Oil settles at highest price in over a week. 'Oil tanks are getting emptier each week Hormuz stays closed.'

MW Oil settles at highest price in over a week. 'Oil tanks are getting emptier each week Hormuz stays closed.'

By Myra P. Saefong and Tomi Kilgore

EIA reports sixth straight weekly drop in U.S. commercial crude supplies while strategic reserve stocks drop by 8 million barrels

WTI crude oil futures were trading nearly 10% higher this week as hopes for a U.S.-Iran deal fade and U.S. supplies drop.

Oil futures settled Wednesday at their highest level in more than a week, after the Energy Information Administration reported a sixth straight weekly drop in U.S. commercial crude supplies and another big draw from the nation's emergency oil reserve.

Continued exchanges of fire between U.S. and Iranian forces have increased worries that a peace deal may not be imminent and that disruptions to shipping in the Persian Gulf will drag on.

"The oil tanks are getting emptier each week [the Strait of] Hormuz stays closed," David Russell, global head of market strategy at TradeStation, said in emailed commentary.

Against that backdrop, West Texas Intermediate crude for July delivery (CL.1) (CLN26) rose 2.4% to settle at $96.02 a barrel - the highest settlement since May 22, according to Dow Jones Market Data. Prices for the U.S. benchmark have climbed 9.9% since Friday.

Brent crude's August contract (BRN00) (BRNQ26) advanced 1.9% to end at $97.81, poised for the highest finish since May 26. Brent was 6.3% higher from the end of last week.

Another huge drop in the U.S. Strategic Petroleum Reserve shows "how hard the government is working to cushion the blow of the massive supply shocks in the Middle East," Russell said.

Crude stocks in the SPR fell by 8 million barrels to 357.1 million barrels for the week that ended May 29, according to Energy Information Administration data released Wednesday. Domestic commercial crude inventories, which don't include the SPR, also posted a weekly fall of 8 million barrels, to 433.7 million barrels.

Together, the SPR and commercial supply withdrawals total 16 million barrels of crude, as U.S. crude exports remain strong and refinery utilization ticked higher to 94.7%, said Matt Smith, Kpler's U.S. head analyst.

TradeStation's Russell said that while the U.S. may have become an "energy superpower" by releasing so much oil supply into the market, it's "not the Persian Gulf."

"Energy isn't very nimble," Russell said. Rather, it's a long-term structural industry that relies on key facilities to ensure steady flow, which means that the longer Persian Gulf supplies are disrupted, the "harder it gets to smooth over with excess inventories and SPR drawdowns."

The Strait of Hormuz has been effectively closed for three months, reducing daily global oil supply by around 14% - the "largest reduction in history," global economists at Macquarie led by Ric Deverell wrote in a Wednesday note.

Global oil prices, they noted, are below $100 a barrel but about one-third higher than preconflict levels. Macquarie attributed the relatively "muted" response to the oversupply of crude seen before the war. The International Energy Agency had forecast, in a report issued in October, a supply surplus of nearly 4 million barrels per day for 2026.

The Macquarie economists estimated that global oil inventories have fallen by around 5 million barrels per day over the past month. If that continues, inventories will be "back to 2025 lows by early July, approaching the 2022 trough by early August, and moving below the range seen so far this decade in September," they said.

The Iran war has led to the "largest disruption oil production in history," according to economists at Macquarie.

Meanwhile, expectations for an agreement to end the Iran war in the near future have faded as traders continue to track the latest developments.

U.S. Central Command said Iranian drone attacks "failed to impact intended targets," but the fact that an "additional wave" of drones had attempted to attack U.S. forces in Kuwait has raised concerns that talks may have stalled.

That comes as President Donald Trump told the New York Post in an interview published Wednesday that the U.S. naval blockade around the Strait of Hormuz could last through Labor Day. But Trump also said he would like to meet the new supreme leader of Iran and "probably will" at some point.

The rise in oil prices means that week's "peace premium" has been largely "priced out due to an apparent lack of progress in talks between the U.S. and Iran," Kyle Rodda, senior financial-market analyst at Capital.com, wrote in a note to clients.

-Myra P. Saefong -Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 03, 2026 15:44 ET (19:44 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.