Oil market signals tighten amid supply disruption

What happened: The oil market is tightening due to supply disruptions, particularly in the Strait of Hormuz. The U.S. military has escorted over 1,300 vessels, including 660 million barrels of oil, through the strait since May. Chevron (CVX) has surged 35% this year, hitting an all-time high, buoyed by high energy prices. BP returned to Venezuela's oil trade, loading 400,000 barrels of heavy fuel oil. Meanwhile, traders brace for an extended oil and LNG squeeze as hopes for a swift reopening of the strait fade. U.S. Treasury Secretary Scott Bessent announced tougher sanctions on Iran.

Market impact: Oil prices are on track for a second weekly gain, with Brent crude briefly topping $100. Japan's oil imports hit an all-time high in July due to elevated prices. Chinese refiners are buying Iraqi oil as Gulf supply routes fracture. Chevron's strong performance reflects investors' confidence in integrated energy companies amid Middle East disruptions. BP's return to Venezuela signals a willingness to navigate geopolitical risks for access to resources.

What to watch next: Chevron's Q2 earnings on August 26 will provide insights into the company's performance amid high energy prices. The U.S. and Iran's next moves regarding the Strait of Hormuz will determine the trajectory of oil prices. Additionally, the upcoming OPEC+ meeting on September 3 will be crucial for monitoring any changes in production policies.