ANS jets into $90s

Alaska North Slope crude crossed the $90 mark Monday Aug. 17, bolting $2.58 higher to close at $90.54 per barrel after Iran and the United States nixed extending a 60-day memorandum of understanding signed in June to end their conflict.

West Texas Intermediate leapt $2.10 on the day to close at $84.50, and Brent leapt $2.35 to close at $90.87.

President Donald Trump told reporters in an Aug. 17 White House press conference that he is not looking to extend the U.S. ceasefire deal with Iran.

Asked about a strongly worded threat in an earlier interview warning Oman - which had been in negotiations with Iran to mutually control traffic in the Strait of Hormuz - not to interfere with the U.S. handling of the Iran situation, Trump said Oman had not "behaved very well."

"But we'd handle them very easily, just like we do other things," Trump said.

Iranian Foreign Ministry spokesperson Esmaeil Baqaei said the same day that the MOU had no 60-day deadline, but only envisaged negotiations on the nuclear issue within 60 days, according to state news agency Tasnim.

"We did not start any negotiations at all, and the U.S. violated the understanding from the very beginning; therefore, the 60-day issue is not relevant," he said, adding, "Iran is not a party that adjusts its policies under pressure and deadlines."

Baqaei said Iran's Armed Forces are closely monitoring developments, adding, "our Armed Forces are keeping a watchful eye on any movement." He said that strengthening relations with regional countries is part of Iran's ongoing activities.

The MOU partially reopened the Strait of Hormuz, according to shipping analytics firm Kpler. Some 374 million barrels of crude cleared the Mideast Gulf across the window - some 6.1 million barrels per day, against 2.3 million bpd over the blockaded months from April to the signing Kpler said, adding, "Clearance here means non-Iranian Hormuz transits plus Gulf of Oman net exports, a combined measure built to avoid double counting."

"But the truce never came close to restoring the strait: the run-rate is around 40% of the ~15 mbd Hormuz averaged in 2025," Kpler said.

On Aug. 17, Tehran announced mandatory transit permits and maritime environmental tolls; Washington rejected the claims and kept its convoy escorts and blockade enforcement, Kpler said.

Six cargo vessels crossed the strait on Aug. 18, down from nine vessels the previous day and significantly below the daily average of 11 vessels during the preceding 10 days, according to Kpler data.

ANS inched 38 cents higher Aug. 18 to close at $90.92, as WTI added 44 cents to close at $84.94 and Brent edged up by 15 cents to close at $91.02.

ANS rose 94 cents Aug. 14 to close at $87.72, WTI rose 67 cents to close at $81.92 and Brent rose 91 cents to close at $87.98.

On Aug. 13, ANS dropped $1.49 to close at $86.78, WTI dropped $2.02 to close at $81.25 and Brent dropped $1.91 to close at $87.07.

ANS jumped $6.94 over the trading week from its close of $83.98 on Aug. 11, to its Aug. 18 close of $90.92.

On Aug. 18, ANS closed at a $5.98 premium over WTI, and at a 10-cent discount to Brent.

UAE economically ghosts Iran

Crude futures jumped Aug. 19 after the United Arab Emirates declared it would suspend all financial and economic transactions with Iran.

Brent rose 60 cents to close at $91.62 and WTI rose 89 cents to settle at $85.83 a barrel.

Upward price action was moderated by a bearish build in U.S. commercial crude oil inventories for the week ended Aug. 14, which increased by 4.4 million barrels from the previous week to 428.8 million barrels - matching the five-year average for the time of year data released Aug. 19 by the U.S. Energy Information Administration showed. Total motor gasoline inventories increased by 0.7 million barrels on the week to 209.4 million barrels - 5% below the five-year average for the season, the EIA said. Distillate fuel inventories decreased by 1.5 million barrels to 105.6 million barrels - 13% below the five-year average for the time of year.

"Crude futures continue to be supported by geopolitical tensions in the Middle East, now compounded by the UAE announcing that it has cut all financial ties with Iran because of the latest missile attacks," said Dennis Kissler, senior vice president of trading at BOK Financial.

Globally, however, refineries continue to purchase large volumes of crude, taking advantage of high refining margins, while Ukrainian attacks on Russia's refining sector are keeping global fuel supplies constrained, according to Kissler.

Russian output constrained

After a year of tighter sanctions and Ukrainian attacks on refineries, ports and tankers, Russia's crude output has fallen further in second half 2026, severely affecting the nation's crude production outlook, Rystad Energy said.

Rystad Energy revised its Russian crude production forecast to average 8.95 million barrels per day in 2026, before declining to around 8.6 million bpd in 2027 - a decline of 90,000 bpd versus its previous forecast, reflecting the continued impact of renewed disruptions at western Russian export terminals and rising risks to seaborne exports.

Russia has little slack, with onshore crude inventories already at levels where sustained production cuts become increasingly difficult to avoid, it said, adding, "Even if operational constraints are eased, a meaningful recovery in output appears unlikely."

A projected 2027 global oil surplus is expected to pressure benchmark prices, eroding Russia's bargaining power with buyers while deep crude discounts, sanctions-related costs and lower sales volumes continue to weigh on producer revenues, Rystad said. Beyond the near term, its production outlook is becoming constrained as aging, high-water-cut wells remain offline for longer, reducing effective spare capacity, while a lack of sizeable greenfield developments limits its ability to offset declines from mature fields after 2027.

"The increasing frequency and effectiveness of drone attacks on Russian oil and gas infrastructure is no longer affecting only refineries; it's constraining the country's upstream sector as well," said Daria Melnik, Rystad Energy vice president, oil and gas research.

"Refinery runs in June and July were among the lowest recorded in the past two decades, while throughput is forecast to average around 4 million bpd between July and December, almost 30% below the 2016-2023 seasonal average of roughly 5.7 million bpd.

"We expect refinery activity to recover gradually as the intensity of drone attacks eases; even so, Russia is still likely to process around 1.4 million bpd less crude in the second half of the year than historical seasonal patterns would suggest," she said. "Every barrel not processed by a refinery must either be exported, placed into storage or removed from production."

"While Russia was able to absorb that imbalance in June, July demonstrated that its export system cannot consistently handle the additional volumes," she said.

The impact of these attacks is becoming increasingly difficult for Russia's upstream sector to absorb, Rystad said.

Inventories are above the threshold that triggers production cuts and operators lack flexibility to ride out short-term disruptions while waiting for export or refining capacity to recover, the consultancy said. Disruptions of the same scale now translate into faster and deeper production cuts at the field level.