Oil Pauses After Six-Day Rally; Focus Remains on Hormuz
Oil prices edged lower after posting gains for six consecutive sessions. Brent crude slipped toward $88 per barrel after surging approximately 12% over the previous six days, while WTI traded around the $82 mark. Investors are now awaiting further developments regarding efforts to reopen the Strait of Hormuz.
On the diplomatic front, no significant progress has been observed between the United States and Iran. President Donald Trump previously stated that the U.S. holds "full control" over Hormuz, while Washington maintains a blockade on Iranian ports to ramp up economic pressure on Tehran. Pakistan, acting as a mediator, has also noted that the broader peace process appears to be stalling.
Despite the pullback, oil remains on track for a weekly gain. Middle East conflicts and the Russia-Ukraine war continue to exert pressure on energy markets following attacks on various ports, refineries, and energy infrastructure. Consequently, oil price volatility is expected to remain high until operations in the Strait of Hormuz return to normal.
Supply risks also remain significant. The International Energy Agency estimates a global oil market deficit of approximately 1.8 million barrels per day for the current quarter—more than double its previous projection. For the full year of 2026, the supply deficit is expected to be the largest in five years. However, high oil prices are beginning to dampen consumption, posing a risk to global demand.
Meanwhile, short-term pressure is stemming from the United States. Data from the Energy Information Administration shows U.S. crude oil inventories surged by 17.4 million barrels last week—the largest increase since January 2023. The stock build-up was concentrated in the Gulf Coast region, driven by weaker exports and rising imports, including supplies from Saudi Arabia and Venezuela.
Newsmaker Analysis: The oil market is currently caught between two opposing sentiments. A global deficit and the Hormuz standoff continue to support prices, yet a massive surge in U.S. inventories and softening demand are capping gains. Until the Strait of Hormuz fully reopens, Brent crude has the potential to remain in the US$85–US$90 range, while diplomatic developments could trigger sharp movements in either direction.
Source: Newsmaker.id
