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The International Energy Agency projected in its August 2026 Oil Market Report that global oil supply will decline by an average 4.3 million barrels per day this year before rebounding by 8.3 million barrels per day in 2027 to reach 110.3 million barrels per day. Benchmark crude prices traded in an exceptionally wide range of nearly $40 a barrel during July, intermittently driven by geopolitical developments and tightening crude and product markets. A breakdown in the mid-June Iran-US ceasefire agreement reversed earlier supply recovery from the Gulf, sending prices as high as $105 a barrel on July 23, the IEA assessment found.
Market data indicated Brent crude futures were set for a 1.3 percent weekly rise while US West Texas Intermediate futures had increased about 1.2 percent. This performance would mark the second consecutive weekly advance following earlier volatility tied to regional conflicts. US demand optimism has contributed to the upward momentum, one analysis showed, even as prices remain below peaks reached during the height of hostilities.
The US Energy Information Administration reported that crude oil and petroleum product prices increased sharply in the first quarter of 2026 after military action in the Middle East on February 28 and the subsequent de facto closure of the Strait of Hormuz. Brent crude began the year at $61 per barrel and finished the quarter at $118 per barrel. Such swings have persisted into the summer, with the EIA data underscoring the market’s sensitivity to supply disruptions in key producing regions.
OPEC+ agreed to raise production quotas by another 188,000 barrels per day from August, extending monthly supply increases as Gulf producers recover from earlier disruptions caused by the Middle East conflict. Giovanni Staunovo, a commodity analyst at UBS, told AFP that the group is expected to continue unwinding production cuts at the same pace seen in prior months. Gulf News reported that the decision comes as shipping through the Strait of Hormuz continues to normalise, potentially easing some supply concerns.
As of August 12, Brent crude was trading at $91.60 per barrel, a level roughly $25 higher than at the same time a year earlier, according to Fortune magazine figures. Gasoline prices have followed a pattern in which they rise quickly when crude costs jump but decline more slowly when oil prices fall, the Federal Reserve Bank of St. Louis noted in an August analysis of recent Iran-related volatility. This asymmetry has remained visible throughout 2026, amplifying the impact of crude fluctuations on consumers.
Recent trading sessions showed September WTI crude closing up more than 2 percent on select days and climbing to a one-month high. The gains align with broader expectations of demand recovery amid improving economic indicators in major consuming nations. Analysts continue to monitor diplomatic shifts that could further influence price direction in the coming weeks.
