Four months ago, WTI crude was trading above $100 a barrel on fears that the Strait of Hormuz could stay closed. In early August 2026, the US benchmark has settled back into the mid-$70s. The war-risk premium is largely gone, OPEC+ keeps returning barrels to the market, and US inventories — including at the Cushing delivery hub — are building again. Here is how the market got here and what to watch next.
From Crisis Premium to Supply Surplus
The spring rally was a textbook geopolitical spike. As we covered in our March analysis of the Hormuz risk premium, roughly one-fifth of global petroleum consumption moves through the strait, and markets price disruption risk quickly. When tensions escalated into April, WTI pushed above $100 per barrel.
The unwind has been just as decisive. Diplomatic progress between Washington and Tehran culminated in a June memorandum reopening the Strait of Hormuz, and negotiators from the US, Iran, and Oman have since been working toward a 60-day interim agreement to keep the waterway open without tolls. With Gulf export flows recovering, the supply-disruption scenario that justified triple-digit prices has faded, and WTI opened August near $80 before sliding to around $75–76 by mid-week.
OPEC+ Keeps Adding Supply
The second force pressing on prices is deliberate. Seven OPEC+ producers — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — agreed to raise production by another 188,000 barrels per day for August, continuing the step-by-step unwind of the voluntary cuts first announced in April 2023. Saudi Arabia and Russia account for the largest shares of the increase, at 62,000 barrels per day each.
Each monthly increment is modest on its own. Cumulatively, they matter: the group is methodically raising its production ceiling into a market that no longer carries a supply-risk premium. OPEC has also trimmed its 2026 demand growth outlook, an acknowledgment that consumption is expanding more slowly than the group projected earlier in the year.
US Inventories Are Building — Including at Cushing
The physical data confirms the loosening balance. In the EIA's latest weekly report, for the week ended July 31, US commercial crude inventories rose by about 2.5 million barrels to 407 million barrels. Stocks at Cushing, Oklahoma — the delivery point for WTI futures — rose by roughly 2.4 million barrels in the same week, to around 21 million barrels.
Cushing inventories remain low by historical standards, at roughly a quarter of working storage capacity, which limits how bearish the build is on its own. But direction matters more than level for price momentum: draws supported the spring rally, and consecutive builds are now reinforcing the decline.
The Forecast Backdrop Has Turned Softer
Forecasters have shifted from projecting inventory draws to projecting builds through the second half of the year. The EIA sees Brent averaging around $74 per barrel in the third quarter of 2026, with recovering Gulf production and softer demand growth both contributing. For WTI, which typically trades a few dollars below Brent, that implies a low-to-mid $70s baseline — roughly where the market now sits. You can track the current gap on our WTI–Brent spread chart.
What This Means for US Producers
Mid-$70s WTI is still comfortably above breakeven for most core shale acreage, but the move from $100+ to $75 changes the calculus at the margin:
- Capital discipline gets easier to keep. As we explored in our piece on the shale production plateau, US operators did not chase the spring price spike with new rigs — a decision that now looks vindicated.
- Regional differentials come back into focus. With the headline price lower, transport costs and quality spreads matter more to producer netbacks. Our guide to US oil prices by state explains why a Bakken barrel and a Gulf Coast barrel earn different prices in this environment.
- Hedging activity typically picks up when producers see forward prices that still lock in solid margins against a softening spot outlook.
What to Watch Next
- The Hormuz interim agreement. A formal 60-day deal would further compress any residual risk premium; a breakdown in talks could revive it quickly.
- OPEC+ monthly decisions. The group reviews market conditions every month. Whether it keeps adding barrels into a building-inventory market is the central supply question for the fall.
- Wednesday EIA reports. A string of further builds at Cushing would confirm the loosening trend; renewed draws would challenge it.
- Demand signals. With the supply story turning bearish, the bull case now rests mainly on demand surprising to the upside in the second half.
Bottom Line
The oil market has moved from pricing a crisis to pricing a surplus in the space of one quarter. Unless the Hormuz diplomacy fails or demand surprises meaningfully, the path of least resistance for WTI appears to run through the $70s rather than back toward the spring highs. Follow the live price on our real-time WTI chart.