U.S. Crude Stockpile Surge Weighs on Oil Prices amid Iran Tensions

U.S. crude inventories surged 8.5 million barrels to their highest level since June 2025, pressuring oil prices despite ongoing geopolitical tensions with Iran capping losses.

U.S. crude oil inventories have surged to a seven-month high, adding significant downward pressure on prices even as escalating tensions between Washington and Tehran provide a geopolitical floor. The EIA reported a massive 8.5 million barrel build for the week ending February 6, pushing stockpiles to 428.8 million barrels the highest level since June 2025.

The inventory glut reflects recovering production following winter storm disruptions, with output jumping nearly 500,000 barrels per day to 13.7 million b/d. Refinery utilization dipped to 89.4%, while imports surged 604,000 b/d to 6.8 million b/d, contributing to the oversupply.

The bearish fundamentals briefly pushed West Texas Intermediate below $64 per barrel, though prices have since stabilized near $66 as traders factor in rising U.S.-Iran military tensions. The Strait of Hormuz, through which 20% of global oil passes, has become a flashpoint following Iranian seizures of commercial tankers and U.S. naval deployments.

The EIA's February Short-Term Energy Outlook forecasts Brent crude averaging $58 per barrel in 2026, down from $69 in 2025, citing persistent global inventory builds averaging 2.3 million b/d. Goldman Sachs similarly expects Brent to fall to $60 by late 2026 as the risk premium fades, though it raised its Q4 forecast by $6 on tighter OECD stocks.

Weekly data remains volatile: after the 8.5 million barrel build, the following week showed a 901,000 barrel draw, highlighting the market's sensitivity to short-term fluctuations amid broader oversupply concerns.