October WTI crude oil (CLV26) settled down 0.16% on Friday, August 29, 2026, closing at session lows as a rally in the U.S. dollar index to a two-week high and signs of larger crude flows from the Persian Gulf weighed on prices. October RBOB gasoline (RBV26) bucked the trend, closing up 2.00%.
Crude losses were limited after President Trump signaled the U.S. has no interest in returning to the terms of the June deal with Iran, casting doubt on any quick normalization of Middle East oil flows. The mixed session capped a volatile week that saw crude drop more than 8% to a two-week low on Wednesday amid easing regional tensions.
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Middle East Supply Signals Point Both Ways
Goldman Sachs estimated that oil exports from the Persian Gulf have risen to between 15 million and 16 million barrels per day, roughly two-thirds of pre-war levels. That increase in flows through the Strait of Hormuz is a key bearish factor, suggesting the market is gradually adjusting to a new supply baseline despite ongoing hostilities.
At the same time, the Biden administration’s successor has maintained pressure on Iran. Treasury Secretary Scott Bessent announced a campaign to sever Iran from the global economy, targeting five “vital lifelines” including digital assets, technology, gold, aviation, and shipping. Countries have been given a defined timeline to shut down economic cooperation with Iran, with the Treasury prepared to act unilaterally against non-compliant nations.
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Energy Secretary Chris Wright said the U.S. is “playing the long game” with Iran, implying no near-term de-escalation. Fresh Israeli strikes on Iran-backed Hezbollah in Lebanon and continued attacks on shipping in the Red Sea and Strait of Hormuz have further dampened hopes for a quick reopening of the waterway.
Russian Supply Disruptions Provide a Floor
Crude prices retain support from persistent disruptions to Russian production and refining. Ukraine has intensified drone attacks on Russian oil infrastructure, striking refineries, tankers, and pipelines at least 30 times in July — the second-highest monthly total since the war began in 2022.
The attacks have taken a measurable toll. Russian crude-processing rates averaged 3.51 million bpd in July, the lowest in 24 years, according to EA Analytics. OPEC secondary-source estimates put Russian crude production at 8.89 million bpd in July, the lowest in six years. Reuters reported Friday that Russian gasoline production has fallen to roughly 80,000 tons per day in August, only 70% of domestic demand, leading to shortages across the country.
Meanwhile, the International Energy Agency’s monthly report, released August 12, said the global oil supply deficit will worsen even as demand takes a hit from the war and high prices. The IEA projected global inventories will fall in Q3 at twice the previously estimated rate due to ongoing disruptions from the U.S.-Iran conflict.
OPEC+ Completes Output Restoration
On the bearish side, OPEC delegates approved their final production increase of 188,000 bpd for September, completing the restoration of all 1.65 million bpd of supply cutbacks made in 2023. The group plans to hold output steady for the remainder of the year. OPEC’s July crude production rose by 1.16 million bpd to 19.44 million bpd.
Reports that Venezuela is considering leaving OPEC added further uncertainty, with analysts noting that a departure could increase the risk of a price war as remaining members compete for market share.
U.S. supply data remains mixed. The EIA reported Wednesday that crude inventories as of August 21 were 1.3% above the seasonal five-year average, while gasoline inventories were 5.9% below and distillates were 14.6% below their respective averages. U.S. crude production rose 0.1% week-over-week to 13.843 million bpd, just below the record high of 13.862 million bpd set in November 2025. Baker Hughes reported Friday that the active U.S. oil rig count fell by 5 to 447 rigs.
Vortexa data showed crude stored on tankers stationary for at least seven days fell 11% week-over-week to 97.71 million barrels in the week ended August 21, suggesting floating storage is being drawn down.
Looking ahead, traders will be watching whether the U.S. Treasury’s sanctions campaign against Iran gains traction, whether OPEC can actually deliver its September increase amid regional instability, and whether Ukrainian attacks on Russian infrastructure continue to tighten refined product markets. The combination of bearish supply flows and persistent geopolitical risk suggests crude is likely to remain rangebound until one of these factors breaks decisively.
This article is for informational purposes only and does not constitute financial advice. Oil and gas markets are highly volatile and subject to significant price swings based on geopolitical and macroeconomic factors.
