Crude oil holds near six-session highs as Hormuz talks stay deadlocked, IEA flags deficit

Crude oil prices held on to most of a six-session rally on Wednesday August 12, as traders anticipated on signs that the Strait of Hormuz would reopen.

Brent crude traded near $88 a barrel, having risen 12% over the previous six sessions, while West Texas Intermediate held below $83.

US President Donald Trump said the US had "total control" over the strait, while talks between Washington and Tehran appeared deadlocked, with both sides hardening their positions.

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The US pressed ahead with a blockade of Iranian ports as part of a wider push to increase economic pressure on the country. Pakistan, which has mediated between the two countries, said the broader peace process had stalled, though it added that the deadline for a US-Iran memorandum of understanding could still be extended, according to a Bloomberg report.

Despite the deadlock, crude was on track for a weekly gain, extending months of volatile trading as markets tracked the on-off efforts by Tehran and Washington to end their conflict. The war in West Asia, combined with continued fighting between Russia and Ukraine that has brought waves of strikes on energy infrastructure such as ports and refineries, tightened oil and product markets further.

The International Energy Agency said the global oil market faced a shortfall of 1.8 million barrels a day this quarter, more than double its earlier projection, as the US-Iran war dragged on. The agency said in a report on Wednesday that the deficit for 2026 as a whole would likely be the widest in five years.

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US crude stockpiles, however swelled by 17.4 million barrels last week which was the largest increase since January 2023 according to the Energy Information Administration. The build was concentrated on the US Gulf Coast, driven by weaker exports and rising imports, including the return of Saudi and Venezuelan crude.

Both the US and Iran hardened their negotiating stances over reopening Hormuz, even as Pakistan's defence minister said on Tuesday that the two sides were close to some form of arrangement. The oscillating nature of the talks, along with continued strikes on tankers, made it difficult for Gulf producers to export their oil.

Before the US and Israel began attacking Iran on February 28 this year, about a fifth of the world's oil and liquefied natural gas passed through the strait. Traffic has continued since, but at a much lower rate, with producers relying on workarounds to keep energy supplies reaching the global market.