Oil futures closed mixed on Friday as geopolitical risks lifted crude while a stronger U.S. dollar weighed on the complex. September West Texas Intermediate crude settled up 1.08, or 1.29%, while September RBOB gasoline finished down 0.0171, or 0.55%, reflecting diverging supply and demand signals across the energy market.
Key takeaways
- Price move: September WTI crude rose +1.08 (+1.29%) while September RBOB gasoline fell -0.0171 (-0.55%).
- Catalyst: Crude gained on escalating Middle East shipping and supply threats, including continued disruption around the Strait of Hormuz and renewed concerns tied to the Red Sea.
- Second driver: Tighter fundamentals in the U.S. (via EIA inventory data) and disruptions to Russian refining supported crude, even as some indicators pointed to ample supply.
- Key implication: Investors are balancing higher geopolitical tail risk against competing signals from inventories, exports, and potential OPEC+ production pause expectations.
- Watch item: Market sensitivity to the U.S. dollar and new developments in Middle East maritime routes remains high.
What drove the move
Crude oil prices climbed sharply despite a lack of fresh direct U.S.-Iran attacks, as threats to global supplies intensified across key shipping corridors. Reuters and related market commentary in the report pointed to disruptions in the Strait of Hormuz and the Red Sea, with additional concern over crude export safety via the Caspian Pipeline Consortium after attacks on tankers connected to the terminal.
Middle East escalation risk also factored into the move. The article cited statements by Houthi leader Abdulmalik al-Houthi indicating “comprehensive escalation” would be met with a more aggressive campaign. Alongside that, the report described continuing U.S. maritime restrictions on vessels calling at Iranian ports and Iran’s continued pressure on shipping transiting the Strait of Hormuz. It also said efforts to reopen the Strait of Hormuz appear to be at an impasse.
Beyond the Middle East, the report highlighted support from Russia-related supply disruption. It said Russian crude production fell to 8.928 million barrels per day in June, the lowest in 2.5 years, according to monthly OPEC data. It further cited EA Analytics for projecting Russian crude-processing rates averaging 3.51 million bpd in July, the lowest in 24 years, amid damage to Russian energy infrastructure from drone and missile attacks from Ukraine. The report added that Ukrainian forces have struck Russian fuel-producing facilities more than 50 times this year, hitting at least 24 of Russia’s 34 largest refineries, citing Bloomberg.
However, the crude rally faced offsetting pressures from supply and export dynamics. The report said robust crude supplies in China could reduce near-term Chinese purchasing, noting China’s crude inventories remained abundant. It also cited data showing Russian crude exports staying elevated, with Bloomberg analysis indicating Russia’s four-week average crude exports above 4 million bpd through late July and reaching 4.13 million bpd through June 28, the highest since Russia invaded Ukraine in 2022.
Separately, the article referenced a bearish tone tied to monetary conditions: it said dollar strength on Friday was a headwind for energy prices.
Market reaction in crude versus gasoline
While crude benefitted from risk premiums tied to supply disruption, gasoline finished lower, underscoring the market’s split view on refined-product fundamentals. The report attributed crude’s strength largely to geopolitical supply threats and disruptions to Russian refining capacity, while noting that broader supply conditions and financial variables supported a more mixed tape for refined products.
On the Russian side, the report linked attacks on refineries to deeper product constraints domestically and abroad. It said as of late June, around 90% of Russian regions had imposed some form of fuel rationing or reported supply issues, and that refining capacity has fallen following facility damage. It also stated Russia had banned almost all gasoline, jet fuel and diesel exports—an action that can tighten specific product markets even if crude exports remain strong.
At the same time, the report noted that stronger Russian crude exports could add to global crude availability, which would typically pressure crude prices, even as refinery outages constrain product flows.
U.S. data and production signals
U.S. inventory and rig data cited in the article provided additional context for crude demand expectations. According to the report’s reference to an EIA update on Wednesday, U.S. crude oil inventories as of July 24 were 6.4% below the seasonal 5-year average. It also said gasoline inventories were 6.6% below the seasonal 5-year average and distillate inventories were 8.5% below the seasonal 5-year average.
Production dynamics were steadier in the weekly snapshot. The report said U.S. crude oil production in the week ending July 24 was unchanged week-over-week at 13.796 million bpd, just below the record high of 13.862 million bpd set in the week of November 7.
On the supply build or draw risk from drilling activity, the article cited Baker Hughes data on Friday showing the number of active U.S. oil rigs in the week ended July 31 rose by 1 to 451 rigs, just below the 1.25-year high of 452 rigs in the week ended July 17.
Bigger picture: OPEC+ expectations and global supply
The report pointed to OPEC+ production strategy as a key uncertainty for the next trading sessions. It said OPEC delegates expect to pause oil production hikes at its meeting this Sunday, following a final increase of 188,000 bpd for September. The group already agreed to restore about two-thirds of a 1.65 million bpd supply cutback made in 2023 and planned further step-ups in three monthly stages, according to the article.
At the same time, the report referenced OPEC+’s previously stated plan to boost output by 188,000 bpd in August, noting that such increases might be difficult amid renewed U.S.-Iran military attacks in the region.
Other global indicators cited in the article also signaled shifting supply conditions. It referenced Vortexa data indicating crude oil stored on tankers stationary for at least seven days rose 3.5% week-over-week to 102.84 million barrels in the week ended July 24.
With crude pricing supported by geopolitical supply disruption and U.S. inventory tightness, but constrained by signs of robust exports and potential OPEC+ adjustments, traders appeared to weigh multiple, competing narratives into Friday’s close.
What to watch next: Market participants will likely focus on developments around Middle East shipping routes and any further disruptions tied to the Strait of Hormuz and Red Sea traffic. The OPEC+ meeting scheduled for this Sunday is another immediate catalyst to monitor, alongside subsequent U.S. inventory and production updates and any new reporting on refinery outages and crude export flows.
