Summary
The U.S.-Iran conflict has yet to turn towards a ceasefire, and supply from Gulf oil producers continues to be constrained. Brent and WTI have risen by more than 7% and 8% respectively over the last five trading days. The daily number of vessels passing through the Strait of Hormuz remains far below pre-war levels, with physical flow becoming the main driver pushing oil prices higher.
International oil prices saw little change in early trading on Friday, but the direction for the week was already clear. Reuters data showed that as of early morning Singapore time on August 21, Brent crude futures were trading at $93.82 per barrel, while WTI crude futures were at $86.78 per barrel. In the previous trading session, they had risen by 2.4% and 2.3% respectively.
Extending the timeframe to the preceding five rising trading days, Brent gained more than 7% cumulatively, and WTI rose over 8%, both reaching highs last seen on July 24. Friday's sideways movement seemed more like a digestion of the previous days' gains and did not alter the pattern of oil prices rising for the second consecutive week.
The Market Is Trading on Missing Supply
Behind this rally, the U.S.-Iran war remains the most immediate cause. Previous peace arrangements have expired, and the two sides have not resumed negotiations. U.S. President Trump has again threatened economic retaliation against countries supporting Iran, and the UAE this week also suspended financial and economic dealings with Iran. With no signals of de-escalation, supply from major oil producers like Saudi Arabia, Iraq, the UAE, and Kuwait thus continues to be affected.
War news can change daily, but what oil prices are truly sensitive to is whether this news changes actual loadings, shipping, and export volumes. The current answer still leans towards constrained supply. Since the U.S. and Israel launched military strikes against Iran on February 28, Iran's blockade of the Strait of Hormuz and attacks on energy facilities in the Middle East have disrupted global oil and gas transportation.
Nine Ships a Day, Still Far From Pre-War Levels
Only nine ships passed through the Strait of Hormuz on Wednesday, unchanged from the previous day and well below pre-war levels. Before the war, the volume of oil transported via this waterway accounted for about one-fifth of global consumption. As long as traffic volumes do not recover significantly, the market cannot treat this supply as having been restored.
This explains why oil prices continue to rise even as the conflict is deadlocked. Deadlock does not mean the risk has stopped; on the contrary, it implies that constrained supply could last longer. Refiners and traders need to pay higher costs for alternative sources, detoured transportation, and delivery uncertainties, with near-month contracts reflecting this tension first.
Oil prices have risen for several consecutive days, so short-term profit-taking is not surprising. However, there are currently few signals that could lower the risk premium: negotiations have not resumed, Strait traffic remains low, and major Gulf supply has not returned to normal rhythm. Compared to new verbal statements, the actual daily number of ships passing through the Strait of Hormuz will more directly determine how much supply premium USOILUSDT can retain going forward.
