Week in Review – WTI Is on Track for a $7 Weekly Gain on Falling Iranian Exports and Strait of Hormuz Risks

Oil prices were slightly lower Friday morning, but that small decline does little to change the bigger picture for the week. Prompt WTI futures were down about $0.48 per barrel in early trading while remaining on track to finish roughly $7 per barrel higher week over week.

Iran has continued targeting vessels transiting the Strait of Hormuz while also striking U.S. bases in Jordan, Kuwait, and Bahrain. At the same time, fighting between Iran and the U.S. has intensified again, with U.S. attacks along Iran's Gulf Coast followed by Iranian retaliation against U.S. bases in Arab states. Neither side has indicated that it is prepared to make the concessions demanded by the other, leaving the conflict in a costly stalemate.

The Strait of Hormuz remains especially important for energy markets. More energy is moving through the waterway despite Iran's attempts to disrupt traffic, while President Trump has said the U.S. has control of the Strait and that more oil is moving out of the region. At the same time, Brent and WTI spreads have continued to strengthen, with rolling December-to-December spreads reaching multiyear highs amid escalating tensions in the Middle East.

Pressure on Iran is also becoming increasingly economic. The U.S. blockade of Iranian oil exports has cut off Tehran's main source of revenue, while additional sanctions are making it more difficult and expensive for the country to access international financing and work around existing restrictions. Iranian crude loadings have fallen to about 260,000 barrels per day this month, compared with roughly 1.7 million barrels per day a year earlier.

The economic strain inside Iran is also growing. The rial has fallen to a record low, inflation remains extremely high, and a senior source said the country has only about two months of gasoline supply left. Despite producing crude oil domestically, Iran still imports gasoline due to limited refining capacity. These pressures increase the importance of whether the current economic campaign eventually pushes Tehran toward negotiations or leads to further military escalation.

Outside the Middle East, Venezuela is becoming another major geopolitical issue for the oil market. The Trump administration has announced plans to seize control of more than 65 billion barrels of Venezuelan crude reserves while restructuring the country's debt and reducing the influence of China and Russia. Washington has also said Beijing will not have claims to revenue generated from new Venezuelan production.

The immediate impact on China may be relatively limited because Venezuela accounted for only 4% of Chinese oil imports in 2025. However, Chinese refiners have lost access to discounted Venezuelan crude at the same time that Iranian supplies are being disrupted. Independent refiners in Shandong have historically relied on Venezuelan heavy crude for bitumen production, and the loss of those barrels has tightened China's domestic bitumen market.

Russia is another supply factor to watch. Russian crude revenues fell to a six-month low in August, down 16% from a year earlier because of lower export prices and the financial burden associated with the war in Ukraine. Russia has also said it plans to resume diesel exports once domestic inventories have been replenished, making the timing of those exports important for global refined-product supplies.

Meanwhile, Saudi Arabia provided a different signal to the market by keeping the price of Arab Light crude for October shipments to Asia unchanged at a $2-per-barrel discount to the benchmark. The decision came despite expectations that the price could increase by $5 per barrel.

Economic data remains part of the picture as well. Goldman Sachs Intelligence Research estimates that U.S. nonfarm payrolls rose by 40,000 in August, below the consensus estimate of 55,000. Fed Governor Christopher Waller has also pointed to signs of disinflation and indicated that continued improvement could support keeping interest rates unchanged, although stronger-than-expected inflation data could reopen the possibility of another rate increase.

For energy markets, the combination of geopolitical risk and constrained oil flows remains the dominant story. WTI may be slightly lower heading into Friday's session, but a roughly $7-per-barrel weekly gain shows how significantly the market has repriced risk. As long as conflict continues around the Strait of Hormuz and pressure on Iranian exports remains intense, oil prices are likely to remain highly sensitive to any development that could affect the availability or movement of global crude supplies.

Prices in Review

Crude prices gained momentum throughout the week, with gains recorded in each session. Starting at $84.69 on Monday, prices rose to $86.31 on Tuesday, then advanced to $90.65 on Wednesday. Prices held near that level at $90.70 on Thursday and continued higher to $91.67 on Friday, marking the week's high. From Monday to Friday, crude gained $6.98 per barrel, an increase of approximately 8.2%.

Diesel prices strengthened early in the week before retreating from Wednesday's peak. Prices began at $4.4238 on Monday and edged up to $4.4309 on Tuesday, before jumping to a weekly high of $4.7045 on Wednesday. Prices then shifted lower, easing to $4.6572 on Thursday and $4.5976 on Friday. Despite the late-week pullback, diesel finished $0.1738 per gallon above Monday's level, representing an approximate 3.9% increase for the week.

Gasoline prices experienced a sharp drop early in the week, followed by mixed movement through Friday. After opening at $3.4899 on Monday, prices fell to $3.1120 on Tuesday before recovering to $3.1625 on Wednesday. Gasoline slipped again to a weekly low of $3.0803 on Thursday, then edged back up to $3.1490 on Friday. Despite the late-week recovery, prices finished $0.3409 per gallon below Monday's level, representing an approximate 9.8% decline for the week.