October WTI crude oil (CLV26) is down -0.09 (-0.11%) today, and October RBOB gasoline (RBV26) is up +0.0079 (+0.27%).

Crude oil and gasoline prices are mixed today. Dollar strength is weighing on crude prices today after the dollar index rose to a 1-week high. Crude is also under pressure after Iran’s military said it reached a revenue-sharing agreement with Oman on reopening the Strait of Hormuz. Losses in crude are limited on concerns that Russian crude production could be disrupted further after Russian President Putin was said to be planning an escalation of his war in Ukraine.

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Crude supplies are moving through the Strait of Hormuz despite the US-Iran war. According to oil traders involved in monitoring cargo activity, about 6 million to 8 million bpd of crude oil are being shipped through the strait. The Joint Maritime Information Center cut the threat level for shipping in the Gulf of Oman to “moderate,” one step lower than the previous assessment. The moderate assessment means the threat of attack on shipping off the coast of Oman is possible but not likely.

Crude prices are under pressure today on signs that more crude supplies could soon move through the Strait of Hormuz, as Iran and Oman appear close to finalizing an agreement that would establish a safe route through the strait. Iran’s Tasmin News Agency reported that the two sides are holding further talks to “negotiate a new permanent route within 30 to 60 days” for shipping through the strait.

Limiting losses in crude are concerns that Russian crude production could be disrupted further after a Bloomberg News report Wednesday that said Russia is preparing to escalate attacks on Ukraine after concluding that negotiations for a peace deal have reached a dead end.

Crude prices have dropped more than -8% this week on signs of easing Middle East tensions and larger supplies of crude moving through the Strait of Hormuz. On Tuesday, the New York Times reported the US State Department is preparing to send US diplomats back to embassies in the Middle East that were evacuated before and during the war with Iran, suggesting that the Trump administration does not anticipate a return to all-out hostilities with Iran.

US Treasury Secretary Scott Bessent said Monday that the US will begin a campaign to sever Iran from the global economy, warning that any country doing business with Iran risks facing US sanctions. He said the US is focusing on five of Iran's "most vital lifelines," including digital assets, technology, gold, aviation, and shipping, and that countries will have a defined timeline to shut down economic cooperation with Iran; if they don't, the Treasury will act unilaterally.

President Trump has said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict. Also, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans to de-escalate the conflict, potentially limiting crude supplied from the Middle East.

Crude prices also have support amid fresh Israeli attacks on Iran-backed Hezbollah in Lebanon, dampening the prospects of ending hostilities in the Middle East and a quick reopening of the Strait of Hormuz. In addition, Israel has struck Iran-backed Hamas in Gaza, the Yemen- based Houthis have attacked ships in the Red Sea, and several vessels have been hit by projectiles in the Strait of Hormuz.

In a supporting factor, the International Energy Agency (IEA) said in its monthly report, released on August 12, that the global oil supply deficit will worsen, even as oil demand is taking a hit from the war and high prices. The IEA said global oil inventories will fall in Q3 at twice the previously estimated rate because of ongoing disruptions from the US-Iran war.

Ukraine has intensified drone attacks on Russian oil infrastructure, curbing Russian crude production and exports. 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 averaged 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. The attacks on Russian oil infrastructure knocked Russia’s crude production in July to 8.89 million bpd, the lowest in six years, according to secondary source estimates published by OPEC.

As a bearish factor for crude, OPEC delegates on August 2 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 fell -11% w/w to 97.71 million bbl in the week ended August 21.

Wednesday's EIA report showed that (1) US crude oil inventories as of Aug 21 were +1.3% above the seasonal 5-year average, (2) gasoline inventories were -5.9% below the seasonal 5-year average, and (3) distillate inventories were -14.6% below the 5-year seasonal average. US crude oil production in the week ending Aug 21 rose +0.1% w/w to 13.843 million bpd, just below the record high of 13.862 million bpd posted in November 2025.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ended August 21 fell by -3 to 452 rigs, falling back from the 1.25-year high of 455 rigs the week of August 14.

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. For more information please view the Barchart Disclosure Policy here.
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