Crude Prices Ease on Surge in US Crude Oil Inventory

Crude oil prices eased today on the surge in US crude oil inventory seen in the weekly EIA inventory report, which showed an increase of 17.4 million barrels. This is the largest increase in more than three years and was mainly due to a sharp drop in US crude oil exports. The IEA also reported that global oil supply deficit will worsen, even as oil demand takes a hit from the war and high prices.

The International Energy Agency (IEA) said that global oil inventories will fall in Q3 at twice the previously estimated rate due to ongoing disruptions from the US-Iran war. The Strait of Hormuz remains shut until all Iranian conditions are met, tightening global crude supplies and boosting oil prices. President Trump stated that the US has 'total control over the Hormuz Strait' and that 'we own it.'

However, Pakistan suggested that the US and Iran were close to an arrangement that could reopen the Strait of Hormuz, while Oman and Iran have reached an advanced stage in talks to do so. Russian crude exports are adding to global oil supplies, which is bearish for prices. OPEC delegates approved their final increase of +188,000 bpd in crude production for September.