WTI Oil Prices Hold Near Monthly Highs Amid Geopolitical Tensions
WTI oil prices held near monthly highs after five consecutive sessions of gains, despite correcting on August 21. The market remains supported by geopolitical risks, particularly the ongoing conflict between the U.S. and Iran, which has resulted in continued restrictions on traffic through the Strait of Hormuz.
The latest EIA report was bearish for crude oil, with commercial inventories rising by 4.4 million barrels to 428.8 million, exceeding market expectations of a decline of around 1.6 million. However, the situation in distillates remains significantly tighter, with inventories falling by 1.5 million barrels to 105.6 million and being around 13% below the five-year seasonal average.
The medium-term fundamental picture remains contradictory, with the IEA lowering its global demand forecast and expecting demand to decline by around 1.6 million bpd in 2026 due to high prices, disruptions to international trade, and weaker economic activity. However, the agency sharply downgraded its supply outlook, forecasting global production to fall by an average of 4.3 million bpd over the year.
The Middle East continues to dominate market dynamics, with production in Persian Gulf countries remaining around 8.3 million bpd below pre-war levels and regional exports declining after the Strait of Hormuz was effectively closed again.