Oil prices jumped on Monday after the United States revoked a waiver permitting Iranian oil sales, a move tied to recent shipping attacks that threatened the fragile ceasefire with Iran. The policy shift tightens the supply outlook just as the American Petroleum Institute reported a 399,000-barrel decline in US crude inventories for the week ending July 3, following a 6.072-million-barrel draw the prior week.
Domestic crude stockpiles, excluding the Strategic Petroleum Reserve, have shed nearly 60 million barrels over the past twelve weeks, according to API data. Yet so far this year, inventories are down only 8.6 million barrels, held in check by draws from the SPR. The steady drawdown signals sustained demand pressure even as some supply constraints begin to ease.
On the supply side, tankers are departing the Persian Gulf in greater numbers than the past three months, prompting analysts to warn of a coming “wave” of crude destined for importing nations. The Wall Street Journal and other major outlets have cited analysts flagging potential oversupply, a stark contrast to the security-driven fear of disruption just days ago. Market participants are also beginning to factor in the possibility that Hormuz passage tolls could become a permanent component of oil price formation.
Geopolitically, the revocation of the Iranian waiver and the shipping attacks inject fresh volatility into an already fragile equilibrium. The lull in US-Iran peace talks has given way to renewed tensions, and any escalation around the Strait of Hormuz could quickly reverse the sentiment shift toward a glut. For now, traders are pricing in both risk of supply disruption and the reality of increasing tanker traffic.
Counterargument: Not all analysts agree on the direction of prices. Some argue that the “wave” of crude exiting the Gulf will overwhelm any supply losses from the revoked waiver, potentially pushing prices lower in the near term despite the inventory draw. The market remains deeply divided between glut fears and toll concerns.