October WTI crude oil (CLV26) closed up +0.18 (+0.20%) on Friday, and October RBOB gasoline (RBV26) closed up +0.0797 (+2.54%).
Crude oil and gasoline prices recovered from early losses and settled higher on Friday. Pre-weekend short covering lifted crude prices on Friday ahead of the three-day US Labor Day holiday weekend. Crude oil initially moved lower on Friday amid no news of military action between the US and Iran. Also, Saudi Aramco’s unexpected decision to keep the price of its crude unchanged for Asian customers for October delivery weighed on crude prices.
Crude prices were pressured on Friday after Saudi Aramco kept the price of its Arab Light crude for October delivery to Asian customers unchanged, versus expectations of a $5 a barrel increase.
Crude prices rose to a 6-week high on Thursday amid signs of tighter global oil supplies. Data compiled by Bloomberg, Kpler and Vortexa showed that Saudi Arabia’s Aug crude exports dropped to about 3 million bpd, the lowest amount in 9 years. Also, hostilities have escalated this week between the US and Iran, dampening hopes that the Strait of Hormuz will be fully reopened anytime soon.
Gains in crude oil prices are contained on signs that crude flows are still moving through the Strait of Hormuz. President Trump said Thursday that the US controls the Strait of Hormuz and, “We’re taking out 30, 40 boats a night, and a lot of oil is coming out of there.” Also, CNN reported that the US military escorted 40 vessels carrying 18 million bbl of oil through the Strait of Hormuz on Tuesday, easing supply concerns.
President Trump recently said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict.
Crude prices also have support on concerns that Israel could be dragged back into the US-Iran conflict. Israeli Defense Minister Katz said on Thursday that an Iranian attack on Israel would free Israel from any existing restrictions in a response against the regime in Iran. Israel has ramped up 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, while the Yemen- based Houthis have attacked ships in the Red Sea.
In a supporting factor, the International Energy Agency (IEA) said in its monthly report, released on August 12, 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.
Ukraine has intensified drone attacks on Russian oil infrastructure, curbing Russian crude production and exports. 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. Meanwhile, Reuters reported last Friday that Russia’s gasoline production fell to about 80,000 tons a day in August, only 70% of domestic demand, leading to shortages throughout the country.
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 rose +7.1% w/w to 107.58 million bbl in the week ended August 28.
Wednesday’s EIA report showed that (1) US crude oil inventories as of Aug 28 were +0.7% above the seasonal 5-year average, (2) gasoline inventories were -6.1% below the seasonal 5-year average, and (3) distillate inventories were -14.0% below the 5-year seasonal average. US crude oil production in the week ending Aug 28 rose +0.1% w/w to 13.862 million bpd, matching the record high first posted in November 2025.
Baker Hughes reported Friday that the number of active US oil rigs in the week ended September 4 rose by +2 to 449 rigs, modestly below the 1.25-year high of 455 rigs from the week of August 14.
