October WTI crude futures gained 5.91% this week to $86.31 as the Iran ceasefire expired and Strait of Hormuz shipping traffic stayed far below normal. The UAE cut economic ties with Tehran and Washington threatened tougher sanctions, while a build in U.S. crude stocks failed to stop the rally as distillate supplies kept tightening.
October WTI crude futures traded at $86.31 late Thursday, up $4.82, or 5.91%, for the week, after the contract opened at $81.62 and swung between $80.80 and $87.69. Friday's session was still ahead, but the market had already made its call: the diplomatic deal traders hoped for never arrived, and the Strait of Hormuz stayed far below normal.
Hormuz Traffic Stays Restricted
Before the war, about one-fifth of global oil and liquefied natural gas consumption moved through the Strait of Hormuz. This week, shipping traffic remained in the single digits: Kpler data showed five commodity vessels passed through the strait Saturday and none on Sunday, and traffic had fallen to six vessels by Tuesday from nine the prior day.
Saudi Aramco resumed some loadings from inside the strait and offered cargoes through transfers off Fujairah, while Chinese companies began collecting crude outside the Gulf. Those moves helped prevent a supply breakdown, but they did not restore normal flows.
Diplomacy Breaks Down as the UAE Cuts Ties
Trump said Tuesday that no talks with Iran were taking place or scheduled, and Iran said the strait would remain shut until Washington met the conditions of the interim agreement. The temporary ceasefire expired Monday.
The UAE then suspended all trade, commercial exchanges and financial transactions with Iran after accusing Tehran of firing two ballistic missiles toward vessels off the Emirati coast, an allegation Iran has denied. According to Oilprice.com: Trump threatened economic consequences for any country whose banks, businesses or government entities give Iran "any type of lifeline", and Treasury Secretary Scott Bessent said he will outline planned actions against Iran on Monday. China buys more than 80% of Iran's seaborne oil, making it the biggest target of the coming measures.
Bulls Hold the Edge Despite a Crude Build
The Energy Information Administration gave the bears a number Wednesday: U.S. crude inventories rose by 4.4 million barrels to 428.8 million barrels. But distillate inventories fell for a third straight week, and refinery utilization rose to 97.2% as refiners kept running hard to capture strong fuel margins. The crude build did not break the rally because the product market stayed tight.
WTI gained more than $2 Monday as the diplomatic situation deteriorated, then added smaller gains Tuesday as traders weighed restricted shipping against supply workarounds. Wednesday brought another push higher after the UAE cut ties with Iran, and Thursday delivered the week's biggest move after Washington raised the threat of economic action.
Levels to Watch Next Week
October WTI is trading higher for the week and could extend gains beyond the July top at $88.07, which would mark the first uptrend since the week ending June 19. A sustained move above that level opens the way toward the May swing top at $91.27 and beyond it, the psychological $100 level. A drop under $73.10 would signal a resumption of the downtrend, with the 52-week moving average at $69.21 as long-term support.
Bessent's planned Iran announcement on Monday leaves the weekend exposed to headline risk. The ceasefire is over, talks are dead, and Friday's close will decide the week — the physical supply picture from Hormuz will decide what comes after it.
Sources: Oilprice.com, Oilprice.com
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