Summary

WTI Rises After Big Product Draws, Tiny Crude Build, SPR Nears 'Tank Bottoms' Oil prices extended their declines for a third straight day after the US plan to ramp up economic pressure on Iran spared the country’s trading partners from harsher measures for now, while mediators said they were continuing efforts to end the conflict. “There was a lot of buildup around the announcement but what we got was more a warning about where policy is heading than an immediate shock to physical supply,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. “Until secondary sanctions start changing who can buy, ship or even finance Iranian crude, I don’t think traders have much reason to add another geopolitical premium.” Oman and Iran said the countries' foreign ministers discussed an agreement to reopen the Strait of Hormuz under a temporary framework. Negotiations between the two countries will continue "with a view to agreeing on a permanent navigational corridor and future administration of the strait," the joint statement said. While positive, an agreement between Oman and Iran wouldn't result in oil flows through the strait returning to prewar levels, ING analysts Warren Patterson and Ewa Manthey said. "We would likely need to see the U.S. lift its blockade on Iranian ports and ease sanctions on Iran before we see any move towards normalization." All eyes on domestic supply (and demand) for the next tactical leg... API Crude +4.2mm Cushing +1.0mm Gasoline -3.2mm Distillates -459k DOE Crude +95k (+500k exp) Cushing +1.18mm Gasoline -2.54mm Distillates -2.23mm Crude stocks rose for the 4th straight week (but it was a tiny 95k increase) while Cushing saw a modest build off tank bottoms. Product inventories saw large drawdowns.. The Trump admin drained another 3.6mm barrels from the SPR to 289.7 million barrels (1983 lows), approaching the minimum operational level for storage facilities, which ranges between 250 and 300 million barrels. The combination of a tiny commercial crude build and sizable SPR drain created the biggest net crude drawdown in over a month... Cushing stocks remain very near 'tank bottoms' Distillates stocks fell back near 25 year lows and the lowest seasonally on record... US crude imports from Saudi Arabia picked up recently (but remain well below peak war levels). Crude exports fell below 4 million barrels a day, a threshold closely watched by the market to gauge demand.  US Crude production remains near record highs and while the rig count dipped last week, it is still trending higher overall... Refining utilization rates are at the highest seasonal level since 1998. That is, in part, due to a shrinking US refining fleet in recent years. But it’s also evidence of how hard fuel-makers are running their plants right now to capture wide margins. They plan to keep that up into the fall, with some companies even deferring maintenance. WTI was hovering around $81.50 (off the overnight lows) ahead of the official data (down from almost $88 last week)... Crude is still up about 50% this year as the war - now in its sixth month - continues to disrupt the shipping of crude and refined fuels out of the Middle East. The impact has been particularly acute in fuel markets, which have also faced a hit from Ukrainian attacks on Russian refiners. That’s helped push premiums over crude to stratospheric levels (but the crack spread is starting to decline)... At the same time, large volumes of crude supplies continue to transit Hormuz with their satellite signals turned off. Those volumes are in millions of barrels a day and have helped generally keep a lid on prices that had been expected to soar at the outset of the conflict. Tyler Durden Wed, 08/26/2026 - 10:40