Recap: The oil market on Monday rallied 9.4% higher following renewed military strikes between the U.S. and Iran over the weekend and news of a U.S. naval blockade of the Strait of Hormuz resuming on Tuesday, increasing concerns over crude oil flows through the strait. The crude market gapped higher from $73.16 to $73.69 after U.S. and Iranian strikes over the weekend fueled fears of a renewed escalation. Iran targeted U.S. facilities across the Gulf of Sunday and said it had again closed the Strait of Hormuz. Kpler data showed that tanker traffic through the waterway fell to a five week low on Sunday, with only six vessels transiting the strait. The market traded higher in overnight trading before it erased some of its gains and backfilled its opening gap as it posted a low of $72.61. However, the market bounced off its low and was further supported after U.S. President Donald Trump said the U.S. was reinstating its naval blockade on Iran and would be reimbursed 20% on all cargo shipped through the Strait. The market extended its gains to over $7 as it posted a high of $78.45. The August WTI contract settled up $6.73 at $78.14 and the September Brent contract settled up $7.29 at $83.30. The product markets ended the session higher, with the heating oil market settling up 27.03 cents at $3.8236 and the RB market settling up 18.17 cents at $3.1663.
Technical Analysis: The crude market is seen remaining supported amid the renewed escalation in tensions between the U.S. and Iran as tanker traffic through the Strait of Hormuz has once again declined. The market will remain well supported by the U.S. beginning its enforcement of a blockade against vessels transiting to or from Iranian ports and coastal areas on Tuesday afternoon. The oil market is seen finding resistance at $78.45, $79.18, $80.15, $80.23, $81.00 to $81.68, $83.34 and $85.61.
Fundamental News: U.S. President Donald Trump said that he would make a speech to the nation on Thursday at 9 p.m. EDT. He did not give a topic for the planned address.
Shipping data showed that the number of tankers transiting the Strait of Hormuz fell in the past day to the lowest level in two months. Shipping industry sources said vessels were increasingly switching off their public AIS tracking transponders, making it difficult to determine the full number of ships crossing the waterway. Based on available data, oil and gas tanker traffic fell to its lowest level since May 25, according to analysis from Kpler. Six vessels transited the strait on Sunday, the lowest number in five weeks.
According to the Department of Energy, crude oil stocks in the U.S. Strategic Petroleum Reserve fell by about 3 million barrels to 316.5 million barrels last week, the lowest level since April 1983. The drawdowns are a part of a U.S. agreement to release 172 million barrels from the facility. Since the U.S.-Israeli war on Iran began at the end of February, SPR inventories fell by 98.9 million barrels as of July 10th.
OPEC lowered its forecast for world oil demand growth in 2026 to 780,000 bpd, marking the third consecutive downward revision. OPEC continues to see a smaller impact on consumption since the Iran war started than other forecasters such as the IEA, which expects demand to decline in 2026. OPEC also raised its forecast for 2027 oil demand growth. The current forecast reduced the expected oil demand growth this year from a previous estimate of 970,000 bpd. For 2027, OPEC expects oil demand to increase by 1.94 million bpd, up 210,000 bpd from the previous forecast. OPEC+ crude output averaged 36.28 million bpd in June, up about 3 million bpd from May, as Gulf members began to resume output halted by the Iran war.
IIR Energy said U.S. oil refiners are expected to shut in about 200,000 bpd of capacity in the week ending July 17th, increasing available refining capacity by 70,000 bpd. Offline capacity is expected to decrease to 89,000 bpd in the week ending July 24th.
Early Market Call – as of 8:45 AM EDT
WTI – Aug $80.74, up $2.74
RBOB – Aug $3.2574, up 9.76 cents
HO – Aug $3.9804, up 14.86 cents
