Brent Rises 5% in a Week as Hormuz Blockade Continues, IEA Warns of Historic Deficit

Benchmark Brent crude recorded a 5% gain during the week ending August 15, settling at $88.5 per barrel, while West Texas Intermediate (WTI) traded near $81. This upward trajectory is driven by three intertwined drivers: the Strait of Hormuz blockade restricting about a fifth of global oil and gas flows, the International Energy Agency's warnings of the steepest supply deficit in five years, and a new round of US sanctions targeting Iranian "shadow banking" networks.

Since its start in early July, the Strait of Hormuz blockade has restricted the flow of roughly one-fifth of global oil and gas resources through this vital waterway. An International Energy Agency report released in August 2026 revealed that Gulf exports fell by 2.1 million barrels per day since the blockade began, while global inventories deteriorated to their lowest levels since April 2025.

The IEA announced an oil supply deficit of 1.8 million barrels per day in the third quarter of 2026, the most severe in five years, as global supplies dropped 4.3 million barrels per day below pre-crisis levels. The agency and its member countries decided to release 400 million barrels from strategic reserves to mitigate the crisis, but prices continue their upward trajectory in the absence of a political solution.

In the same week, the US Department of State announced an eighth round of sanctions targeting networks smuggling Iranian oil revenue through informal financial channels, as reported by The Hill. The oil market remains hostage to these dynamics unless a documented agreement reopening the Strait of Hormuz is achieved—a scenario that diplomatic signals continue to keep out of near reach.

What do these terms mean?

Brent Crude and West Texas Intermediate (WTI): The two most famous benchmark crudes used to price oil globally; Brent is the reference for European and global markets, while WTI is the reference for the US market. They usually trade at a small spread reflecting the quality of each and transportation costs.

Supply Deficit: A condition in which the amount of oil available in the market is less than what refineries and consumers demand, putting upward pressure on prices.

Strategic Reserves: Oil stockpiles held by nations for emergencies and released during crises to ease upward price pressures.

Shadow Banking: Financial networks operating outside official regulatory oversight, used by Iran to transfer oil revenues and circumvent international sanctions.

Million Barrels Per Day: A unit measuring the volume of oil production or flow in global markets; one barrel equals approximately 159 liters.