Oil gains for 5th session on US-Iran deal concerns

Today’s headlines

What’s happening: Crude oil prices traded higher this morning as investors assessed the latest developments in the Middle East.

What happened: Crude prices held near monthly highs this morning, extending Tuesday’s sharp rally.

Oil prices recorded gains for the fifth straight session despite industry data showing a rise in US crude inventories last week.

Why it matters: Crude has climbed around 9% over the past three sessions after US President Donald Trump’s comments dimming hopes of a deal with Oman being reached soon to fully reopen the Strait of Hormuz.

Iran said talks were in their “final stages” but maintained that a full reopening of the strategic waterway would only happen after the US meets their conditions for ending the war.

Traffic through the Hormuz route fell to six vessels on Monday, down from a 10-day ‌average of ⁠around 11. Daily traffic through the key route averaged 125 to 140 vessels before the US-Iran conflict.

Data released by the American Petroleum Institute (API) showed that US crude inventories climbed sharply in the week ended August 7. Crude stockpiles grew by around 9.1 million barrels during the week, while gasoline and distillate inventories shrank by 1.5 million barrels and 596,000 barrels, respectively.

Strength in the US dollar weighed on oil prices as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher to 99.85 this morning.

Spot price for WTI crude oil rose 1.0% to $83.03 per barrel, while spot Brent rose 0.9% to $88.54 per barrel this morning.

Both oil benchmarks rose more than $1 on Tuesday, recording their highest settlements since July 31, after surging around 5% on ⁠Monday amid dimming hopes of a peace agreement between the US and Iran.

In other energy trading, gasoline gained 0.7% to $3.1577, while heating oil jumped 1% to $4.2951. However, natural gas bucked the overall market trend, falling 0.3% to $2.758 this morning.

What to watch: Investors will keep an eye on the recent developments between the US and Iran.

Data on EIA crude oil stocks change (1830 UAE Time) will be released today. US crude inventories, which jumped by 2.479 million barrels to 407 million barrels in the week ended July 31, are expected to decline by 0.5 million barrels in the recent week. Analysts expect US gasoline stockpiles to shirk 1.58 million barrels, while distillate stocks are projected to contract by 1.6 million barrels in the week.

The markets today

US stocks in focus today ahead of today’s closely watched CPI data

Context: US equity markets closed lower on Tuesday as a fresh rally in oil prices revived inflation concerns.

Details: US President Donald Trump asked Iran to pay for war damages, hardening his negotiating stance.

Meanwhile, Pakistani and Qatari officials signalled progress towards a deal between the US and Iran, which would restore energy flows through the key Strait of Hormuz.

Data released on Tuesday showed the NFIB small business optimism index climbed to 99.8 in July from a reading of 97.4 in June. The figure also surpassed market estimates of 97.5. US existing home sales fell 1.7% from the previous month to an annualised rate of 4.06 units in July, versus expectations of 4.06 million.

Aramark’s shares jumped around 8.5% after the company reported stronger-than-expected third-quarter results. Shares of Cardinal Health also moved higher after the company posted better-than-expected earnings for the fourth quarter.

Higher speculations of the Federal Reserve hiking its benchmark interest rates dampened overall market sentiment for stocks.

The Dow Jones index shed 184.13 points, or 0.34%, to close at 53,791.85 on Tuesday, while the S&P 500 fell 0.32% to 7,728.20 and the Nasdaq 100 declined 0.33% to settle at 29,525.48.

What to watch: Investors will keep an eye on the developments in the US-Iran talks.

Data on US inflation rate (1630 UAE Time) and monthly budget statement (2200 UAE Time) will be released today. The annual inflation rate in the US, which fell to 3.5% in June from 4.2% in the previous month, is expected to ease further to 3.4% in July. The US government, which recorded a budget deficit of $120 billion in June, versus a surplus of $27 billion in the year-ago month, is expected to report a wider gap of $346 billion in July.

Other Markets: European indices closed mixed on Tuesday, with the DAX 40 and STOXX Europe 600 Index up by 0.26% and 0.01%, respectively, and the FTSE 100 and CAC 40 down by 0.17% and 0.13%, respectively.

The news shaping the markets

Ukrainian drones halted operations at one of Russia’s largest petrochemical complexes, while President Volodymyr Zelensky said new proposals were sent to US negotiators for ending the war. The news sent the USD/RUB pair higher in forex trading this morning.

Singapore’s current account surplus expanded to S$37.08 billion in the second quarter, from S$30.52 billion in the year-ago period of 2025. The primary income deficit widening to S$44.77 billion from S$37.87 billion lent support to the USD/SGD forex pair.

Italy’s trade surplus contracted to €4.23 billion in June from €5.38 billion in the year-ago month. The figure missing market estimates of €4.74 billion sent the EUR/GBP pair lower in forex trading this morning.

South Korea’s unemployment rate rose to 2.8% in July from 2.7% in the previous month, lending support to the USD/KRW forex pair.

Japan’s Reuters Tankan manufacturers’ sentiment index jumped to +18 in August from +13 in July. This being the highest level since March sent the USD/JPY pair lower in forex trading this morning.

What else to watch today

• India’s Inflation Rate (1430 UAE Time)
• US MBA Mortgage Applications (1500 UAE Time)
• Canada’s Building Permits (1630 UAE Time)
• Germany’s Current Account (1630 UAE Time)
• Russia’s GDP Growth Rate (2000 UAE Time)
• Russia’s Inflation Rate (2000 UAE Time)