Crude Oil Prices Fall Deeper as Global Supply Risks Ease

August WTI crude oil (CLQ26) on Friday closed -2.69 (-3.74%), while August RBOB gasoline (RBQ26) closed -0.0765 (-2.64%).

Crude oil and gasoline prices fell sharply on Friday, posting new 4-month lows. The acceleration of oil tankers leaving the Persian Gulf is increasing global oil shipments and increasing oil prices.

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Crude oil prices are sinking as tanker traffic in the Strait of Hormuz accelerates, adding millions of barrels to the global market. According to Bloomberg figures, exports to countries outside the Persian Gulf have returned to at least 75% of pre-war levels, with 13 billion dollars leaving the region in the three days to Wednesday.

Crude prices also eased as Saudi Arabian ships headed to the Ras Tanura airport, a sign that the kingdom is set to resume shipments from within the Persian Gulf for the first time since March.

Crude oil prices are also under pressure after Iraq warned on Thursday that it may leave the Organization of the Petroleum Exporting Countries (OPEC) if it does not meet a maximum output limit.

The International Energy Agency (IEA) last Wednesday warned that the impact of the Iran war on global oil demand will be deeper than previously expected, saying that world oil consumption will fall by -1.1 million bpd this year, a significant drop from the previous estimate of -420,000 bpd.

Goldman Sachs last Tuesday cut its forecast for Brent prices to $80 a barrel in Q4 of this year, down from $90, and said it expects Persian Gulf crude exports to return to pre-war levels by the end of July, one month earlier than previously expected.

The outlook for rising US crude production is negative for oil prices. The Department of Energy (DOE) on June 9 raised its 2026 US crude production estimate to 13.72 million bpd from May’s estimate of 13.65 million bpd.

Crude prices have been supported since Ukraine’s ongoing drone attacks on Russian oil infrastructure. According to EA Analytics, Russian crude-processing levels reached 4.32 million bpd in the first 10 days of June, the lowest in 20 years, amid damage to Russia’s energy infrastructure caused by drone attacks and missiles from Ukraine. According to Bloomberg, Ukrainian forces attacked three Russian oil facilities this month, following a record 17 attacks in May. US and EU sanctions on Russian oil companies, infrastructure, and tankers have also curbed Russian oil exports.

As part of the bearish trend for crude, OPEC delegates said on May 14 that the cartel intends to continue a series of oil quota increases in the next few months, completing the return of dry oil production at the end of September. The group has formally agreed to restore nearly two-thirds of the 1.65 million bpd supply cuts it made in 2023 and said it plans to raise the target and renew the final portion in three more monthly tranches. On May 3, OPEC+ said it would increase its crude production by 188,000 bpd in June after increasing production by 206,000 bpd in May, although any increase in production now seems unlikely given that Middle Eastern producers were forced to cut production due to the Middle East war. OPEC crude production for May fell by -3.36 million bpd to a 40-year low of 16.33 million bpd.

Vortexa reported on Monday that crude oil held in tanks for at least 7 days stood -4.1% w/w to 90.86 million bbl in the week ended June 19.

Wednesday’s EIA report showed that (1) US crude oil inventories as of June 19 were -6.5% below the 5-year seasonal average, (2) gasoline was -5.6% below the 5-year seasonal average, and (3) distillate inventories were -10.3% below the 5-year seasonal average. US crude oil production for the week ending June 19 rose +0.1% w/w to 13.819 million bpd, slightly below the record high of 13.862 million bpd posted in the week of November 7.

Baker Hughes reported on Friday that the number of US rigs in operation for the week ended June 26 rose by +7 rigs to a 1-year high of 440 rigs, from a 4.25-year low of 406 rigs posted in December 2025. However, the number of US rigs remains below the 5.5-year high of 27 December 220.

As of the date of publication, Rich Asplund did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published Barchart.com