14-08-2026

This week crude oil has felt pressure; on the face of it, the reason seems rather obvious with the US inventory figures showing one of their biggest weekly increases in many years. But looking carefully, a clearer picture begins to emerge. In the same week that saw oil prices fall, the foremost global energy forecasting agency has been warning of a severe supply shortage and a critical shipping chokepoint in the Middle East is still operating at partial capacity.

This is a market telling two different stories at once. Here`s how to make sense of both.

14-08-2026

The Bearish Headline: A Historic Inventory Build

For the week ending August 7, US commercial oil inventories jumped 17.4 million barrels, the biggest weekly increase since January 2023, pushing stocks to around 424 million barrels. Analysts had expected a small decline. The rise came as crude imports increased by over 1 million barrels, while exports fell, adding more oil to US storage, especially along the Gulf Coast. The surprise inventory build triggered a bearish reaction, with Brent and WTI prices falling sharply and WTI briefly touching $80. Higher inventories signal that supply is outpacing demand, prompting traders to book profits and push prices lower.

14-08-2026

The Bullish Undercurrent: IEA`s Supply Deficit Warning

On the same day, the IEA gave a different picture, calling the global oil market “tight” rather than oversupplied. According to the IEA, global oil supply could face a 1.8 million barrels per day deficit in Q3 2026, while global inventories may have fallen by tens of millions of barrels in July. So, despite the sharp rise in US oil inventories, global stocks are actually declining. The US build-up may be more about a temporary trade-flow imbalance—higher imports and lower exports—especially around the Gulf Coast, rather than a genuine global supply glut. In short, one week of rising US inventories is not enough to confirm a global oversupply, particularly when global oil balances remain tight.

14-08-2026

The Strait of Hormuz: The Unexpected Element

The situation is not a distant threat—it is already impacting the oil market. Oil flows through the Strait of Hormuz have fallen from over 21 million barrels per day to around 5 million barrels on some days.
Brent climbed from around $69 in early June to $105 in July following renewed tanker attacks, while the blockade was reinforced in mid-July. Although Trump has called the Strait open, tanker traffic remains far below normal levels.
This remains a key risk for oil prices: any major positive development could quickly reduce the risk premium, while a fresh tanker attack could send prices higher within hours.

14-08-2026

The Inflation and Fed Angle

Outside the Middle Eastern area, the financial markets` belief in a September rise in Fed rates has fallen from around 55 percent to almost 35 percent due to US CPI and PPI figures coming in lower than expected. Since lower probability of rate hikes means that ahead financial conditions will be looser, this will usually be positive for risky assets and commodities. However, this is a less important factor when it comes specifically to oil; price behaviour is being dictated by supply and geopolitics.

14-08-2026

The Angle of Election

Prices of fuel or energy have important political influence now that midterm elections in the US are around the corner in November. It can be argued that there is a motive for the administration to have control over gas and oil prices before the elections, resulting in some moral or political pressure to keep crude oil prices under control. It is hard to say whether this motivation is much greater than what emerges from the supply shock in the Middle East and once the elections have passed, this is the type of issue that might fall off the radar quickly.

14-08-2026

Putting It Together: The Big Contradiction

14-08-2026

Conclusion

To conclude, as of now, the world market is still tense, the situation with Hormuz still remains complicated, and crude prices are falling because of a revision in US inventories instead of a true surplus in supply. The developments in Hormuz and increase in shortage of supply suggest higher prices in all aspects of life, while the current state of reserves and the upcoming electoral process have a reverse effect on prices at this time.