West Texas Intermediate (WTI), the US crude oil benchmark, surged above $78.00, trading around $78.10 during early Asian trading hours on Friday, following an 8.5% single-day gain—the largest since 2020 [1]. This sharp rally was driven by escalating conflict between the United States and Iran, which has led to significant disruptions in global oil supplies. Iran effectively halted traffic in the Strait of Hormuz on Tuesday, a critical passage for about one-fifth of global oil shipments [1]. Additionally, attacks on oil tankers continued, with the Bahamas-flagged Sonangol Namibe reporting a breached hull after a blast near Iraq's port of Khor al Zubair on Thursday [1].
ANZ analysts commented that "crude oil markets remained on edge as they face ongoing risks to supply following the attacks in the Middle East, and concerns are centred on the flow of supply through the Strait of Hormuz" [1]. These supply disruptions are expected to support WTI prices in the near term [1].
However, bearish inventory reports from the Energy Information Administration (EIA) may limit further upside for WTI. The EIA weekly report showed US crude oil stockpiles for the week ending February 27 climbed by 3.475 million barrels, compared to a rise of 15.989 million barrels in the previous week. The market consensus was for a 2.2 million barrel increase [1]. This larger-than-expected build in inventories could temper the rally, as it signals weaker demand or increased supply domestically [1].
CONCLUSION
WTI crude oil prices have experienced a significant rally due to escalating Middle East tensions and supply disruptions, particularly in the Strait of Hormuz. While ongoing geopolitical risks are likely to support prices, rising US inventories may cap further gains. The market remains highly sensitive to developments in both supply disruptions and inventory data.