Recap: The oil market rallied higher after Iran-backed Houthis attacked Saudi energy facilities and Iran threatened the U.S. with “economic warfare”. On Tuesday, operations at some energy facilities in Saudi Arabia were halted following attacks by Houthis, in what Saudi Arabian authorities called a dangerous escalation. Meanwhile, Iran said it fired an advanced missile at U.S. warships, increasing risk of further escalation in the war after U.S. forces over the weekend struck Iranian oil tankers and Iran’s Revolutionary Guards attacked U.S. warships operating in the region. The market which was well supported during Monday’s abbreviated session due to the Labor Day holiday, continued on its upward trend on Tuesday, rallying to a high of $94.73 in overnight trading. The crude market later erased some of its gains, trading back below the $92 level ahead of the close. The October WTI contract ended the session up $1.55 at $93.03 and the November Brent settled up 92 cents at $97.92. The product markets also settled sharply higher, with the heating oil market settling up 2.76 cents at $4.5678 and the RB market settling up 3.79 cents at $3.2525.
Technical Analysis: The crude market will remain supported amid the threat of an expansion of the Iran war after Houthis attacked Saudi energy facilities. The market is seen finding resistance at $94.73, $95.47, $95.91 and $97.00. Meanwhile, the market is seen finding support at $90.87, $88.72, $86.13, $84.11 to $83.78, $82.25, $80.65 and $79.62.
Fundamental News: Shipping traffic through the Strait of Hormuz slowed at the start of this week, after Iran threatened on Monday to retaliate for any new U.S. attacks. Kpler data showed that the number of commodity vessels sailing through the Strait of Hormuz totaled seven on Monday, compared with eight on the previous day. Meanwhile, traffic increased through the Bab el-Mandeb Strait. A total of 29 commodity vessels passed through Bab el-Mandeb on Monday, up from 17 on the previous day.
Senior industry executives said global diesel supply will remain tight due to a lack of spare refining capacity. At the APPEC conference, Vitol’s CEO, Russell Hardy, said “There’s really a shortage of products because we’re missing 2 million barrels a day from Russia, and we’re missing nearly 2 million barrels a day from the Middle East.” He said crude is in a better supply position than products as the Middle East is exporting about 9 million bpd of crude and 1 million bpd of products. He said high prices and the lack of available fuel supplies are expected to reduce global oil demand by about 1.5 million bpd in 2026 versus 2025. Mark Senn, senior vice president of global trading at Phillips 66 said most U.S. refineries were already running flat out. A Goldman Sachs executive said oil product flows out of the Hormuz Strait are at 35% of pre-war levels, compared with 70% for crude oil. Goldman Sach’s co-head of global commodities research Daan Struvyen said “The Middle East supply shock is bigger for products than crude, especially for the heavier products such as diesel.”
Goldman Sachs raised its Brent and West Texas Intermediate crude oil price forecasts by $5/barrel for December 2026 and 2027, citing an expectation that shipping disruptions in the Middle East will persist into next year. Goldman Sachs said Brent crude could increase over $120/barrel if average Gulf oil output in 2027 remains 4 million bpd below pre-war levels, compared with its base case assumption of a 500,000 bpd shortfall. It also noted that Brent crude could fall into the $60s in 2027 under a downside price scenario in which average Gulf oil output rises 1 million bpd above pre-war levels.
Early Market Call – as of 8:30 AM EDT
WTI – Oct $95.90, up $2.87
RBOB – Oct $3.2496, down 37 points
HO – Oct $4.7242, up 15.64 cents
