Price Trend Summary
| Open 07/15 | Close 07/25 | Price Change | High | Low | |
|---|---|---|---|---|---|
| Brent Crude | 84.46 | 91.68 | +8.55% | 101.19 | 83.37 |
| WTI Crude | 79.54 | 85.15 | +7.05% | 88.02 | 78.6 |
| OPEC Basket | 78.03 (7/13) | 102.76 (7/23) | +31.69% | N/A | N/A |
July 13-19: US-Iran Conflict Rapidly Escalates and Spreads Across the Persian Gulf, Driving a Sharp Rise in Oil Prices
Early in the week, international oil prices rose sharply, driven mainly by Trump's announcement that the US was reimposing a naval blockade on Iran, along with mutual military strikes between the US and Iran over the weekend, which boosted safe-haven buying. However, Trump subsequently dropped his earlier proposal for a Strait of Hormuz transit fee, replacing it with increased Gulf-state investment in the US as compensation, which eased market concerns about sharply rising shipping costs. At the same time, investors began worrying that high oil prices could suppress global economic activity and energy demand, causing price gains to narrow. Mid-week, the US-Iran conflict continued, but no new developments further affecting global crude supply emerged, and actual maritime shipping remained largely operational, temporarily easing market concerns over supply disruption. Investors booked profits following the earlier sharp rally, leading to a technical correction in oil prices. Late in the week, the US-Iran conflict escalated further as Iran attacked Kuwaiti power and desalination facilities and US forces continued airstrikes on Iran. Iran then retaliated against US military targets in Bahrain, Jordan, Kuwait, Oman, Qatar, and Syria, expanding the conflict from bilateral confrontation to the entire Persian Gulf region. Market concern over deteriorating security of Middle East energy infrastructure and crude oil transport routes pushed up fears of supply disruption and the geopolitical risk premium, driving Brent crude to its highest level since June.
July 20-26: Rapid Escalation of the US-Iran Conflict and Houthi Movement Activity Pushes Oil to Recent Highs; Prospects Improve for Resumed US-Iran Talks
Early in the week, the US-Iran conflict continued to escalate and expanding Red Sea risk pushed oil prices higher. On July 20, Trump posted a warning to Iran on Truth Social in response to an attack on Jordan's Muwaffaq Salti Air Base that caused US military casualties, and US forces continued airstrikes on Iran. At the same time, the Iran-backed Houthi movement announced a maritime blockade against Saudi Arabia, raising market concern that the conflict could extend from the Strait of Hormuz to Red Sea shipping lanes, further threatening the security of Middle East crude exports. On July 21, two Saudi tankers originally bound for China and India rerouted due to safety concerns, and Brent crude rose to its highest level since June 11, with the market risk premium continuing to climb. On July 22, the US and Iran exchanged warnings, with Trump cautioning that if Iran continued attacking vessels transiting the Strait of Hormuz, the US would retaliate, while Iran said it would strike back at regional energy and infrastructure targets, heightening market concern over further escalation. Mid-week, the US-Iran conflict and the Red Sea situation deteriorated in tandem, and oil prices hit the peak of this cycle. The Houthi movement claimed to have attacked two Saudi tankers with drones and missiles, raising concerns that even Saudi Arabia's alternative export routes were under threat. This drove Brent crude up roughly 7% in a single day, breaking above $100, while WTI also hit its highest level since June 8. In addition, US forces continued airstrikes on Iran and Iran rejected a US ceasefire proposal, dimming hopes for a diplomatic cooldown. Meanwhile, the Russia-Ukraine war also disrupted energy markets, as Ukraine's recent attacks on tankers in the Black Sea and Sea of Azov forced the Caspian Pipeline Consortium to suspend loading operations at its Black Sea terminal, affecting Kazakh crude exports. With multiple overlapping supply disruption risks, the market grew concerned that if the conflict escalated into a regional war, oil prices could climb even higher. Late in the week, news of a possible resumption of US-Iran talks improved market sentiment, and oil prices pulled back from their highs. Reuters reported that, with Chinese backing, Pakistan was actively working to help restart US-Iran talks; the market viewed the reopening of diplomatic channels as helping to reduce the risk of a prolonged Strait of Hormuz blockade and energy supply disruption, sending Brent crude down nearly 4% in a single day, with WTI falling in tandem. However, the military situation did not clearly ease — US forces continued airstrikes on Iran, and Iran continued to retaliate against US bases in the region — so the Middle East situation cannot yet be considered fully stabilized.
