A research report by CITIC Futures indicates that crude oil inventories are currently undergoing a sustained drawdown, and U.S. retail prices for gasoline and diesel have hit record highs for this time of year; oil prices are expected to remain strong amidst this low-inventory environment. The report further assesses that if expectations for the resumption of shipping through the strait fail to materialize, the persistent physical shortage will continue to drive crude oil prices upward.

The primary driver of recent sharp fluctuations in oil prices is geopolitical instability surrounding the Strait of Hormuz. Following the collapse of the U.S.-Iran memorandum of understanding, the situation in the Middle East continues to impact crude oil transport. Analysis by SDIC Futures suggests that Iran has taken a hardline stance: the Strait of Hormuz will not reopen unless the U.S. changes its attitude and accepts Iran's conditions. With the negotiation process remaining volatile, the geopolitical risk premium is unlikely to dissipate. Data from the IEA shows that Middle East crude oil shipments dropped from 20 million barrels per day (bpd) in early July to 12 million bpd by the end of the month, with July production remaining 8.3 million bpd below pre-conflict levels; supply disruptions have shifted from a mere "risk premium" to an actual physical supply gap.

"Tracking data from institutions such as Kpler and ChuanShiBao indicates that traffic through the Strait of Hormuz has recovered to only 10%–15% of pre-conflict levels—a figure inconsistent with the U.S. Energy Secretary's claim that traffic has returned to 45% of pre-conflict levels. Although the U.S. claims full control over the strait, the reality on the ground suggests otherwise." CITIC Futures maintains that crude oil is currently in a phase of continuous inventory depletion, with U.S. retail gasoline and diesel prices hitting seasonal record highs, ensuring oil prices remain strong. The firm further assesses that if expectations for the resumption of shipping through the strait fail to materialize, the persistent physical shortage will continue to drive crude oil prices upward. "Global crude oil inventories are currently below levels seen at the same time in 2025, with refined product stocks even lower; overseas inventories of light, medium, and heavy distillates are all at five-year seasonal lows, and domestic refined product stocks—particularly at refineries—have also dropped sharply." A research report by CITIC Futures suggests that refining enterprises consider implementing buy-side hedging when oil prices retreat to $80 per barrel or lower.

Bearish signals have also emerged recently on the demand side. EIA data shows that for the week ending August 7, U.S. commercial crude oil inventories rose by 17.423 million barrels to 424 million barrels, marking the largest weekly increase in three and a half years. Within this total, crude stocks at Cushing increased by 1.611 million barrels, while Strategic Petroleum Reserve (SPR) stocks fell by 6.115 million barrels; U.S. SPR inventories have now dropped below 300 million barrels, leaving very limited buffer capacity in the strategic reserve. Alongside the sharp rise in inventories, OPEC lowered its forecast for global oil demand growth in 2026 for the fourth consecutive time—reducing it to 580,000 barrels per day (bpd) from the previous 780,000 bpd—while the IEA further downgraded its full-year oil demand forecast, projecting a contraction of 1.6 million bpd, an increase of 510,000 barrels in the projected decline compared to the previous month's estimate.

Jia Wanjing of the energy and chemical research team at Guolian Futures noted that the EIA's August monthly report lowered the 2026 global crude oil production estimate by 1.06 million bpd compared to the July report, causing the projected 2026 crude supply deficit to widen again; however, monthly data indicates a gradual recovery in supply during the fourth quarter, significantly narrowing the supply gap compared to the third quarter. Despite the EIA's repeated adjustments to its global crude supply-demand forecasts for 2026, it has consistently maintained the view that the crude oil market will face a supply surplus in 2027. When the EIA first released its 2027 forecast in January 2026, it projected a supply surplus of 2.08 million barrels per day (bpd). Even as Middle Eastern crude output contracted during the first half of the year, the EIA continued to revise its surplus projections upward, peaking at 5.02 million bpd in July and standing at 4.76 million bpd in August.

Jia Wanjing noted that, based on seasonal patterns in U.S. crude demand, the market is currently at the tail end of the traditional peak demand season. As the summer travel rush concludes and demand for refined products gradually declines, U.S. refinery utilization rates typically drop significantly during September and October. With demand facing downward pressure, the market's sensitivity to supply fluctuations is likely to diminish, even if supply-side disruptions persist. Although the U.S. and Iran have halted mutual attacks and negotiations between Iran and Oman regarding the management of the Strait of Hormuz are nearing completion, significant disagreements remain over compensation claims, leaving the prospects for peace talks uncertain. Overall, oil prices are likely to face downward pressure in September and October, with the range of fluctuation expected to narrow.

Wang Yingmin, a crude oil analyst at SDIC Futures, believes the core dynamic in the current crude oil market is a tug-of-war where geopolitical factors dominate pricing while commodity fundamentals provide a floor for prices. Cross-referencing the August reports from the three major energy agencies reveals a telling divergence: while the EIA repeatedly lowered its demand forecasts, it raised its forecast for the average Brent crude price for the third quarter. This "demand-down, price-up" pattern indicates that the market's primary driver has shifted from the demand side to the supply side. Currently, tight fundamentals provide a price floor, while the geopolitical situation dictates the upside potential. Wang advises investors to de-emphasize directional bets and instead focus on volatility management and strict position control, waiting for the geopolitical situation to clarify before making further decisions. (Source: Futures Daily)

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