Oil Prices Surge on Tightening US Supply and Hormuz Tensions

Global oil prices rebounded sharply in early trade on July 29, 2026, after plummeting 5% the previous day. Brent futures surged $2.71 (3.2%) to $86.80 per barrel, while WTI crude added $2.26 (3.4%) to reach $81.95 per barrel.

The rebound was driven by a tightening US crude supply, which exceeded consensus analyst expectations. A 3.3 million barrel draw in the week ended July 24, 2026, sent a bullish signal to energy traders, as it indicated that domestic demand was absorbing supply faster than it was being replenished.

The American Petroleum Institute (API) releases weekly crude inventory figures, which serve as one of the most closely watched leading indicators in global energy markets. The API data diverged from Energy Information Administration (EIA) numbers, with EIA reporting a 2.6 million barrel draw for the same week.

The Strait of Hormuz, a critical chokepoint in the world's oil supply chain, also contributed to the price rebound. The US-Israeli conflict with Iran, which resulted in the effective closure of Hormuz transit flows, introduced a geopolitical risk premium into Brent pricing.