Saudi Arabia’s Jazan refinery. It also noted that the Houthis said they would escalate actions against Saudi oil tankers in the northern Red Sea to prevent transits through the area.
At the same time, crude’s momentum faces offsets from broader supply and production signals. OPEC delegates approved a final planned increase of 188,000 bpd for September on August 2, restoring all of the 1.65 million bpd supply cutback implemented in 2023. The group also indicated it intends to hold output steady after the September hike, though traders may question how smoothly the increase can be executed if renewed regional attacks intensify.
Russia disruptions and demand signals add complexity
Support for crude also came from Russia-linked supply concerns tied to damage from drone and missile attacks. According to EA Analytics, Russian crude-processing rates were expected to average 3.51 million bpd in July, described as the lowest level in 24 years. The report attributed the decline to damage to Russian energy infrastructure and cited fuel rationing or supply issues across many regions.
Those disruptions have fed through into Europe and global product markets via tightening supply. The report also noted that Russia is the world’s second diesel exporter after the U.S., citing Vortexa, and said the strikes deepened a nationwide gasoline shortage, including refinery shutdowns and restrictions on most gasoline, jet fuel, and diesel exports.
Counterbalancing factors also emerged. The report pointed to potentially softer buying in China as inventories remain high. Data from Kpler was cited showing China’s crude inventories at around 1.2 billion bbl, down only 54 million bbl since early May, suggesting ample supply locally could reduce near-term imports.
Further, the report cited stronger Russian crude exports as another bearish element for prices—potentially reflecting Russia’s ability to ship more despite reduced refining capacity.
U.S. inventories and positioning in focus
Tuesday’s move also sat in front of investor attention on U.S. inventory trends. The market consensus referenced in the report expects Wednesday’s weekly EIA crude inventories to fall by 1.5 million bbl, with gasoline supplies down by 1.15 million bbl.
The article also referenced the prior EIA release from last Wednesday, which reported U.S. crude inventories at July 31 were 6.2% below the seasonal five-year average, with gasoline inventories 6.2% below the same benchmark and distillate inventories 11.7% below it. It further noted that U.S. crude production for the week ending July 31 rose 0.1% week over week to 13.804 million bpd, just below the record high of 13.862 million bpd reported for the week of November 7.
Supply-side indicators remained supportive at the margin. Baker Hughes reported that the number of active U.S. oil rigs in the week ended August 7 increased by 3 to 454, described as a 14-month high.
Looking ahead, traders will likely weigh whether Middle East shipping constraints persist or ease, how effectively OPEC’s September production plan holds, and how the latest EIA inventory data reshapes expectations for U.S. balances. With crude and gasoline priced against both geopolitical risk and shifting supply flows, the next set of inventory numbers may determine whether Tuesday’s crude rebound can extend.
