Middle East Conflict Drives Oil Price Higher Amid Inventory Build
The price of oil has been rising due to the ongoing conflict in the Middle East. The West Texas Intermediate for September delivery traded at $86.40, up 2.38% from the previous day. Brent crude also rose by 1.52%, reaching a high of $94.31.
The administration's economic warfare and isolation measures against Iran have led to a widening of the Brent-WTI spread to around $6.61. This indicates that the market is pricing in a supply problem rather than a domestic one.
However, inventory data shows that US commercial crude stocks rose by 4.4 million barrels last week, followed by another 17.4 million barrel build the previous week. This has taken commercial stockpiles to 424.4 million barrels, just 2% below the five-year average for this time of year.
The divergence between rising crude inventories and tightening distillate stocks highlights a growing divide in the market. Distillate stocks fell by 1.5 million barrels to their lowest level in over a month, while refinery processing rates reached their highest since September 2019.