Oil Prices Slip 1.6% as Hormuz Traffic Improves

Oil Prices Slip 1.6% as Hormuz Traffic Improves

On Friday, July 31, 2026, Brent Oil Futures for September delivery declined 1.6% to $87.62 per barrel, while West Texas Intermediate (WTI) futures fell 2% to $81.85 per barrel. Both benchmarks were on track for weekly losses exceeding 8% as renewed hopes for peace talks at the start of the week weighed on prices, yet they were still positioned to achieve an almost 20% gain for July—their largest monthly increase since March.

Ship‑tracking data indicated a modest rise in tanker movements through the Strait of Hormuz, easing concerns about a prolonged disruption to this critical oil transit route. ING analysts noted that crossings remain in single‑digit numbers, but reports suggest that shuttling of oil across the strait has resumed, a flow that may not be captured by tracking data because transponders are often turned off.

In parallel diplomatic activity, Saudi Arabia held discussions with representatives from 43 countries to explore the formation of a maritime coalition intended to safeguard shipping in and around the Red Sea, countering a blockade imposed by Iran‑backed Houthi militants the previous week.

The market also reacted to fresh U.S. strikes on Iranian military targets, which provoked retaliatory Iranian missile attacks on U.S. positions and regional allies. The conflict further spread to Egypt when an unidentified drone struck gas vessels at Damietta port near the Suez Canal, igniting fires and raising concerns about the security of both the Suez Canal and the nearby SUMED pipeline—key conduits for crude and refined fuel moving from the Middle East to Europe.

Houthi militants have intensified threats against Red Sea shipping, while Iran continues to assert control over traffic through the Strait of Hormuz, prompting shipowners to reassess routing decisions. Simultaneously, attacks on refineries across the Middle East and Russia have tightened supplies of gasoline, diesel, and jet fuel, keeping refining margins near record highs despite crude prices remaining below historic peaks.

U.S. commercial crude inventories experienced a sharp drawdown, falling by 7.2 million barrels to 404.5 million barrels in the week ended July 24, according to the Energy Information Administration (EIA). This decline left U.S. commercial crude stocks at their lowest level since 2018, reinforcing concerns that an expanding Middle East conflict could further tighten global supplies.