Oil Prices Tumble Over 4% as Supply Fears Ease, U.S. Inventories Rise

Crude oil prices fell sharply in midday trading Friday, July 24, with West Texas Intermediate (WTI) dropping over 4% to trade near $88 per barrel. The sell-off comes despite ongoing supply risks in the Middle East, as the market focuses on rising U.S. inventories and complex global crude logistics.

As of midday, WTI Crude was trading at $88.40 per barrel, down $3.79 or 4.11% on the day. The international benchmark Brent Crude fell to $96.05, a drop of $4.64. The price for Bakken crude at the wellhead, reflected in its differential to WTI, was $3.42 per barrel below the benchmark. Natural gas prices saw a slight increase, rising $0.02 to $2.94 per MMBtu.

The price drop coincides with a reported build in U.S. crude inventories. According to Rigzone, citing the latest U.S. Energy Information Administration weekly report, crude oil stocks, excluding the Strategic Petroleum Reserve, stood at 411.7 million barrels on July 17.

The decline occurs amid significant disruption to traditional global crude trade routes. According to OilPrice.com, major Indian refiners are scrambling to replace Middle Eastern supply trapped by the conflict around the Strait of Hormuz. State-run refiners like Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are testing new crude grades from Angola and Venezuela after receiving minimal term supplies from the Persian Gulf in the first quarter.

"India’s crude oil imports from Russia have remained close to record-high levels in July despite the end of the U.S. waiver the previous month," OilPrice.com reported. However, some Indian refiners have suspended crude loadings from Iraq due to security risks, with one major refiner reportedly canceling a 2-million-barrel supertanker shipment.

Simultaneously, Abu Dhabi National Oil Company (ADNOC) continues to market its crude aggressively. OilPrice.com reported ADNOC has issued its seventh tender since early June, aiming to sell millions of barrels for loading between August and October. The UAE, which left OPEC in May, is estimated to have produced a record 4.1 million barrels per day in June and is adapting to the Hormuz closure by offering loadings outside the Gulf at ports like Fujairah.

For Bakken operators, the sharp drop in the headline WTI price directly impacts revenue calculations. However, the stability of the Bakken differential, which remains in its typical historical range, suggests regional pipeline and rail logistics are functioning normally without major bottlenecks. The global scramble for non-Middle Eastern supply, exemplified by India's search, underscores the continued importance of stable production basins like the Bakken. Yet, rising U.S. stockpiles may temper any near-term price rallies driven by geopolitical risk.