WTI At 5-Week Highs As US-Iran Fighting Resumes; US Production At Record High As Cushing & SPR Hit 'Tank Bottoms'

Oil prices were volatile but are trading around unchanged this morning, but still near the highest closing level in five weeks (WTI topped $92 overnight) as hostilities broke out again between the US and Iran, renewing the threat to energy exports from the Middle East.

The US conducted a second day of strikes on the Islamic Republic overnight, with President Donald Trump threatening more attacks if Tehran responded. Within hours, Iran retaliated against Jordan, Bahrain and Kuwait, countries that host American forces.

“The market is now clearly pricing in a direct military confrontation, while the prospect of a negotiated solution has diminished,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen.

“This is a worse combination for the energy market than the situation we faced just a few days ago and even in April. Today, inventories are even more depleted.”

Priecs pared some gains this morning on Venezuela news and more much-debated news from Secretary Wright about 'shadow' flows through the Strait.

API

• Crude -2.6mm

• Cushing

• Gasoline +348k

• Distillates -265k

DOE

• Crude -4.45mm (+60k exp)

• Cushing +80k

• Gasoline -1.17mm

• Distillates +796k

US Crude stocks declined for the first time in five weeks (more than expected and more than API reported) while Gasoline stocks continued to drawdown and Cushing saw a de minimus build. Distillates stocks did see a build (good news) for the first time in five weeks...

Distillate supplies on the East Coast are now at record lows, while supplies on the West Coast are the lowest since May 2025. The vast majority of heating oil demand in the US occurs in the Northeast, so this is less than ideal with just a month to go before heating season starts.

Another brutal week for gasoline imports, which fell to 370,000 barrels a day last week. That’s below levels for the same time in 2020. There’s just not a lot of relief for markets desperate for more supply.

Amid all the clamor that Venezuela will be used to refill it, the SPR saw yet another drawdown last week (-3.12mm barrels) for the biggest overall crude draw since July...

The SPR is now at its lowest level since 1982...

US Crude production surged back to record highs...

Refinery crude refinery runs soared to the highest in seven years, as oil processing in both the Gulf Coast and Midwest moved higher, with the Midwest at an all-time record high. Runs on the Gulf Coast are the highest for this time of the year. 

WTI holding around $90...

The return to a hot war has once again thrust shipping through the vital Strait of Hormuz into jeopardy, as the two sides remain at loggerheads and diplomatic efforts yield few results.