Iran's missile strike ends four-day price slide
Alaska North Slope crude fell $1.39 on July 28 to close at $77.36 per barrel, while WTI dropped $3.35 to close at $79.26 and Brent dropped $4.27 to close at $84.29 — the fourth consecutive trading day of declines after President Donald Trump halted US strikes on Iran on July 24 to allow a chance to find a diplomatic solution. The fragile ceasefire was shattered later on July 28 when Islamic Revolutionary Guard Corps forces launched multiple ballistic missiles from Iran in an attempted surprise attack on US forces based in the Middle East, US Central Command said in a release, adding that all Iranian missiles were successfully intercepted. Crude futures turned sharply higher in Asian trading when the news broke.
US retaliates and crude rallies on July 29
WTI jumped $5.22 on July 29 to close at $84.48 and Brent jumped $4.00 to close at $88.09, while ANS rose $2.33 to close at $83.61. US Central Command said late on July 29 that its forces had successfully completed a heavy wave of strikes against Iran in response to the July 28 attempted missile attacks, striking dozens of targets including military command centers. CENTCOM and the Saudi Arabian Armed Forces also conducted precision strikes against Iran-aligned terrorists that Iran had directed to attack US and Saudi forces.
EIA reports major crude inventory drawdown
US commercial crude oil inventories for the week ended July 24 plunged by 7.2 million barrels to 404.5 million barrels — 6% below the five-year average for the time of year — according to Energy Information Administration data released July 29. Total motor gasoline inventories slightly increased but remained 7% below the five-year average for the season. Distillate fuel inventories rose 1.1 million barrels over the week to 110.6 million barrels, 10% below the five-year average. The US Strategic Petroleum Reserve was drawn down by 3.7 million barrels to end the week at 307.7 million barrels.
Broader Middle East disruptions reshape oil supply routes
The Iran conflict has reshaped global crude flows. Iran has blocked most shipping through the Strait of Hormuz since the war began, while Houthi allies in Yemen declared a maritime embargo against Saudi Arabia on July 20 and have since claimed attacks on Saudi vessels, including a strike on the 50,000 DWT NCC Ghazal on July 28. Indian Oil Corporation has overhauled its sourcing, raising spot purchases from 50% to nearly 84% as supplies through Hormuz and the Red Sea are disrupted; the refiner posted a standalone net loss of Rs 2,661 crore for the April-June quarter, citing higher crude costs from the West Asia conflict. Iraq and Turkey signed a one-year extension of the Kirkuk-Ceyhan pipeline deal at 750,000 barrels per day as Baghdad seeks alternative export routes after its output fell 66% during the war, from 4.3 million to 1.4 million barrels per day. Meanwhile, an India-bound Aframax tanker carrying 700,000 barrels of Saudi crude that went dark in the Red Sea to evade Houthi threats anchored at New Mangalore Port on August 1, and a Malta-flagged Aframax loaded about 550,000 barrels of WTI at Corpus Christi for shipment to Israel's Ashkelon port — the first US crude cargo to Israel since October 2023. Hedge funds boosted bullish WTI bets by 21,402 lots in the latest CFTC data, the largest increase since March.
Follow-up signals: Iraqi Oil Minister Bassem Khudair traveled to Turkey on August 1 to formalize the Kirkuk-Ceyhan pipeline extension; the Aframax Rodos is expected to begin cargo operations at New Mangalore Port on August 3, and the Suezmax Amazon, carrying one million barrels of Saudi crude for Indian Oil, is expected to reach Chennai by August 4.
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