Oil Prices Fall as Energy Secretary Claims Higher Hormuz Exports

Oil prices fell Thursday after Energy Secretary Chris Wright claimed that exports through the Strait of Hormuz are higher than many independent estimates.

U.S. West Texas Intermediate futures fell 2.4% to close at $81.25 per barrel. Brent crude, the international benchmark, lost about 2% to settle at $87.07. Prices are up about 4% this week as a deal between Washington and Tehran to increase ship traffic through Hormuz still has not materialized.

Oil exports through Hormuz have neared a seven-day average of 9 million barrels per day, Wright said Wednesday. Exports from the Gulf rise to around 15 million bpd when pipeline flows are included, he said. About 20 million bpd of oil and products moved through Hormuz before the war.

The export data provided by the energy secretary is much higher than the estimates of many independent firms. TD Securities, for example, has put Hormuz exports at around 5 million bpd. This is "nowhere near enough for the market," said Ryan McKay, director of commodity strategy at the firm, in a Wednesday note.

Wright said in a social media post Wednesday that the U.S. military and Department of Energy maintain "the best available data related to oil and oil products leaving the Arabian gulf."

"Many private businesses undercount the number of ships leaving the Strait of Hormuz due to ships moving covertly through the waterway," he said.

Oil demand is expected to fall by 1.6 million barrels per day this year, about 510,000 bpd more than previously anticipated, according to the International Energy Agency. Renewed hostilities in the Gulf have undermined efforts to boost global oil supplies, the IEA said. Supply was 6.3 million bpd lower year-on-year in July with 8.3 million bpd of Gulf production shut in, it said.

The security situation in the Middle East remains precarious for shippers, with attacks on vessels in the Gulf of Oman and the Red Sea this week. Iran's Houthi allies in Yemen, meanwhile, claimed Thursday that they targeted a refinery in Saudi Arabia's Jizan region with drones.

The U.S. and Iran disputed who controls Hormuz this week. Tehran claims that it has closed the strait and it will only reopen the waterway after Washington meets its demands. President Donald Trump, meanwhile, claimed the U.S. has total control over Hormuz.

The Trump administration last week teased a potential deal with Iran to boost traffic through the strait, but an agreement still has not materialized.

"The one thing we know is we have to discount political statements. They're completely irrelevant to what's happening," Amos Hochstein, a former energy advisory to President Joe Biden, told CNBC Thursday. "It's all nonsense. It's just market management."