Global Crude Weakness, Hormuz Strikes Create Volatile Price Outlook for Bakken

Geopolitical risk returned to oil markets Tuesday after drone strikes hit shipping in the Strait of Hormuz, pushing ICE Brent prices toward $74 per barrel, according to OilPrice.com. This price support contrasts sharply with extreme weakness in the physical crude market, a volatility that directly impacts pricing for Bakken crude streams.

The physical market malaise is underscored by drastic price cuts from Saudi Aramco. The Saudi national oil company slashed its official selling prices for Asia-bound cargoes in August by $11 per barrel, almost double the expected cut, OilPrice.com reported. For European buyers, the cut was even deeper at $15 per barrel, marking the largest monthly reduction for both regions since at least 2000. Saudi Arabia's flagship Arab Light crude is now priced $1.50 per barrel below the Oman/Dubai benchmark.

Demand for Saudi crude has collapsed in key markets. Chinese nominations for June fell to just 14 million barrels (470,000 barrels per day), the lowest on record, while flows to the United States have dried up completely, according to the source. Saudi production remains well below capacity, with flows from Ras Tanura around 1 million b/d in July, far below the pre-war rate of 6 million b/d.

Meanwhile, the OPEC+ alliance is moving to increase supply. Seven core OPEC+ members have decided to hike their crude production targets for August 2026 by another 188,000 barrels per day, leaving just 188,000 b/d of voluntary cuts in place, OilPrice.com reported. This decision is expected to be ratified at the next meeting scheduled for August 2.

In the United States, a key buffer for domestic supply continues to shrink. Inventories in the U.S. Strategic Petroleum Reserve dipped by another 6.2 million barrels in the week ending July 3, reaching their lowest level in 43 years, according to Department of Energy data cited by OilPrice.com.

The source also noted several major corporate moves with indirect implications for global supply competition. Chevron signed an agreement with Iraq's Basrah Oil Co. to study pipelines that would allow Iraqi crude to bypass the Strait of Hormuz. BP agreed to sell its Canadian offshore stakes to Equinor, Shell sold its stake in the Gulf of Mexico's Na Kika platform for $1.7 billion, and ENI entered the lithium sector with a $225 million investment in a Chilean project.

For Bakken operators, the conflicting signals create a challenging price environment. The deep discounts for competing Middle Eastern crudes and the planned OPEC+ output hike pressure global benchmarks, while the Hormuz instability and declining U.S. strategic stocks provide countervailing support. This volatility underscores the continued sensitivity of North Dakota's oil-dependent economy to global supply, demand, and geopolitical events.