Oil Steadies After Trump Says He Expects Strait of Hormuz to Reopen Soon
Summary
- International oil prices moved in a narrow range after the previous day's sharp drop, following President Donald Trump's comments expressing hope that the Strait of Hormuz would reopen.
- Markets said volatility could persist as Middle East tensions continue, raising concerns over disruptions to oil shipments and the possibility of additional attacks.
- A decline in Saudi crude exports in July and Ukraine's attacks on energy infrastructure linked to Russia's oil supply chain are emerging as key supply-side variables.
Forecast Trend Report by Period
Oil traded little changed after a sharp drop a day earlier, as President Donald Trump said he expects the Strait of Hormuz to reopen soon.
WTI crude traded near $80 a barrel on August 3, Bloomberg reported. Brent, after sliding more than 5% in the previous session, settled around $84 a barrel.
Trump told reporters at the White House a day earlier that he expects the Strait of Hormuz to be reopened "literally by tomorrow."
He also said Iran had a last chance to sign "a good agreement." Trump added that he wanted to give Tehran one final opportunity before moving toward "decapitation." He did not specify what negotiations he meant or who the parties would be.
Iran, meanwhile, denied holding direct talks with the US. It said discussions on normalizing vessel traffic through Oman and the Strait of Hormuz were making progress. Mohsen Rezaee, an adviser to Iran's supreme leader, said on state television that the US must change its behavior first.
Markets expect Middle East tensions to persist for now. Carolyn Kissane, associate dean at New York University's Center for Global Affairs, said de-escalation and renewed tensions could alternate as long as routes for crude shipments remain available. Iran does not want a full-scale escalation, she said, but is likely to keep tensions alive. If markets stabilize, further attacks could follow.
Shipments of crude and liquefied natural gas through the Strait of Hormuz remain sharply reduced. By contrast, Saudi Arabia's Red Sea port of Yanbu saw the busiest vessel traffic since threats from the Houthi militants emerged.
Saudi crude exports fell in July. Tanker-tracking data compiled by Bloomberg showed the kingdom exported an average of 4.19 million barrels a day in July, down 460,000 barrels a day from the previous month.
Russia's oil supply chain has also emerged as a variable. Ukraine attacked Russian energy infrastructure at least 30 times in July, including refineries, tankers and major pipelines. That was the second-highest monthly total since Russia's invasion of Ukraine in 2022.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.