The Commodities Feed: Oil prices cool despite US-Iran deadlock
Per the full note source, ING's commodities desk sees oil prices easing despite the US-Iran deadlock, driven by a bearish EIA inventory print and no fresh supply disruption. The market is shrugging off geopolitical headlines as large US stock builds and resilient refining activity dominate the tape. With the IEA projecting a substantial 1.8m b/d supply deficit for 3Q26, the medium-term view remains constructive, but the immediate catalyst is the next round of US-Iran diplomacy and weekly inventory data. The desk implies that unless a tangible supply outage emerges, crude will remain rangebound, a stance that carries implications for oil-sensitive currencies and inflation expectations.
What the desk is arguing
The ING commodities desk argues that oil's recent cooling is a function of supply-side resilience rather than a resolution of geopolitical tensions. Per the full note source, 'Oil prices edged lower through much of yesterday's session; Brent crude ended the day largely flat' despite the lack of progress between the US and Iran. The desk frames this as a market that is increasingly desensitized to headline risk, particularly after the drone attack on Russia's Novorossiysk port spared oil infrastructure.
Supporting this thesis is the EIA's weekly report, which showed US commercial crude inventories surging by 17.42 million barrels – the largest weekly gain since January 2023. The build was driven by a sharp jump in imports and a drop in exports, offsetting what the desk notes are 'seasonally high' refinery utilisation rates above 96%. These figures point to a well-supplied near-term market, even as the IEA projects a 1.8m b/d deficit in 3Q26.
The alternative read would be that the inventory build is a one-off trade-related distortion, and that the IEA's deficit forecast signals a tighter market ahead. However, the desk's tone suggests that until we see a genuine supply disruption, the path of least resistance for prices is lower, or at least sideways.
Key takeaways
- 01Oil prices are easing despite US-Iran deadlock, with Brent flat on the day.
- 02Largest weekly US crude inventory build since January 2023 (17.42m barrels).
- 03IEA projects a 1.8m b/d global oil supply deficit in 3Q26.
- 04Refinery utilisation remains high at above 96%, supporting product supply.
Market implications
Watch crude oil’s reaction to the next EIA weekly inventory report and any escalation in Middle East tensions. A break below the recent trading range could weigh on oil-sensitive currencies like the Canadian dollar and the Norwegian krone, while a geopolitical shock could reprice inflation expectations and support the US dollar.
Risks to this view
The call is invalidated if the US-Iran talks collapse and lead to a concrete supply disruption, or if attacks on Russian energy infrastructure expand beyond port facilities. Additionally, a sharper-than-expected slowdown in global demand could offset supply deficits, driving prices lower than the desk anticipates.
Articles The Commodities Feed: Oil prices cool despite US-Iran deadlock Published 03:21 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices are easing despite no breakthrough in US-Iran discussions. Meanwhile, the latest EU gas storage data shows that storage levels fell, adding to supply fears as we move closer to winter Warren Patterson and Ewa Manthey Energy - EU gas storage drops Oil prices edged lower through much of yesterday’s session; Brent crude ended the day largely flat. There was little in the way of fresh developments between the US and Iran, with both sides remaining in a deadlock.
Meanwhile, the latest large drone attack on Russia’s Novorossiysk port appears to have spared oil infrastructure, with no reports of damage to oil terminals as of now. The EIA’s weekly report was fairly bearish, with US commercial crude oil inventories increasing by a significant 17.42m barrels over the last week. This is the largest weekly increase since January 2023.
Total crude stocks actually rose by 11.31 million barrels once the 6.12 million barrels of SPR releases are included. The large inventory increase was predominantly driven by the trade side, with crude oil imports increasing 1.14m b/d week-onweek, while crude exports fell by 627k b/d. Inventory changes for refined products were more modest, with gasoline and distillate stocks falling by 968k barrels and 10k barrels, respectively.
While refiners reduced their utilisation rates by 0.3pp WoW, they remain at seasonally high levels of above 96%. Very healthy refinery margins will be pushing refiners to maximise run rates. The International Energy Agency expects the global oil market to be in a 1.8m b/d deficit in 3Q26, which has grown since last month, given the renewed disruptions in the Middle East.
While global oil supply grew by 2.4m b/d in July, it remains 6.3m b/d lower year-on-year, and full-year oil supply is now expected to fall by 4.3m b/d in 2026. Aggressive downward revisions were also made to demand. The IEA now expects global oil demand to fall by 1.6m b/d YoY in 2026 due to Persian Gulf disruptions and elevated fuel prices.
OPEC also released its latest monthly report yesterday. The group remains more upbeat when it comes to demand, expecting global demand to grow by 580k b/d YoY. This seems fairly optimistic given the price levels that we have seen refined products trading this year.
Meanwhile, when it comes to OPEC supply, the group reportedly increased output by 1.69m b/d MoM to 19.85m b/d in July, with gains dominated by Iraq, Saudi Arabia, and Kuwait. However, the supply recovery is likely to have stalled in August amid renewed disruptions in the Strait of Hormuz. European gas has firmed notably this week, with TTF pushing back above EUR 60/MWh, yet the lagged positioning data tells a different story.
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