Crude oil and gasoline prices fell on Tuesday, with August WTI crude settling lower and August RBOB gasoline also ending the session down. The declines tracked a firmer U.S. dollar and improved near-term supply expectations tied to progress around Iran, while weaker global equities signaled investors were trimming assumptions for demand.
Key takeaways
- Price move: August WTI crude closed down 0.65, or 0.88%, and August RBOB gasoline finished down 0.0211, or 0.73%.
- Catalyst: A rally in the dollar index to a 13-month high weighed on energy commodities, while easing supply concerns followed resumed crude flows through the reopened Strait of Hormuz.
- Demand concern: A sell-off in global equities reduced confidence in the economic outlook and energy demand.
- Competing supply signals: Potential releases of stocked cargoes from the Persian Gulf faced offsets from ongoing disruptions to Russian refining and a forecast for tight global supply later in the year.
What drove the move
Energy markets came under pressure as the U.S. dollar strengthened. Tuesday’s rally in the dollar index to a 13-month high increased the cost of commodities priced in greenbacks for buyers using other currencies, a headwind for crude and refined products.
At the same time, near-term oil supply fears eased. The article cited reporting that the reopened Strait of Hormuz is seeing resumed vessel traffic after Iran said on Monday there was “major progress” in all-night discussions with the U.S. over a peace deal following an interim agreement that extended a 60-day ceasefire and reopened the strait. The U.S. also authorized a temporary, 60-day license allowing Iran to sell crude oil and petroleum products through August 21.
Mechanically, resumed shipping could bring additional cargoes to market. The report said vessel traffic through the Strait of Hormuz could eventually release more than 100 laden ships carrying oil from Middle Eastern countries other than Iran that were reportedly stuck in the Persian Gulf, effectively adding to supply.
Separately, macro sentiment also weighed on the complex. The article pointed to Tuesday’s sell-off in global equity markets as a factor reducing confidence in the economic outlook and, by extension, expected energy demand.
Why the story is still mixed for crude
Despite Tuesday’s weakness, the underlying supply-demand picture remains contested across regions. The report referenced multiple forecasts and data points that, on different timelines, support both bears and bulls.
On the demand downside, the International Energy Agency (IEA) warned that the impact of the Iran war on global oil demand would be deeper than previously anticipated. It cited an expectation that world oil consumption would decline by 1.1 million barrels per day this year, compared with a prior estimate of a 420,000-barrel-per-day drop.
On the supply side, however, the report also highlighted constraints. It referenced continued disruptions to Russian oil infrastructure and refining capacity due to Ukrainian drone attacks. According to EA Analytics, Russian crude-processing rates averaged 4.32 million barrels per day in the first 10 days of June, the lowest in 20 years, amid damage caused by drone and missile strikes. The report also cited Bloomberg coverage indicating Ukrainian forces struck three Russian fuel-producing facilities this month after record attacks in May.
Sanctions are another supporting factor mentioned in the article. It said U.S. and EU sanctions on Russian oil companies, infrastructure, and tankers have constrained Russian exports.
In addition, the IEA’s broader view pointed to a tight market for much of the year. The article said the IEA warned that global oil inventories fell by about 4 million barrels per day in March and April and that the market could remain “severely undersupplied” until October, even if the conflict ends soon.
Analyst and policy signals traders are weighing
Several developments cited in the article complicated the near-term outlook. On one hand, Goldman Sachs lowered its Brent crude forecast for Q4 to $80 a barrel from $90 and expected Persian Gulf crude exports to return to pre-war levels by the end of July, one month earlier than previously expected. That projection supported the notion that supply could normalize sooner than markets had feared.
On the other hand, the report said expectations for higher U.S. crude output remain a bearish factor for prices. It cited the Department of Energy raising its U.S. 2026 crude production estimate to 13.72 million barrels per day from 13.65 million barrels per day.
OPEC-related policy guidance also featured. The article noted that OPEC delegates said on May 14 the cartel aims to continue oil quota increases over the coming months, completing the return of halted production by the end of September. It also referenced OPEC’s May crude production falling by 3.36 million barrels per day to a 40-year low of 16.33 million barrels per day.
Still, the article suggested that any output ramp may face obstacles. It said OPEC+ previously planned to boost crude output by 188,000 barrels per day in June after raising production by 206,000 barrels per day in May, but that production hikes now appeared less likely given Middle East-related constraints affecting producers.
Inventory and rig signals ahead of the next EIA print
Traders were also likely positioning ahead of the next weekly U.S. inventory update. The article said the market consensus for Wednesday’s weekly EIA data called for U.S. crude inventories to decline by 3.6 million barrels and gasoline supplies to fall by 1.1 million barrels.
Recent U.S. inventory data cited in the report pointed to ongoing under-stocking versus historical norms. It said the prior EIA update showed U.S. crude oil inventories as of June 12 were 6.1% below the seasonal 5-year average, gasoline inventories were 6.4% below the seasonal 5-year average, and distillate inventories were 12.9% below the 5-year seasonal average.
Supply activity data also appeared supportive but not decisively so. The article cited that U.S. crude oil production in the week ending June 12 rose 0.1% week over week to 13.806 million barrels per day, modestly below the record high of 13.862 million barrels per day set in the week of November 7.
In the rig market, Baker Hughes data referenced by the report showed active U.S. oil rigs held steady in the week ended June 19 at an 11-month high of 433. The article added that the rig count remains well below a 5.5-year high of 627 recorded in December 2022.
On the shipping side, Vortexa reported that crude stored on tankers stationary for at least seven days fell 4.1% week over week to 90.86 million barrels in the week ended June 19, indicating some movement in how crude is being held and transported.
Looking ahead, the next EIA weekly inventory release is the immediate focus, with expectations calling for declines in both crude and gasoline. Markets will also continue to weigh shifting Iran-related logistics, ongoing disruption risk to Russian energy infrastructure, and U.S. production momentum as investors calibrate the balance between near-term supply normalization and longer-horizon tightness.
