October WTI crude oil (CLV26) closed up +0.23 (+0.26%) on Friday, and October RBOB gasoline (RBV26) closed up +0.0377 (+1.25%).

Crude oil and gasoline prices settled higher on Friday, with gasoline posting a 3.5-week high.  Crude prices were supported on Friday by threats from President Trump to crush Iran’s economy, dampening any hopes of a resolution to the US-Iran war and the reopening of the Strait of Hormuz.  However, gains were limited on Friday due to comments from Iranian President Masoud Pezeshkian, who called for an end to the US-Iran war. 

On Thursday, President Trump threatened Iran and its trading partners with economic isolation.  Mr. Trump said any country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous consequences.  Markets await Monday’s press conference, when US Treasury Secretary Bessent said the administration would give details on plans to isolate Iran’s economy. 

Comments on Friday from Iranian President Masoud Pezeshkian limited gains in crude when he said, “It would be better to end the war today, now that we are strong and have dignity, with the whole world acknowledging our victory.” 

On Monday, President Trump said he’s not interested in extending the expiring agreement with Iran, dimming prospects for a swift reopening of the Strait of Hormuz.  Also, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans for de-escalation of 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.

Gains in crude prices are contained as many Gulf countries can successfully transit crude shipments through the Strait of Hormuz despite Iran’s attacks on shipping through the strait. Last week, US Energy Secretary Wright said that 9 million bpd crossed through the strait over the past seven days, higher than expectations of 4 million bpd.  According to vessel-tracking data compiled by Bloomberg, Kpler and Vortexa, the UAE, Qatar, Iraq and Kuwait have all been shipping crude oil out of the Persian Gulf by turning off the transponders on their oil tankers, or “dark” transits. 

There have been no signs of progress toward a US-Iran agreement to fully open the Strait of Hormuz. An Iranian military spokesperson said last Thursday that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision and that President Trump’s claims of control over the Strait are “nothing more than lies.” The Iranian statement was in response to President Trump’s comment last Tuesday that the US has “total control over the Hormuz Strait” and that “we own it.” 

In a supportive factor, the International Energy Agency (IEA) said in its monthly report, released last Wednesday, 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.

Crude prices have support as Ukraine intensifies drone attacks on Russian oil infrastructure.  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 -5.8% w/w to 108.02 million bbl in the week ended August 14.

Wednesday’s EIA report showed that (1) US crude oil inventories as of Aug 14 were +0.3% above the seasonal 5-year average, (2) gasoline inventories were -5.3% below the seasonal 5-year average, and (3) distillate inventories were -12.7% below the 5-year seasonal average.  US crude oil production in the week ending Aug 14 rose +0.2% w/w to 13.83 million bpd, just below the record high of 13.862 million bpd posted in November 2025.

Baker Hughes reported 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.