Oil markets experienced a sharp weekly selloff as traders moved aggressively to price in the possibility of a diplomatic resolution to the Strait of Hormuz crisis, only to partially reverse course when it became clear that no concrete agreement had been reached, according to OilPrice.com. September WTI crude oil futures were trading at $78.08 early Friday, down $8.72, or 10.05%, for the week. The contract opened at $80.10, reached a weekly high of $82.33, and fell to a low of $74.24.
The weekly result remained subject to Friday's final session. The early selloff was driven by optimism surrounding diplomatic talks involving Iran, Oman, and the United States. Markets treated reports of negotiating progress as a pathway toward restoring crude flows through the Strait of Hormuz, prompting traders to rapidly unwind a substantial risk premium embedded in WTI prices.
However, the market reversed part of its losses once it became evident that no binding agreement had materialized. Analysts at OilPrice.com noted that the market effectively priced in the outcome before the physical barrels had been confirmed. Iran's stated conditions — seeking influence over vessels entering the Gulf and oversight of ships departing — may produce a temporary arrangement but fall well short of restoring unrestricted tanker traffic or providing refiners with the scheduling certainty they require.
The Strait of Hormuz remains the central pressure point for global energy markets. Before the conflict, the waterway handled approximately one-fifth of global oil and liquefied natural gas flows. Gulf crude and condensate exports are still running well below pre-war levels, a physical reality that traders need to see change before sustaining further downside pressure on WTI.
The Red Sea added a further layer of risk. Houthi claims of attacks on Saudi tankers near Yanbu and in the Gulf of Aden renewed concerns about the alternate export route. Saudi Arabia had not confirmed the strikes, but the timing was unfavorable for sellers who had been relying on the Red Sea as a backup outlet for Saudi barrels while Hormuz traffic remained restricted.
On the domestic supply side, the latest U.S. Energy Information Administration report provided additional bearish ammunition. U.S. commercial crude inventories rose by approximately 2.5 million barrels in the week ended July 31, against market expectations for a draw.
Imports increased, refinery runs eased, and stocks at Cushing rose sharply. However, the report was not uniformly bearish: gasoline inventories fell, and distillate stocks posted a larger-than-expected draw, reflecting continued tightness in the diesel market driven by Russian refinery disruptions and reduced Middle East product exports. The U.S.
Strategic Petroleum Reserve also continued to decline, with emergency releases helping to cushion the supply shock but reducing the buffer available should the conflict escalate or Gulf flows fail to recover. From a technical standpoint, OilPrice.com analysts identified September WTI as trading into a critical long-term retracement zone at $75.40 to $70.70, with additional support provided by the 52-week moving average at $69.35, and the main structural bottom at $67.12. On the upside, the short-term retracement zone is identified at $81.21 to $84.53, followed by the May and June swing tops at $93.50 and $95.30 respectively.
A sustained move above $80.31 would be required to signal genuine buying interest rather than short-covering, while a failure to hold that level would direct attention back toward the $75.40 to $70.70 support band. The broader technical picture describes the market as operating in a wide trading range between $55.49 and $95.30, with the midpoint at $75.40. The market appears to be oscillating in a headline-driven buy-the-dip, sell-the-rally pattern, with the 52-week moving average at $69.35 serving as the key long-term support floor.
Source: OilPrice.com, Editorial Dept, August 7, 2026.
Source: oilprice.com