NEW YORK, July 29, 2026, 09:56 EDT — Oil prices surged toward the $90 mark on Wednesday, as escalating geopolitical tensions in the Strait of Hormuz took center stage, overshadowing a set of conflicting U.S. crude inventory reports. The dual forces of supply risk and ambiguous demand signals kept the market on edge.
Price Action
Brent crude, the global benchmark, climbed 6.8% to $89.79 per barrel by 9:35 a.m. EDT. U.S. West Texas Intermediate (WTI) advanced 6.2% to $84.20. The rally accelerated as cash markets opened, fueled by fresh reports of military strikes in the Middle East and continued shipping constraints through the strategic waterway.
Inventory Data Confusion
The initial reading from the American Petroleum Institute (API) offered little clarity, with public reports providing conflicting information on both crude and distillate stockpiles. One feed from Trading Economics indicated a 3.3 million-barrel build in crude inventories, while Reuters reported a 3.3 million-barrel draw. The disparity extended to distillates, with some sources showing an increase and others a decrease. The range of total inventory change estimates spanned 6.6 million barrels, from a 2.5 million-barrel draw to a 4.1 million-barrel build, making it too broad to anchor a decisive trade.
The official Energy Information Administration (EIA) report is scheduled for release at 10:30 a.m. EDT and is expected to provide a clearer picture. Last week, the EIA reported a 2 million-barrel increase in commercial crude inventories, bringing total stocks to 411.7 million barrels, which remained 6% below the five-year seasonal average.
Geopolitical Drivers
Geopolitical factors remain the primary catalyst. U.S. and Saudi military forces have resumed operations against Iran-backed factions in Iraq, while Iran has rejected an Omani mediation initiative regarding governance of the Strait of Hormuz. This week, only a handful of commodity vessels have transited the strait, sustaining supply concerns despite earlier optimism about diplomatic progress.
DBS Group Holdings Ltd (SGX:D05) energy research chief Suvro Sarkar anticipates Brent crude will “whipsaw in the $80-$100 per barrel range” in the near term, reflecting the volatile interplay of supply risks and demand uncertainty.
Market Outlook
The broader supply-demand balance remains tight. The EIA projects global stockpiles will decline by 2.2 million barrels per day over the third quarter. OPEC+ could postpone planned production increases for three months starting in October, which would support the current supply premium if Gulf shipments remain constrained.
The API characterizes its weekly bulletin as an estimate derived from industry surveys, while the EIA report offers the official government benchmark, though it too is based on estimated weekly figures.
Risks to Watch
The upcoming EIA report has the potential to confirm either inventory scenario, which could trigger rapid price movement. Any diplomatic breakthrough could eliminate much of the war premium seen on Wednesday, while continued disruption at Hormuz would maintain upward pressure on prices.
