Oil prices pushed higher on Friday but struggled to break above $88 a barrel as traders weighed an escalating security situation in the Strait of Hormuz against weakening global demand expectations and a surprise build in US crude inventories. Brent crude rose about 1% to $87.90, while West Texas Intermediate gained 1.6% to $82.56. Both benchmarks were on track for their first weekly gain in three weeks, up roughly 5% for the period.
The latest supply scare came after the United Kingdom Maritime Trade Operations confirmed that a tanker was struck by an uncrewed aerial vehicle while attempting to leave the strait. The vessel suffered minor damage and the crew was reported safe. The drone strike followed a US warning that its navy could maintain a blockade of Iranian ports indefinitely by rotating ships through the region. Treasury Secretary Scott Bessent also warned of economic measures against Iran unlike anything seen before.
However, bearish fundamental signals limited oil's upside. US commercial crude inventories jumped 17.4 million barrels to 424.4 million in the week ended August 7, the largest weekly gain since January 2023 and a sharp contrast to analyst expectations for a decline. The International Energy Agency cut its 2026 demand outlook and now expects global oil demand to fall by 1.6 million barrels per day, while OPEC lowered its demand growth forecast for the fourth consecutive time to 580,000 barrels per day.
On the macroeconomic side, US consumer prices rose just 0.1% in July, in line with expectations and soft enough to reduce fears that the Federal Reserve might raise interest rates in the near term. Money markets had assigned roughly a 50% chance to a Fed rate hike before the data; the mild reading reduced that pressure. Wall Street edged higher, with the S&P 500 up 0.26% and the Nasdaq gaining 0.54%, while gold climbed 0.92% to $4,407.12 an ounce.
For crypto and other risk assets, the mixed backdrop provides competing signals: softer inflation and reduced rate-hike odds are supportive, while Washington's warnings on Iran add geopolitical uncertainty.
