Oil prices extended their rally for a fifth consecutive session, with ICE Brent surpassing $92 per barrel and NYMEX WTI trading above $86 per barrel on Thursday morning. This surge was driven by market concerns over the US intensifying sanctions on Iran, following President Donald Trump's announcement of tougher economic penalties targeting entities supporting Iranian economic activities. The move signals a further escalation in US efforts to isolate Iran economically, contributing to bullish sentiment in the oil market [1].
Despite the price rally, the latest EIA weekly inventory report revealed a surprise build in US commercial crude oil inventories, which increased by 4.4 million barrels to 428.8 million barrels. This marks the third consecutive weekly build and the highest inventory level since May. The inventory build contrasts with the American Petroleum Institute's reported 328,000 barrel draw and market expectations for a 74,000 barrel decline. The Strategic Petroleum Reserve also fell by 5.3 million barrels, resulting in a modest total US crude inventory decline of 0.9 million barrels [1].
The commercial stock build was attributed to higher domestic supply, even as crude exports rose by 1.01 million barrels per day week-on-week to 4.07 million barrels per day, and imports fell by 746,000 barrels per day to 6.59 million barrels per day. Refinery activity remained strong, with crude throughput increasing by 216,000 barrels per day and utilisation rates climbing to 97.2%, near seasonal highs. Strong refining margins continue to incentivise refiners to maximise run rates [1].
Refined product inventories presented a mixed picture: gasoline stocks increased by 690,000 barrels to 209.4 million barrels, while distillate inventories fell by 1.5 million barrels to 105.6 million barrels. The decline in distillate stocks was driven by lower imports and reduced domestic production, tightening supply in the US market [1].
CONCLUSION
The oil market is experiencing heightened volatility as US sanctions on Iran intensify, pushing prices higher despite a surprise build in US crude inventories. Strong refining margins and robust export demand continue to support market strength, while tightening distillate supplies may add further upward pressure. Market participants are closely watching for further developments in US-Iran relations and inventory trends.