West Texas Intermediate (WTI), the US crude oil benchmark, fell to around $80.50 during early European trading hours on Friday as traders engaged in profit-taking following a sharp rally the previous day [1]. This decline occurred despite ongoing conflicts in the Middle East, which have typically supported oil prices [1]. The recent increase in shipping activity through the Strait of Hormuz contributed to the downward pressure on prices, with the US Navy reportedly escorting some tankers and fourteen commodity vessels transiting the waterway on Wednesday, up from single digits the previous week, according to Kpler [1].
Geopolitical tensions remain elevated, with Iranian Parliament Speaker Mohammad Bagher Ghalibaf warning that the United States will "pay the price" for killing Iranian civilians, and the Islamic Revolutionary Guard Corps (IRGC) claiming responsibility for targeting US bases in Kuwait, Jordan, and Bahrain after US forces bombed a building on Iran’s Qeshm Island [1]. The IRGC also stated that the Strait of Hormuz would remain closed and that the "aggressor will be punished" [1].
On the supply side, US crude oil inventories fell by 7.167 million barrels for the week ending July 24, according to the US Energy Information Administration (EIA), a larger drawdown than the market consensus of a 2.5 million barrel decline and a reversal from the previous week's 2.011 million barrel increase [1]. This significant inventory drop could provide some support to prices, counterbalancing the effects of increased shipping and profit-taking [1].
Looking ahead, analysts at ING expect OPEC+ to confirm a further supply increase at their meeting on August 2, projecting an additional 188,000 barrels per day for September [1]. This would complete the unwinding of the 1.65 million barrels per day of voluntary cuts announced in 2023 [1]. However, ING notes that the alliance will likely pause any further supply increases after September, signaling a more cautious approach to adding barrels beyond that point [1].
CONCLUSION
WTI crude oil prices have retreated to near $80.50 due to profit-taking and increased shipping through the Strait of Hormuz, despite ongoing Middle East tensions and a larger-than-expected US inventory drawdown. OPEC+ is expected to complete its voluntary supply cut unwind in September, with a likely pause in further increases thereafter. The market remains sensitive to both geopolitical developments and supply-side adjustments.