Oil prices are marginally lower this morning as OPEC again cut its forecast for global oil-demand growth for this year, but stalled talks to reopen the critical Strait of Hormuz waterway and risks in the Red Sea prolong disruptions to global supplies.
Physical disruptions are spreading beyond Hormuz. Refinery attacks and fires have hit Russia and Libya, while the Houthis claimed another attack on Saudi Aramco’s Jazan complex. The Red Sea has become a key alternative export route for the Kingdom, and Houthi attacks are putting that release valve under pressure.
Overnight saw API report a huge crude inventory build and
API
-
Crude +9.1mm
-
Cushing +1.6mm
-
Gasoline -1.5mm
-
Distillates -600k
DOE
After API's reported large build, the official data showed an almost unprecedented 17.4mm barrel build in crude stocks (the biggest since Jan 2023), Cushing saw another build while products saw draws for the second week in a row...
The massive oil stock build was driven by imports which rose to the highest level since November 2024. The US imported over a million barrels a day of oil last week, in part driven by a rise in Venezuelan imports and a return of Saudi Arabian oil. This is a sharp reversal from only a few months prior when oil was flowing abroad in massive quantities.
Net Imports at their highest since June 2025 (thanks in addition to a big slump in US crude exports to the lowest since Nov 2025) ...
Stocks at the critical Cushing Hub are limping off 'tank bottoms'...
As we detailed here, the Strategic Petroleum Reserve saw drawdowns re-accelerate last week (with 6.1mm barrels leaving the caves of salt), back below $300 million barrels to its lowest level since January 1983. Nevertheless, total commercial crude stocks rose 11.3mm barrels last week - the largest since February...
A total of 117 million barrels of crude has been taken out of the SPR since late March under a program to release 172 million barrels as part of a relief plan coordinated by the IEA aimed at lowering energy costs.
US Crude production also limped higher near record highs as the rig count continues to rise...
The oil stock build comes even as refiner runs rose and are sitting at the highest seasonal level since 2019. Fuel makers have signaled they intend to run harder-than-usual through the third quarter, a time when plants typically go down for maintenance.
WTI dipped back below $83 after the official data, holding gains from Friday's close around $77...
Interestingly, Bloomberg points out that US gasoline demand continued to remain resilient in the face of elevated gasoline prices. US retail gasoline prices are averaging over $4 per gallon, almost $1 per gallon (29%) higher than last year’s level at this time, according to data from the American Automobile Association. However, this week’s gasoline demand is only 36,000 barrels per day -- 0.4% lower compared to last year.
Finally, as we noted yesterday, quoting Bloomberg macro strategist, Michael Ball, market structure reflects that stress better than outright prices. Brent and WTI curves remain backwardated and refining cracks are elevated, signaling near-term scarcity. Options are less aggressively bullish, with 25-delta call skews in both benchmarks dropping to their least bullish levels since July 10.
That points to a market vulnerable to spot disruptions while increasingly pricing a path toward de-escalation.