WTI crude oil prices rallied to $91.55/bbl on June 11, extending gains after the EIA reported a larger-than-expected 7.2 million barrel draw in U.S. commercial crude inventories. The draw, the seventh consecutive weekly decline, was significantly above analyst expectations of a 4 million barrel decline and points to a tightening U.S. physical market.
The primary driver of supply tightness remains the near-total disruption of Strait of Hormuz shipping lanes, which has reduced the flow of Gulf crude by an estimated 10 million barrels per day. The disruption, now entering its fourth month, has effectively removed a significant portion of global spare capacity from the market and forced refiners to source alternative supplies at higher costs.
OPEC's May production fell to its lowest level in over 20 years, exacerbating the supply squeeze. While some of this decline is voluntary (maintaining compliance with existing production agreements), the inability of several OPEC members to increase output due to infrastructure constraints and underinvestment has limited the group's ability to respond to the Hormuz disruption.
The drawdown at Cushing, Oklahoma (NYMEX delivery hub) was particularly notable, as inventories there fell to levels that historically precede backwardation widening and potential delivery constraints. The prompt WTI contract has maintained backwardation throughout the crisis, incentivizing inventory draws rather than storage builds.
The combination of the Hormuz disruption, 20-year low OPEC output, and sustained U.S. inventory draws creates a tight physical market. Procurement teams should expect WTI to trade in the $85–$100 range through Q3 2026 and consider layering in hedges at current levels rather than waiting for pullbacks that may not materialize.