Oil Surges Over 5% on Hormuz Attacks as Inventories Tighten

Oil prices surged more than 5% Tuesday, with West Texas Intermediate (WTI) crude closing at $72.30 per barrel, a gain of $3.75. Brent crude rose $4.01 to $76.00 per barrel, according to live market data. The rally was driven by a series of attacks on oil tankers in the Strait of Hormuz, reigniting immediate supply concerns despite recent progress in reopening the critical chokepoint.

The price jump provides a direct boost to Bakken producers. The Bakken crude differential narrowed to -$3.42 per barrel versus WTI, meaning local crude is priced around $68.88. The strong benchmark pricing, if sustained, improves cash flow for operators across the Williston Basin.

The rally contrasts with recent analyst warnings of a potential global oil glut as tanker traffic from the Persian Gulf increases. According to OilPrice.com, OPEC's combined output rose by 3.3 million barrels per day last month to 19.43 million bpd, and the United States is pumping close to 14 million bpd. However, the market's focus Tuesday shifted sharply back to geopolitical risk and tightening physical inventories.

U.S. crude and product inventories continued to fall last week even as Hormuz traffic began to recover. The American Petroleum Institute estimated U.S. crude oil inventories fell by 399,000 barrels in the week ending July 3, according to a source published Tuesday. Gasoline inventories fell by 2.929 million barrels, and distillates dropped by 1.801 million barrels. These draws come after weeks of significant declines, with commercial crude stocks shedding almost 60 million barrels over the last twelve weeks.

The Strategic Petroleum Reserve (SPR) also saw another large draw of 6.2 million barrels, bringing the total to 325.7 million barrels—the lowest level in over four decades. This ongoing release has helped cap total U.S. inventory builds this year, with commercial stocks only down 8.6 million barrels year-to-date despite the massive weekly draws.

The price surge occurs against a political backdrop where President Trump has recently accused major oil companies of price-gouging at the pump, according to a separate OilPrice.com report. Chevron and Exxon are expected to report their best quarter since 2022 this month, fueled by the supply tightness following the U.S.-Israel war with Iran that began February 28. President Trump has insisted gasoline prices should fall faster, creating potential regulatory headwinds for the downstream sector even as upstream producers benefit.

For Bakken operators, the current price environment is favorable but layered with uncertainty. The sharp Tuesday gain underscores the market's continued sensitivity to Middle East supply disruptions, which have elevated global benchmarks and supported U.S. exports. However, the conflicting narratives of a looming supply glut versus replenishment demand for depleted global storage create volatility. North Dakota producers will watch for sustained strength in WTI above $70 to justify steady activity levels, while monitoring the Bakken differential for signs of takeaway constraint.