WTI Settles at $84.67 and Brent at $87.93, Capping July With 20-Percent Monthly Gain as Iran War Squeezes Global Crude Supply

WTI crude oil settled at $84.67 per barrel on Friday July 31, up 1.29% on the day per CME data reported by OilPrice.com, while ICE Brent settled at $87.93 per barrel, up 1.21%, capping the strongest monthly performance for both benchmarks since March 2026. Both grades gained approximately 20% through July, driven by Iran-US military conflict and Houthi disruptions to tanker shipping through the Bab el-Mandeb Strait. WTI opened July near $70 per barrel, a level that now represents the month's floor.

Western Canadian Select (WCS), the blended heavy crude benchmark for Alberta oil sands producers, last traded at $71.24 per barrel as of late July per OilPrice.com, a discount of $13.43 per barrel to WTI. That differential is narrower than during the pipeline-constrained period of 2018 to 2020, when WCS routinely traded $20 to $40 below WTI. The narrowing reflects improved egress capacity from the Trans Mountain Pipeline Expansion and sustained US heavy crude refinery demand.

The monthly WTI gain of roughly $14.67 per barrel is material for producers with spot price exposure. For an operator with 30,000 barrels per day of WTI-linked production, that improvement adds approximately $160 million in annualized gross revenue for every $14.67 sustained above the July starting level. Alberta oil sands operators participating in Pacific Basin markets via Trans Mountain benefit from prices that track closer to Brent than to historical WCS lows.

Iran-US Hostilities Reshape Tanker Routes

Iran struck US military facilities in Kuwait and Bahrain on July 31, adding to market concern about Strait of Hormuz passage. Tanker traffic through the Strait remains well below pre-conflict levels, though approximately 13 million barrels per day was reported leaving the Persian Gulf as of July 30, indicating the Strait has not fully closed. The conflict began escalating in mid-July, driving both WTI and Brent from near $70 per barrel to above $84 and $87 respectively.

Six empty Saudi supertankers rerouted around Africa's Cape of Good Hope as of July 31, avoiding Houthi-controlled shipping lanes in the Red Sea and Bab el-Mandeb Strait. The Houthis announced a blockade on Saudi shipments through those waters following attacks on Saudi tankers. The round-Africa route adds at least two weeks to delivery times compared to the Suez Canal path, lifting freight costs and effective crude prices for Atlantic Basin buyers.

Saudi Arabia redirected crude overland via the SUMED pipeline from Yanbu to Egypt's Sidi Kerir port, adding operational cost and complexity. Saudi crude production fell almost 25% from pre-conflict levels in Q2 2026. Despite lower volumes, Saudi oil revenue climbed as elevated prices offset the production decline.

Forecasters See Supply Waiting to Return

John Kilduff, partner at Again Capital, told OilPrice.com that "there is this sense that there is a lot of supply waiting to hit the market once all of this is resolved." That July 30 assessment reflected the view among some market participants that Iranian and Gulf supply has been delayed rather than destroyed. Kilduff's perspective contrasts with the physical tightness that pushed both benchmarks to their highest monthly close since March.

EFG Hermes estimated Saudi Arabia's crude price requirement at $115 per barrel to balance its national budget, versus $96 one year prior. The IMF projected that elevated prices will narrow Saudi Arabia's fiscal deficit to 3.7% of GDP in 2026 and 3.1% in 2027. Both estimates assume no further escalation in Strait of Hormuz restrictions, the central variable that market participants are pricing.

The US Strategic Petroleum Reserve is running at critically low levels, limiting the government's ability to release emergency supplies. The SPR drawdown that began in 2022 has not been fully replenished, leaving the reserve at a fraction of its pre-drawdown capacity. That constraint removes a bearish buffer that moderated price spikes in prior disruptions, leaving markets more sensitive to geopolitical developments.

Supply Disruption on Multiple Fronts

The Caspian Pipeline Consortium halted operations for the third time in July, following Ukrainian drone strikes near Novorossiysk on the Black Sea. Oil Authority reported earlier that Kazakhstan's crude exports were cut roughly in half by repeated outages. The Caspian route typically handles around 1.3 million barrels per day of Kazakhstani output, removing another supply source from Atlantic Basin markets during an already-tight month.

OPEC+ approved a fifth consecutive monthly production increase of 188,000 barrels per day at its most recent meeting. The volume reaching export terminals has fallen short of that target, constrained by tanker availability and Strait passage restrictions. The gap between approved production increases and actual export delivery has been a recurring theme throughout the Gulf conflict period.

Saudi Arabia is organizing a 14-country maritime security coalition covering the Bab el-Mandeb and Gulf of Aden, per OilPrice.com reporting. The coalition includes Turkey, Pakistan, Egypt, Sudan, and Djibouti. Formation of that grouping suggests the shipping disruption is not expected to resolve quickly, a signal that supports the current price floor.