US Crude Oil Data Update
U.S. crude oil inventories shift back to builds, while ongoing SPR drawdowns reduce supply-side risk mitigation capacity | Inventories (million barrels) | 2026/07/10 | 2026/07/17 | | --- | --- | --- | | Commercial crude inventories (excl. strategic reserve) | 409.7 (-1.66) | 411.7 (+2.00) | | Strategic Petroleum Reserve (SPR) | 316.5 (-3.00) | 311.4 (-5.10) | | Motor gasoline | 210.5 (-1.56) | 211.30 (+0.80) | | Distillate fuel | 108.2 (+4.58) | 109.6 (+1.40) | | Production Activity | | | | Baker Hughes rig count | 452 (+7) | 450 (-2) | | Refinery utilization (%) | 96.20% (+0.40%) | 96.10% (-0.10%) | According to the EIA's Weekly Petroleum Status Report released on 7/10 and 7/17, US commercial crude inventories rose from 409.7 million barrels to 411.7 million barrels, shifting from a drawdown to a build, indicating that crude supply has become relatively more abundant on a phased basis. The Strategic Petroleum Reserve (SPR) fell from 316.5 million barrels to 311.4 million barrels, continuing to decline with a widening drawdown, indicating the pace of SPR depletion has accelerated. Gasoline inventories rose from 210.5 million barrels to 211.30 million barrels, also shifting from a drawdown to a build; distillate inventories rose from 108.2 million barrels to 109.6 million barrels, still building but at a notably slower pace. In addition, the Baker Hughes rig count fell from 452 to 450, reversing from an increase to a decrease, while refinery utilization slipped slightly from 96.20% to 96.10%, remaining at a high level near full capacity. Overall, over the past two weeks the US crude market has shown commercial crude and gasoline inventories shifting from drawdowns to builds, a widening SPR drawdown, and slowing distillate inventory build momentum. The simultaneous rebound in commercial crude and gasoline inventories suggests that near-term supply growth (mainly from OPEC+ output increases) is outpacing the rate at which end demand is absorbing it, putting pressure on the market's supply-demand balance. However, with the SPR continuing to decline and the recent escalation in the US-Iran conflict, the market's sensitivity to potential supply disruption remains elevated. Overall, while the US crude market currently shows relatively ample supply in the near term, the buffer provided by strategic reserves continues to narrow, reducing the market's capacity to absorb sudden geopolitical shocks; close attention should continue to be paid to developments in the US-Iran situation and their impact on the crude supply chain.
Key News and Developments
Houthi Movement Resumes Bab-el-Mandeb Blockade; Middle East "Dual-Strait Crisis" Threatens to Raise Global Energy Supply Risk
As the US-Iran conflict continues to escalate, Middle East geopolitical risk is spilling further into the Arabian Peninsula, with energy security concerns that were once concentrated in the Persian Gulf now extending to the Red Sea shipping corridor. On July 20, Yemen's Houthi movement relaunched its blockade of the Bab-el-Mandeb Strait, with multiple tankers coming under attack or turning back over safety concerns as they approached the Red Sea exit. The Houthi movement has long been regarded as an important Iranian proxy force on the Arabian Peninsula, and this action is also seen by the market as part of Iran's pressure strategy against the US and its Gulf allies. The Strait of Hormuz and the Bab-el-Mandeb Strait each control critical global oil export routes; roughly 7.4 million barrels of oil pass through the Bab-el-Mandeb Strait daily, accounting for about 7% of global oil supply. If both waterways were blocked simultaneously, global energy transport costs would rise substantially, further lifting the geopolitical risk premium in the crude oil market. This crisis has a particularly notable impact on Saudi Arabia. In the past, to reduce its dependence on the Strait of Hormuz, Saudi Arabia built an alternative energy corridor by piping crude from its eastern oil fields to the Red Sea port of Yanbu for export. However, oil exported from Yanbu still must pass through the Bab-el-Mandeb Strait to reach Asian markets, meaning the Houthi blockade of the Red Sea effectively cuts off Saudi Arabia's key "energy escape route." If the blockade persists over the long term, Saudi Arabia could be forced to reroute via the Suez Canal or around the Cape of Good Hope, raising transport costs and potentially affecting global energy supply efficiency. The market has not yet seen large-scale disruption to oil supply, but if the crisis continues for weeks or months, shipping insurance premiums, transport costs, and energy prices could rise in tandem, and could prompt Asian and European buyers to accelerate efforts to reduce their reliance on Middle East energy. Overall, if the Bab-el-Mandeb blockade continues, oil prices could face a fresh round of upward pressure, becoming a key risk factor for global inflation and rising oil prices in 2026.
