Crude Prices Rise as IEA Forecasts Worsening Global Oil Supply Deficits

Crude oil prices closed higher on Wednesday due to forecasts from the International Energy Agency (IEA) that global oil supply deficits will worsen in Q3, despite a drop in oil demand caused by the ongoing US-Iran war. The IEA said global oil inventories will fall at twice the previously estimated rate this quarter due to ongoing disruptions from the conflict.

The Strait of Hormuz remains closed, with Iran's state-owned Islamic Republic of Iran Broadcasting (IRIB) stating that it would remain shut until its conditions are met. Pakistan suggested on Tuesday that the US and Iran were close to an agreement to reopen the strait, but there has been no official confirmation.

US President Trump claimed on Tuesday that 'we own' the Strait of Hormuz, and that 'at some point, maybe they'll do something, and then they get blown away.' Despite this, only five vessels are currently transiting through the strait daily, down from 14 ships a day in June.

Ukraine's drone attacks on Russian oil infrastructure have also boosted crude prices. The country has attacked Russian refineries, oil tankers, and major pipeline infrastructure at least 30 times in July, with EA Analytics predicting that Russian crude-processing rates will average 3.51 million bpd in July, the lowest in 24 years.