Recap: The crude oil market traded higher following report of attacks on vessels in the Strait of Hormuz and the U.S. decision to reimpose sanctions on Iranian oil. A Qatari LNG tanker and a Saudi-flagged crude oil tanker were damaged following reports that Iran’s Revolutionary Guards fired missiles at ships in the waterway overnight. The strikes against the tankers brought back some geopolitical risk premium, with the crude market trading from a low of $68.58 in overnight trading to a high of $70.72 ahead of the close. The market was also supported by comments made by Iran’s Foreign Minister, who stated that talks to reach a final deal between Iran and the U.S. would not take place if U.S. threats continue following U.S. President Donald Trump’s threat to “finish the job” unless a deal is done. The August WTI contract settled up 1.89 at $70.44 and rallied further in the post settlement period to a high of $72.51, retracing almost 50% of its move from a high of $78.14 to a low of $67.04. The rally followed the news that the U.S. was revoking a general license authorizing the sale of Iranian oil. The September Brent contract settled up $2.17 at $74.16. Meanwhile, the product markets settled in mixed territory, with the heating oil market settling up 33 points at $3.3017 and the RB market settling down 4.94 cents at $2.9539.
Technical Analysis: The oil market is seen remaining in its recent trading range as the market seems to have found its support around the $67.00 amid the renewed concerns over the passage of tankers through the Strait of Hormuz following the latest Iranian strikes against the Qatari LNG tanker and a Saudi crude tanker. The market will remain supported by the U.S. decision to revoke a general license authorizing Iranian oil sales and warnings of consequences over Iran’s actions in the Strait of Hormuz. The market is seen finding resistance at $72.51, $72.59, $73.18, $73.90, $74.45, $78.14 followed by $79.18, $80.15, $81.00 to $81.68. Meanwhile, support is seen at $68.58, $67.82, $67.04, $66.96 to $66.29, $63.86 and $63.16.
Fundamental News: In its Short Term Energy Outlook, the EIA said global oil output and trade flows should rebound fully by the end of this year from the disruptions caused by the Iran war. The EIA said global benchmark Brent crude oil prices will average around $74/barrel in the spot market during the third quarter of this year, down from an average of $85/barrel in June. Last month, the EIA forecast Brent prices would average over $101/barrel in the third quarter. The EIA said it expects most of the oil output previously shut in across the Middle East to return online by the first quarter of 2027. That will lift global supply and reduce withdrawals from stockpiles, returning oil markets to a state of oversupply that will weigh on prices. The agency expects oil prices to average about $65/barrel through next year, down from its prior forecast of over $79/barrel in 2027. The EIA also forecast U.S. motor fuel prices will average about $3.80/gallon in the third quarter, down from $4.21/gallon in the second quarter. The EIA reported that world oil demand is expected to total 102.8 million bpd in 2026, down 100,000 bpd from a previous estimate and 2027 demand is forecast at 104.8 million bpd, down 500,000 bpd from a previous forecast. World oil output is forecast to total 101.9 million bpd in 2026 compared with a previous forecast of 99 million bpd and output in 2027 is expected to increase to 109.8 million bpd, up from a previous estimate of 109.3 million bpd. U.S. crude oil demand in 2026 is forecast at 20.7 million bpd, unchanged from a previous forecast, while demand in 2027 is seen at 20.8 million bpd, up 100,000 bpd from a previous estimate.
Axios reported that Iran’s Revolutionary Guards fired at least two missiles at commercial ships transiting through the Strait of Hormuz on Monday night. The report, citing two U.S. official said A Qatari LNG tanker and a Saudi-flagged crude tanker suffered significant damage but had no casualties. Separately, the United Kingdom Maritime Trade Operations agency said early on Tuesday that the LNG tanker was struck on its port side while travelling southbound about 8 nautical miles east of Limah, causing a fire.
Early Market Call – as of 8:55 AM EDT
WTI – Aug $73.62, up $1.42
RBOB – Aug $3.0107, up 1.1 cents
HO – Aug $3.4345, up 5.89 cents