Pakistan Mediates to Restart US-Iran Talks; Market Hopes for a Cooling of Middle East Tensions
With China's encouragement, Pakistan has been actively working to mediate and seek a resumption of US-Iran talks. Iran's Interior Minister Momeni has recently visited Pakistan twice for exploratory contacts with Pakistani government and military leaders on resuming negotiations. Chinese Foreign Minister Wang Yi has also publicly called on all parties to return to the previously signed memorandum of understanding to avoid further deterioration of the situation, while Iranian Foreign Minister Araghchi has reiterated that Iran remains willing to negotiate, does not want the conflict to continue, and hopes China and other third parties will continue to push forward diplomatic mediation. On the US side, the Trump administration has recently adopted a strategy of "military pressure alongside diplomatic negotiation" toward Iran. On one hand, Trump has emphasized that the US military is prepared to escalate military action and has not ruled out expanding strikes further if talks fail. On the other hand, the US has refrained from new military strikes on Iran for the past two to three days, ending a previous 13-day continuous bombing campaign, and has repeatedly stated publicly that the US and Iran are "in talks," suggesting that military pressure has prompted Iran to take negotiations more seriously. At this stage, the US is preserving room for diplomatic mediation but has not ruled out resuming military action. The US Ambassador to the UN has also said Trump is giving negotiations "some room," with both sides currently maintaining a temporary ceasefire combined with continued pressure, rather than having formally reached a ceasefire agreement. Overall, the US-Iran conflict has gradually shifted from direct military confrontation to a new phase of "military deterrence alongside diplomatic negotiation." In the near term, expectations of resumed US-Iran talks should help reduce the geopolitical risk premium in the crude oil market and limit further oil price increases. However, since the core disagreements between the two sides remain unresolved and the US continues to keep the military option on the table, the current situation is closer to a tactical, temporary cooldown rather than a genuine end to the conflict. Going forward, close attention should be paid to whether US-Iran talks make substantive progress and whether military conflict escalates again.
Conclusion
Short-Term Crude Oil Market Summary
The short-term crude oil market remains dominated by geopolitical risk. On the supply side, OPEC+ output increases have shifted US commercial crude inventories from a drawdown to a build, with gasoline inventories rebounding in tandem, reflecting near-term supply growth slightly outpacing demand. While US refinery utilization remains at a high level above 96%, indicating continued strong refining demand, the ongoing decline in the SPR is reducing the market's ability to absorb potential supply disruptions, warranting continued close attention to developments in the US-Iran situation and their impact on the crude supply chain. The recent extension of the US-Iran conflict from the Persian Gulf to the Red Sea, along with the Houthi movement's resumption of the Bab-el-Mandeb blockade, has sparked market concern over a "dual Strait of Hormuz and Bab-el-Mandeb crisis," further lifting the crude oil risk premium. While this has not yet caused large-scale supply disruption, if shipping disruptions persist, rising transport costs and insurance premiums could continue to support oil prices. On the other hand, Pakistan's efforts—backed by China—to facilitate US-Iran talks, combined with the US's having refrained from military action against Iran for the past two to three days, have raised market hopes for a cooling of tensions, causing oil prices to pull back from their highs. However, both sides remain in a state of temporary ceasefire combined with continued pressure, and if the talks fail to reach consensus on core issues such as control of the straits, the risk of renewed escalation remains high, meaning the oil price risk premium is unlikely to fully dissipate in the near term.
