Oil prices surge 20% on monthly gains despite recent pullback

Crude oil futures are on track for a strong finish to the month despite recent volatility. The benchmarks have climbed close to 20% over the past 30 days, even as they pull back slightly on Thursday. Brent crude is trading at $87.67 per barrel, while West Texas Intermediate sits at $82.07. Both contracts are down about 1% from the previous session.

Rising traffic through the Strait of Hormuz is putting downward pressure on prices. Reports indicate more tankers are crossing the strategic waterway as hostilities between Iran and the United States persist. This renewed shipping activity feeds a market concern that a large volume of supply is waiting to hit global markets once tensions ease.

“There is this sense that there is a lot of supply waiting to hit the market once all of this is resolved, and that is a weight against any kind of dramatic price rise,” Again Capital partner John Kilduff said.

The volume of traffic remains well below pre-conflict levels, but the market reacts to any news of improvement. Some shipping activity has resumed, though it is difficult to detect because vessels are turning off their transponders. ING commodity strategists noted that these shuttles are not yet significant enough to show up in tracking data. They cited U.S. Energy Secretary Chris Wright, who said about 13 million barrels of oil are leaving the Persian Gulf daily.

While shipping data suggests a flood of supply, the U.S. Strategic Petroleum Reserve is facing a different problem. The Department of Energy has noted that the reserve is running low. Releases from the stockpile have previously helped cap prices, but officials have said the draws must stop soon. Once the government stops adding oil to the market, that support will disappear.

Riyadh is actively working to secure shipping routes further afield. Saudi Arabia announced plans to form a defense coalition this week to focus on the Bab el-Mandeb Strait and the Gulf of Aden. The initiative has garnered support from 14 nations, including Turkey, Pakistan, Egypt, Sudan, and Djibouti.

The return of this volume could overwhelm current market balances, pushing prices lower even as geopolitical risks remain high. Analysts watch the Strait of Hormuz closely, but the Bab el-Mandeb Strait is becoming an increasingly important chokepoint for global energy flows. If shipping through that region is disrupted, the impact on prices would likely be immediate and severe.

The complex mix of shrinking government reserves, rising tanker traffic, and new regional alliances creates a volatile environment for traders. The data suggests that while prices have rallied significantly over the last month, the path forward is not clearly bullish or bearish.