Crude Oil
Energy infrastructure strikes deepen Gulf supply concerns
Crude markets remained anchored to the ongoing disruption in the Persian Gulf as the conflict enters its third week, with flows through the Strait of Hormuz still heavily constrained and regional energy infrastructure increasingly targeted. The WTI prompt-month contract settled at $98.32 on Friday, modestly lower week over week, as the market continued to assess the scale and duration of supply losses tied to constrained tanker flows and ongoing production shut ins.
Supply conditions tightened further as attacks expanded beyond initial targets to include key facilities across Iran, Qatar, Saudi Arabia, and Kuwait, raising the risk of deeper and more prolonged outages. Gulf producers have already begun shutting in meaningful volumes as storage fills and export routes remain limited, with estimates suggesting around 10 MMbbl/d of production has been curtailed. Even where alternative routes exist, such as Red Sea pipelines or selective tanker movements, they remain insufficient to offset the loss of normal seaborne flows through Hormuz.
Forward markets reflected this tightening backdrop as deferred crude contracts repriced higher, with longer dated WTI moving above $70 and opening a window for producers to hedge at more attractive levels. At the same time, physical shortages began to emerge in parts of Asia as delayed shipments and logistical constraints disrupted refinery supply chains. The widening Brent premium over WTI also highlighted the growing divergence between seaborne crude exposed to global shortages and inland US barrels more influenced by domestic supply and potential government intervention.
Policy responses intensified but remained limited in their ability to offset near-term supply losses. Coordinated strategic reserve releases and easing of sanctions offer some relief, but the scale and timing of these measures lag the disruption. This tighter near-term backdrop is consistent with the EIA’s latest outlook. The agency raised its price expectations sharply, projecting WTI to average $73.61/bbl in 2026 and $60.81/bbl in 2027, while lowering its 2026 global inventory build estimate.
Looking ahead, the trajectory of crude markets will depend on how quickly flows through Hormuz can normalize and whether production shut ins deepen. If transit resumes in an orderly manner, deferred balances suggest the market could move back toward surplus over time. However, continued disruption or further escalation across regional infrastructure would likely sustain tight physical conditions and keep risk premiums elevated across the curve.