(RTTNews) – Crude oil prices have ticked lower on Wednesday after U.S. Energy Information Administration data on crude oil inventories indicated weaker-than-expected demand.
Further, ignoring the threat in U.S. President Donald Trump’s call for Iran to seal a deal or face destruction, traders optimistically sensed a scope for negotiations. Supply concerns due to the closure of shipping traffic across the Strait of Hormuz limited the fall.
WTI Crude Oil for August month delivery was last seen trading down by $0.09 (or 0.11%) at $79.25 per barrel.
The ongoing U.S.-Iran war intensified with Iran threatening to close all export corridors that benefit the U.S. and its allies.
Experts are of the view that Yemen’s Houthi militia, which is backed by Iran, could block the Bab el-Mandeb Strait, a chokepoint between Yemen and the Horn of Africa that links the Red Sea to the Gulf of Aden.
After Iran reopened the Strait of Hormuz following a Memorandum of Understanding signed with the U.S. on June 17, shipping traffic picked up across the strait.
In the recent days, Iran started firing at tankers transiting the strait, which according to Iran did not coordinate with Iranian authorities.
Angered by this, Trump reinstated the naval blockade on Iranian ports he had earlier withdrawn following the MoU signing, and under his orders, U.S. forces hit back on several Iranian targets. Iran retaliated by striking U.S. bases in several neighboring countries.
The United Nations’ International Maritime Organization announced that navigation through the Strait of Hormuz remains too dangerous for operators and warned them not to risk a transit through the seaway.
Yesterday, the Joint Maritime Information Center reaffirmed the threat to the strait as “severe” which it had raised last week.
According to a July 13 report from S&P Global Commodities at Sea, the traffic through the Strait of Hormuz came down to 11 ships.
No ship entered the Persian Gulf on July 12 after Iran declared the strait closed.
The Joint Maritime Information Center, backed by the U.S. Navy, announced that the southern route closer to Oman across the strait remains open for traffic in both directions.
Yesterday, U.S. President Donald Trump withdrew his earlier decision to impose a 20% fee on vessels passing through the Strait of Hormuz. Instead, Trump opted to mobilize trade and investment agreements with these countries in exchange for ensuring tanker safety across the strait.
Tight fuel markets are pushing gasoline prices in the U.S. higher with experts predicting that the average price could top $4 per gallon within a week.
Brushing aside the threats in Trump’s call for Iran urging the nation to secure a deal, investors remain optimistic that the U.S. will opt only for a diplomatic solution rather than aggressive military offensives.
According to the U.S. Energy Information Administration, for the week ending July 10, crude oil inventories in the U.S. fell by 1,693,000 barrels. Last week’s report showed a significant build-up of 2,998,000 barrels.
Inventories at the Cushing, Oklahoma delivery hub climbed back above 20 million barrels.
Today, the smaller-than-expected decline in inventories hinted at weak demand and exerted downward pressure on oil prices.
A larger-than-expected drawdown indicates stronger demand which would support bullish market sentiments.
For the same period, gasoline inventories decreased by 1,533,000 barrels and heating oil inventories increased by 30,000 barrels. Distillate inventories, however, rose by 4,556,000 barrels.
On Monday, in its monthly oil market report, the Organization of Petroleum Exporting Countries reduced its forecast for global oil demand growth in 2026. Cutting 190,000 barrels per day from its previous month’s projection, the alliance expects the demand to increase by 780,000 barrels per day.
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