Crude futures closed higher on Thursday, with intraday volatility remaining elevated as prices once again reversed early losses to finish in positive territory for the second consecutive session, extending the ongoing range-bound tug-of-war. After a sharp selloff earlier this week triggered by cooling geopolitical expectations, oil prices have found support as the US-Iran standoff shows no tangible progress. The White House stated that no negotiations are currently underway with Iran but emphasized that all options remain on the table, reiterating that Washington remains focused on economic isolation of Tehran and that the maritime blockade remains in effect. Iran, meanwhile, expressed deep distrust toward the US, citing its repeated abandonment of diplomatic engagement, and warned that any destructive action by Washington would bring "historic disaster" upon American military and economic interests. Regarding the Strait of Hormuz, Tehran insists that the US must first take concrete steps to meet Iran's conditions before the waterway could be reopened.
However, a growing number of reports on Thursday indicated that Gulf nations are increasingly delivering crude via dark-fleet ship-to-ship transfers, with producers ramping up exports and oil flows through the Strait of Hormuz gradually recovering. Oil traders monitoring cargo activity estimate that flows through the strait are now significantly above earlier projections, with roughly 7 to 8 million barrels per day currently being shipped through the waterway, up sharply from around 4 million barrels per day in mid-July and recovering to roughly three-quarters of pre-conflict levels. This week's price action demonstrates that the market has yet to establish a consensus one-directional view, with geopolitical developments continuing to drive outsized volatility. Thursday's session saw INE crude outperform its international counterparts, largely due to persistently rising tanker freight rates over the past period. Additionally, domestic refinery throughput has shown a notable seasonal rebound since August, with demand-side supply anxieties lending upward momentum to Chinese oil prices. From a supply-demand perspective, oil price downside remains limited until the strait is fully reopened, with expectations of continued range-bound trading. Risk management remains essential, and participation should be approached with caution.
Daily Market Snapshot
[1] WTI front-month crude futures rose $1.30, or 1.58%, to settle at $83.53 per barrel. Brent front-month crude futures gained $1.58, or 1.82%, to close at $88.52 per barrel. INE crude futures climbed 4.76% to 601 yuan per barrel.
[2] The US dollar index slipped 0.01% to 99.13. The HKEX USD/CNH rate edged up 0.01% to 6.7123. The US 10-year Treasury fell 0.2% to 108.53. The Dow Jones Industrial Average rose 0.2% to 53,569.44.
Recent Headlines
[1] Asian crude imports remain persistently weak, challenging US claims about Hormuz oil flows. Asian crude arrivals for August remain well below pre-Iran-conflict levels, further questioning US Energy Secretary Wright's assertion that strait flows have recovered. Kpler data shows expected August Asian crude arrivals of 23.12 million barrels per day, slightly below July's 23.36 million and nearly 4 million barrels per day, or 14%, below the 26.91 million three-month average through the end of February. Following the US-Israel strikes on Iran on February 28, the Strait of Hormuz was effectively shut, a waterway that once carried nearly 20% of global crude and refined product shipments. Wright has claimed that Hormuz flows are rising and total Middle East exports have neared pre-conflict levels, citing a seven-day period with strait traffic of 9 million barrels per day, plus Red Sea and Gulf of Oman exports bringing total Middle East exports to 15 million barrels per day. However, Kpler data shows that the largest volume of vessels departing through the strait in any week of August was just 4.26 million barrels per day, with total August strait exports of only 2.3 million barrels per day, far below the 15.82 million pre-war three-month average. India, the nearest major importer to the Middle East, shows port arrivals that do not corroborate the export recovery narrative. Kpler estimates Indian August crude imports at 4.51 million barrels per day, the lowest since March, with Middle East arrivals of just 1.45 million barrels per day, slightly below July's 1.5 million and only half the 2.88 million three-month average through end-February. While total Asian imports from the Middle East have rebounded from the April low of 7.01 million barrels per day to 11.11 million in August, they remain far below the pre-war 15.82 million three-month average. Even if Wright's "15 million barrels per day export" figure is accurate, most cargoes would likely not arrive in distant destinations like Japan, South Korea, and China until September due to voyage times, yet there is currently no evidence that Asian imports are nearing pre-conflict levels.
[2] Another attack reported in the Strait of Hormuz, escalating tanker security alerts. The UK Maritime Trade Operations issued a security advisory on Thursday stating that a commercial tanker was struck by an unidentified projectile while transiting the Strait of Hormuz, causing a fire that was extinguished, with all crew members safe. The agency did not disclose the identity of the affected vessel or indicate a potential responsible party but advised merchant ships to maintain heightened vigilance and promptly report any suspicious activity. The incident occurred in one of the world's busiest oil transit chokepoints, further intensifying market concerns over energy transport security and supply chain stability. Recent discussions between Oman and Iran over maritime arrangements in the strait have taken place, but Tehran has made clear such contacts do not signify a reopening of the waterway, linking navigation arrangements to external policy developments. No group or individual has claimed responsibility for the attack, and investigations remain ongoing, with all parties closely monitoring the situation. In the near term, the incident could push up regional shipping insurance premiums and crude freight rates, with market attention now on whether additional escort or diplomatic measures will emerge to stabilize transit security expectations.
[3] Kuwait and Qatar increase crude exports through the Strait of Hormuz, with export volumes recovering to 70% of pre-conflict levels. According to foreign media reports, two smaller Persian Gulf oil producers, Kuwait and Qatar, are increasing crude shipments through the Strait of Hormuz, further driving the recovery of petroleum traffic through the waterway. Traders indicate that the two countries combined exported approximately 2 million barrels per day before the Iran war, and current export volumes have recovered to 70% of pre-conflict levels. The UAE was the first Gulf producer to resume large-scale oil exports through the strait, employing a "shuttle transport" method involving ship-to-ship transfers in the Gulf of Oman, with Saudi Arabia subsequently joining. According to a Bloomberg report citing an anonymous trader, approximately 7 to 8 million barrels per day of crude are currently being shipped out of the strait, a significant increase from roughly 4 million barrels per day in mid-July, recovering to about three-quarters of pre-conflict levels. Energy cargo analytics firm Vortexa also corroborated this recovery trend in data released Monday, showing recent oil flows through the waterway approaching 10 million barrels per day.
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