Brent and WTI crude remain flat despite geopolitical risks and a surprise inventory build, as markets price in prolonged supply constraints.
Oil prices held near $89 as tensions between Iran and the US showed no signs of easing, with both Brent and WTI trading in narrow ranges of $88 to $90 and $82 to $84, respectively. A surprise build in crude stocks limited early gains, but structural factors, including constrained supply routes, kept prices supported.
OPEC and the IEA revised demand forecasts lower, citing refiners’ struggles to secure crude amid reduced vessel transits through the Strait of Hormuz. Daily transits fell to around eight on Tuesday, down from a pre-war norm of 125 to 140. The IEA’s widening deficit forecast for the third quarter underscores supply-side risks.
Separate attacks on shipping in the Strait of Hormuz and Bab el-Mandeb Strait added to supply concerns, though markets appeared to have priced in the geopolitical stalemate. Draining inventory buffers suggest any further escalation could drive prices higher.