Oil Prices Steady Despite Mounting Middle East Supply Risks

Oil prices were flat in Sunday trading, with West Texas Intermediate crude holding at $81.78 per barrel, according to live market data. The lack of movement follows a week of significant volatility driven by renewed military conflict between the United States and Iran.

Brent crude was also unchanged at $88.10, while the discount for Bakken crude versus WTI was $3.42. Natural gas traded at $2.91.

The static prices belie heightened geopolitical risks that spurred the largest weekly gain in months. According to OilPrice.com, September WTI rallied over 11% last week, climbing from near $72.50 to above $80. The surge rebuilt a "geopolitical risk premium" into the market after renewed U.S. airstrikes and Iranian retaliation raised fears of supply disruptions.

The Strait of Hormuz, a critical chokepoint for seaborne crude, is a central concern. OilPrice.com reported that transits through the strait have fallen close to zero due to attacks on tankers. Fatih Birol, head of the International Energy Agency, warned the global economy could face serious trouble unless the waterway fully reopens within weeks.

Further supply disruptions were reported. Iraq briefly suspended crude loadings from Basra after a suspected drone approached a tanker, and a security threat forced the Khor Mor gas field in Kurdistan offline, cutting 2.5 GW of power supply.

Demand signals are mixed. China's crude imports plunged 41% year-on-year in June to 7.12 million barrels per day, the lowest since 2016, according to OilPrice.com. Meanwhile, India nearly doubled export taxes on diesel and jet fuel to protect domestic supplies.

For Bakken operators, the steady price above $80 is supportive, but the wider differential of -$3.42 versus WTI indicates regional pricing pressure. The broader market volatility underscores the sensitivity of North Dakota's crude to global supply shocks.

U.S. drilling activity showed a slight increase. Baker Hughes data from Friday, July 17, showed the total U.S. rig count rose to 588, with active oil rigs increasing by 7 to 452. Weekly U.S. crude oil production averaged 13.861 million barrels per day for the week ending July 10, up slightly year-over-year.

However, well completion activity dipped. Primary Vision’s Frac Spread Count fell by 5 to 200 crews in the week ending July 10. The Permian Basin added 3 rigs for a total of 259, while the Eagle Ford count held steady at 47.

The market now watches whether the physical blockage of Hormuz shipping will translate into sustained higher prices or if weakening Asian demand will cap gains.