• U.S. regional crude grades tumbled as increased tanker traffic through the Strait of Hormuz reduced the geopolitical risk premium.
  • Houston crude fell $6.01 to $98.46/bbl, while Midland dropped $4.68 to $97.35 and LLS plunged $7.77 to $100.10.
  • ANS bucked the trend, rising $3.94 to $107.84, highlighting regional supply tightness.

A Partial Reopening

U.S. crude prices fell sharply on Thursday as rising export volumes through the Strait of Hormuz eased concerns over global supply tightness. The move marks a partial retreat from the war-driven spikes that have roiled energy markets for weeks, though traders cautioned that the situation remains fragile.

Houston crude averaged $98.46 per barrel, down $6.01 from the prior session. Midland crude slipped $4.68 to $97.35, while Light Louisiana Sweet (LLS) tumbled $7.77 to $100.10. The declines reflect a market recalibrating after Kpler ship-tracking data cited by Reuters (TRI) showed 33.7 million barrels of crude flowing through Hormuz in the week beginning September 20. That’s a meaningful improvement in throughput, but far from a secure reopening of the chokepoint.

“The market is taking some risk premium out, but it’s not pricing a full return to normal,” said a Houston-based crude trader, who asked not to be identified discussing commercial strategy. “Flows can reverse quickly if talks break down or if we see another attack on Saudi infrastructure.”

WTI Rangebound, For Now

West Texas Intermediate (WTI) settled at $92.41 on September 25, according to Reuters, holding in the mid-$90s range. While that’s well above pre-conflict levels—Brent settled at $94 in early March, roughly 50% higher than at the start of the year—it’s below the crisis peaks seen during the worst of the disruptions.

The price action follows reports that U.S. and Iranian negotiators are exploring a phased path out of the war. Under the proposed framework, Iran would reopen the Strait of Hormuz, and Washington would lift its economic blockade. But Iran has signaled it won’t show flexibility on its nuclear program merely in exchange for reopening the strait, underscoring that a durable agreement remains uncertain.

Efforts to reach the White House and the Iranian mission to the United Nations for comment were unsuccessful.

A Chokepoint Crisis

Hormuz is not a routine supply route. Before the conflict, about 20% of global oil supply moved through the strait. Even a partial restoration of traffic can remove a substantial portion of the scarcity premium built into futures and physical-crude prices. But the wider energy complex remains strained. The Energy Information Administration (EIA) projected Brent to average $96 per barrel in 2026 and noted that production shut-ins across Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain reached 7.5 million barrels per day in March, with an assumed rise to 9.1 million b/d in April.

EIA emphasized that its forecast depends heavily on the duration of the conflict and the pace at which Hormuz traffic normalizes. The agency has characterized a full restoration as likely to take months rather than occur immediately, because producers, shippers, insurers, storage systems, and buyers all need to normalize operations.

The ANS Anomaly

While Gulf Coast grades weakened, Alaska North Slope (ANS) crude bucked the trend, rising $3.94 to $107.84. The increase suggests regional physical-market factors—such as Pacific Basin demand, refinery-specific crude requirements, or shipping economics—are outweighing the generalized easing of the Hormuz risk premium for that grade.

“ANS is less substitutable for Gulf grades, so it’s holding up better,” said a West Coast refining source. “But if the broader market continues to soften, it’s only a matter of time before that strength erodes.”

The standout move highlights how uneven the price reaction has been. While WTI and Gulf Coast grades are sensitive to geopolitical headlines, regional grades like ANS can diverge based on local supply-demand dynamics.

What’s Next

In the near term, prices are likely to trade on incremental evidence about actual export volumes through Hormuz, tanker insurance conditions, and the credibility of U.S.-Iran negotiations. Rising flows could keep pressure on WTI and U.S. Gulf Coast grades, but renewed attacks or a breakdown in talks could quickly restore a large geopolitical premium.

Medium term, a sustained reopening would likely narrow the supply gap and pull prices lower. EIA’s baseline forecast anticipated Brent falling below $90 per barrel in the fourth quarter of 2026 and averaging $76 per barrel in 2027, contingent on outages subsiding and conflict not persisting.

Key downside risks include reliable, rising Hormuz transit; restoration of Saudi alternative export capacity; and diplomatic progress. Upside risks include a failure of negotiations, renewed restrictions on the strait, or attacks on Saudi production facilities. The September 25 Reuters report also noted a drone attack that temporarily suspended Russia’s Novoshakhtinsk refinery—an example of a separate supply-chain risk supporting refined-product prices.

For now, the market is breathing a cautious sigh of relief. But with talks ongoing and military threats still present, the reprieve may be short-lived.

Correction: An earlier version of this article misstated the date of the Kpler ship-tracking data. It covered the week beginning September 20, not September 25.