Progress Toward Reopening the Strait of Hormuz Weighs on Oil Prices

Progress Toward Reopening the Strait of Hormuz Weighs on Oil Prices Rich Asplund Wed, August 5, 2026 at 9:16 PM GMT+2 4 min read CL=F September WTI crude oil (CLU26) closed down -0. 55 (-0. 73%) on Wednesday, and September RBOB gasoline (RBU26) closed down -0.

0134 (-0. 47%). Crude oil and gasoline prices added to this week's sharp losses on Wednesday, with crude falling to a 3-week low and gasoline dropping to a 4.

75-month nearest-futures low. Growing optimism that the US and Iran are nearing a deal to reopen the Strait of Hormuz is pushing crude oil prices lower. Crude prices were also pressured on Wednesday after weekly EIA crude inventories unexpectedly increased.

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Crude prices fell on Wednesday after the AP reported that Iranian and Omani negotiators have finalized a draft deal to reopen the Strait of Hormuz and are awaiting final approval from Iran's supreme leader. Separately, Axios reported that the US, Iran and Oman were nearing an interim 60-day accord to reopen the waterway that would involve no tolls or fees, with inbound vessels using a northern lane and outbound traffic a southern one. Crude prices initially moved higher in overnight trading after a Houthi military spokesperson said the group will escalate attacks on Saudi oil tankers in the northern Red Sea to prevent them from transiting the area.

However, Saudi Aramco said that Houthi threats have yet to affect Saudi crude exports through the Red Sea and that the kingdom is preparing contingency measures to keep barrels moving. Robust crude supplies in China may reduce Chinese crude purchases in the near term, a bearish factor for oil prices. China's crude inventories remain abundant, with supplies falling by only 54 million bbl since early May to around 1.

2 billion bbl, according to data from Kpler. Crude prices also have support as Ukraine intensifies drone attacks on Russian oil infrastructure. Ukraine has attacked Russian refineries, oil tankers, and major pipeline infrastructure at least 30 times in July, the second highest monthly number of attacks since the war began in 2022.

According to EA Analytics, Russian crude-processing rates will average 3. 51 million bpd in July, the lowest in 24 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine. As of the end of June, around 90% of Russian regions have imposed some form of fuel rationing or reported supply issues, as refining capacity has plunged following damage to facilities.

The strikes have deepened a nationwide gasoline shortage, with several major refineries shut down and the government banning almost all gasoline, jet fuel and diesel exports. Russia is the world's number two diesel exporter, after the US, according to Vortexa. Story Continues Stronger Russian crude exports are also adding to global oil supplies, which is bearish for prices.

Data compiled by Bloomberg show the four-week average of Russian crude exports remains above 4 million bpd in the period to July 26 and rose to 4. 13 million bpd through June 28, the highest since Russia invaded Ukraine in 2022. Russia may be boosting its crude exports as the country's refining capacity has plunged due to damage at its refining facilities from Ukraine's drone and missile attacks.

As a bearish factor for crude, OPEC delegates on Sunday approved their final increase of +188,000 bpd in crude production for September. The group has now restored all of the 1. 65 million bpd supply cutback it made back in 2023 and said it plans to hold output steady for the rest of the year after the September hike.

The production increases by OPEC+ might prove difficult to achieve amid renewed US-Iran military attacks in the region. OPEC's July crude production rose by +1. 16 million bpd to 19.

44 million bpd. Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days rose +4. 6% w/w to 112164 million bbl in the week ended July 31.

Wednesday's weekly EIA report was mixed for crude oil and products. On the bearish side, EIA crude inventories unexpectedly rose by +2. 4 8million bbl versus expectations of a -1.

5 million bbl draw. Also, crude supplies at Cushing, the delivery point of WTI futures, rose by +2. 36 million bbl.

On the bullish side, EIA gasoline inventories fell -1. 6 million bbl to an 8. 5-month low, a larger draw than expectations of -1.

45 million bbl. Also, EIA distillate stockpiles unexpectedly fell -3. 47 million bbl versus expectations of a +419,000 bbl build.

Wednesday's EIA report showed that (1) US crude oil inventories as of July 31 were -6. 2% below the seasonal 5-year average, (2) gasoline inventories were -6. 2% below the seasonal 5-year average, and (3) distillate inventories were -11.

7% below the 5-year seasonal average. US crude oil production in the week ending July 31 rose +0. 1% w/w at 13.

804 million bpd, just below the record high of 13. 862 million bpd posted in the week of November 7. Baker Hughes reported last Friday that the number of active US oil rigs in the week ended July 31 rose by +1 to 451 rigs, just below the 1.

25-year high of 452 rigs posted in the week ended July 17. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.

This article was originally published on Barchart.