WTI Near $87 as Iran Sanctions Risk Lifts Crude

Key Takeaways

• WTI crude traded near $86.78, while Brent held above $93 as both benchmarks remained close to their highest levels since July 24.
• Brent has gained more than 7% over five sessions, while WTI has advanced over 8% amid continuing Middle East supply disruptions.
• New US economic threats against Iran and its trading partners have increased uncertainty surrounding sanctions, shipping and the Strait of Hormuz.

WTI oil price holds near $87 after a five-session rally

Oil prices held close to a nearly one-month high on Friday as traders assessed the prospect of tougher US sanctions against Iran and the continuing disruption to Middle Eastern energy supplies.

Brent crude futures edged four cents higher to $93.82 a barrel at 01:42 GMT. US West Texas Intermediate crude slipped six cents to $86.78 after gaining 2.3% in the previous session.

The international Brent benchmark had risen 2.4% on Thursday. Over the five sessions leading into Friday, Brent gained more than 7%, while WTI climbed over 8%. Both contracts reached their highest levels since July 24, placing crude on course for a second consecutive weekly increase.

The price move has been particularly important for WTI because it has brought the US benchmark back towards the psychologically significant $90 level. Brent, meanwhile, is approaching the $95 region, where traders may reassess whether the current geopolitical premium is justified by actual supply losses.

Brent was trading roughly $7 above WTI on Friday. That comparatively wide spread reflects the international benchmark’s greater sensitivity to supply disruptions affecting Gulf exporters, although regional refinery demand, transport costs and US inventory conditions can also influence the difference.

Trump’s Iran sanctions threat raises supply concerns

The latest increase in oil prices followed President Donald Trump’s warning that countries providing economic support to Iran could face “tremendous economic consequences”.

The US administration is preparing a new package of measures intended to place additional pressure on Tehran. Treasury Secretary Scott Bessent is expected to provide further details on Monday, meaning the scope, timing and enforcement of the sanctions remain uncertain.

The market will be watching whether the measures focus primarily on Iran’s own oil exports or introduce broader secondary sanctions against foreign companies, banks, shipping firms and governments that continue conducting business with Tehran.

Secondary sanctions could have a larger market impact because they may raise the cost of financing, insuring and transporting Iranian crude even without directly removing every sanctioned barrel. China remains a major buyer of Iranian oil, making any restrictions on Chinese refiners, banks or shipping networks particularly important for the supply outlook.

The United Arab Emirates has already suspended financial and economic transactions with Iran until further notice. The decision has reinforced concerns that commercial ties across the Gulf could deteriorate further, complicating regional energy flows and increasing the risk faced by banks, traders and tanker operators.

The sanctions threat also comes as the previous US-Iran peace arrangement has expired without renewed talks. The conflict began on February 28 and has disrupted production and exports from several major Middle Eastern suppliers, including Saudi Arabia, Iraq, Kuwait and the UAE.

The Strait of Hormuz remains the central issue for the oil market. Restrictions on tanker traffic through the waterway have reduced the region’s ability to move crude and refined products to international buyers. As long as shipping remains limited, even a diplomatic statement or sanctions announcement can trigger a sharp move in oil futures.

Middle East supply remains below pre-war levels

Physical oil-market conditions continue to support the geopolitical premium.

The IEA’s August Oil Market Report showed that global supply increased by 2.4 million barrels per day in July to 101.5 million barrels per day. However, production remained 6.3 million barrels per day below the previous year’s level, with approximately 8.3 million barrels per day of Gulf output still shut in.

Regional oil exports fell to around 15 million barrels per day in July after tanker traffic through the Strait of Hormuz was disrupted again. Gulf production recovered from earlier lows but remained substantially below pre-war capacity.

Global observed oil inventories also declined by 69 million barrels during July. Total stocks stood just below 7.9 billion barrels, representing a reduction of approximately 410 million barrels since the beginning of the war.

These figures indicate that the market is not reacting only to the possibility of new sanctions. Existing supply losses, reduced tanker movements and lower inventories have already created a tighter physical backdrop.

Nevertheless, demand conditions remain a possible restraint on further price increases. The IEA expects global oil consumption to contract by 1.6 million barrels per day in 2026 as high fuel prices, transport disruption and weaker economic activity reduce consumption.

This tension between restricted supply and softer demand may help explain why oil has risen steadily but has not produced a more dramatic one-day surge following Trump’s announcement.

US inventories offer a mixed signal for crude prices

Recent US inventory data presented a more balanced picture.

Commercial crude inventories increased by 4.4 million barrels in the week ending August 14, reaching 428.8 million barrels. That level was in line with the five-year seasonal average and could limit WTI’s upside if inventories continue to rise.

However, the same EIA petroleum report showed that distillate stocks fell by 1.5 million barrels and remained approximately 13% below their five-year average. Distillates include diesel and heating oil, products that have been particularly sensitive to reduced Middle Eastern refinery output and export disruption.

US refineries operated at 97.2% of capacity during the reporting week, while crude inputs averaged 17.4 million barrels per day. High refinery utilisation may continue supporting crude demand, but it also leaves relatively little room for additional processing growth.

Total US petroleum products supplied over the latest four-week period averaged 20.5 million barrels per day, down 2.9% from a year earlier. This suggests that domestic consumption is not accelerating strongly enough to become the main driver of the oil rally.

Can WTI break above $90?

WTI’s immediate technical test is the $88 area, followed by the psychological resistance at $90. A sustained move above $90 would indicate that traders are pricing in a longer period of supply disruption or expecting the new sanctions to remove additional barrels from the market.

If momentum weakens, $85 may provide initial support. The August 14 WTI spot price of $83.99 offers a secondary reference point below that level.

For Brent, the $94–$95 region is the nearest resistance zone. A failure to break above it could encourage profit-taking towards $92, while a renewed escalation involving Iranian exports, Gulf energy facilities or the Strait of Hormuz could push attention back towards $100.

Oil prices may remain highly sensitive to headlines ahead of Monday’s US sanctions announcement. Other catalysts include Iran’s response, changes in Hormuz tanker traffic, possible diplomatic negotiations and the reaction of major Iranian crude buyers.

The next US petroleum inventory report, scheduled for August 26, will provide another test of whether physical demand is strong enough to reinforce the geopolitical rally or whether rising crude stocks could slow WTI’s advance.