Oil Wrap: USO Holds Above US$127 as Hormuz Stays Shut
Key Facts
- USO settled flat-to-lower the WTI-tracking fund ended Wednesday at US$127.30, down 0.24%, as a 17.4 million barrel US inventory build offset the Strait of Hormuz outage.
- US stockpiles jumped commercial crude inventories reached 424.4 million barrels in the week to August 7, one of the largest single-week builds on record.
- Hormuz risk persists the EIA now sees 600,000 barrels per day of Middle East output still offline through the end of next year.
- Gulf lease sale went ahead the Trump administration offered more than 81 million acres in the Gulf of Mexico on Wednesday, the second such sale since the 2025 tax law.
- Putin threatened EU ships Moscow warned it could seize European vessels in retaliation for action against Russia’s shadow oil fleet, raising shipping risk.
- Petrobras drifted lower the Brazilian major’s New York shares closed at US$17.76, a drop of 0.95%, the weakest move among the Latin American producers tracked.
Today’s Focus
Oil barely moved on Wednesday even as two enormous forces pulled in opposite directions. The USO fund, which tracks WTI crude, settled at US$127.30, down just 0.24%, after Washington reported a 17.4 million barrel jump in commercial stockpiles to 424.4 million barrels.
That bearish inventory shock was cushioned by the continuing disruption at the Strait of Hormuz. The EIA now expects 600,000 barrels per day of Middle Eastern supply to remain offline through the end of next year, keeping a floor under crude near historic highs.
Latin American oil equities slipped in sympathy but held their gains from the recent rally. Petrobras fell 0.95% to US$17.76, YPF eased 0.51% to US$48.90, and Ecopetrol dipped 0.29% to US$16.96.
The session mixed geopolitical danger with a reminder that physical US supply is ample. Traders are now weighing whether the Hormuz premium can survive a market swimming in American crude.
What matters today. The market is torn between a record US stockbuild and a prolonged Middle East supply outage, and until one force breaks, Latin American oil shares will track sideways.
01 The session in one read
Wednesday, August 12, 2026 was a session of two contradictory headlines and one quiet price board. The WTI-tracking USO fund settled at US$127.30, down 0.24% on the day, barely registering what was one of the largest weekly US crude inventory builds in years.
The US Energy Information Administration said commercial stockpiles jumped by 17.4 million barrels to 424.4 million barrels in the week to August 7. Yet the same agency also said the Strait of Hormuz disruption would keep 600,000 barrels per day of Middle East output offline through the end of next year.
That supply-loss forecast, plus a new Russian threat to seize European ships, kept a hard floor under crude even as American tanks filled. For Latin American producers, the session was a mild drift lower rather than a repricing.
Wednesday’s session showed traders are still more frightened of losing Middle Eastern barrels than of drowning in American ones. A 17.4 million barrel build would normally crush prices, yet USO fell only 0.24%, a sign that the Hormuz disruption and Putin’s threat to seize EU ships are doing heavy lifting. The variable to watch is whether the EIA’s next weekly stock report confirms another outsized build, which could finally force the geopolitical premium to deflate.
02 The board
Petrobras shares in New York fell the most among the regional names, dropping 0.95% to US$17.76. Argentina’s YPF slipped 0.51% to US$48.90, while Colombia’s Ecopetrol posted the smallest decline at 0.29% to US$16.96.
The three producers moved in a tight band, reflecting a market that could not decide whether to price in oversupply or shortage. The USO proxy at US$127.30 remains near the upper end of the 2026 range, suggesting the risk premium is intact.
| Asset | Level | Change |
|---|---|---|
| WTI crude (USO) | US$127.30 | -0.24% |
| Petrobras | US$17.76 | -0.95% |
| Ecopetrol | US$16.96 | -0.29% |
| YPF | US$48.90 | -0.51% |
Source: RT close, 2026-08-12. Where a commodity has no spot feed, an exchange-traded tracker or leading producer is shown as a labelled proxy.
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Latin America — Cross-Market Board
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 167,491.07 | -0.23% | +21.85% | 167,874.64 | 168,310 | 167,142 | — |
| IPSA | 10,982.72 | -1.31% | — | 11,128.56 | 11,210 | 10,984 | 1,513,213,483 |
| IPC MEX | 65,860.95 | +0.45% | +12.17% | 65,564.76 | 66,121 | 65,405 | 108,886,187 |
| MERVAL | 2,999,524 | -0.76% | +30.51% | 3,022,485 | 3,042,365 | 2,991,150 | — |
| COLCAP | 2,430.45 | +0.29% | — | 9.04 | 9.05 | 9.02 | 4,133 |
| BVL PERÚ | 58,737.38 | +0.13% | — | — | — | — | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| EUR/BRL | 5.95 | +1.01% | -5.83% | 5.89 | 5.98 | 5.94 | — |
| USD/MXN | 17.06 | -0.24% | -8.58% | 17.10 | 17.08 | 17.01 | — |
| USD/CLP | 913.98 | +0.04% | -5.67% | 913.65 | 915.11 | 906.68 | — |
| USD/COP | 3,140 | +0.03% | -22.04% | 3,139 | 3,141 | 3,105 | — |
| USD/PEN | 3.36 | -0.66% | -4.82% | 3.38 | 3.38 | 3.35 | — |
| USD/ARS | 1,493 | +0.10% | +12.96% | 1,491 | 1,494 | 1,480 | — |
| USD/UYU | 40.27 | +1.24% | +1.80% | 39.77 | 40.27 | 40.23 | — |
| USD/PYG | 5,939 | +1.68% | -19.54% | 5,841 | 5,939 | 5,925 | — |
| USD/BOB | 11.64 | -0.76% | +72.04% | 11.73 | 11.72 | 11.64 | — |
| USD/DOP | 58.34 | +1.25% | -3.44% | 57.62 | 58.34 | 58.04 | — |
| USD/CRC | 445.92 | +0.89% | -9.71% | 441.97 | 448.50 | 445.92 | — |
03 What moved it
The 17.4 million barrel inventory build was the session’s bearish anchor. At 424.4 million barrels, US commercial crude stocks are now comfortably above the five-year average, a signal that domestic production and imports are overwhelming refinery demand.
Countering that, the EIA’s Short-Term Energy Outlook confirmed the Hormuz disruption is not a short-lived shock. With 600,000 barrels per day expected to remain shut in through the end of 2027, traders are reluctant to sell deeply into any dip.
President Vladimir Putin added a new layer of shipping risk by threatening to seize European vessels in retaliation for EU moves against Russia’s shadow fleet. Ukrainian forces reportedly paused drone attacks on oil tankers at Novorossiysk after a request from US Vice-President JD Vance, but the broader Black Sea picture remains tense.
Meanwhile the Trump administration pushed ahead with a huge Gulf of Mexico lease sale covering more than 81 million acres, the second such auction since the 2025 tax and spending law mandated 30 sales. That promises more US supply in future years, not less.
04 The Latin American read
For Petrobras, the flat crude tape offers little fresh direction. Brazil’s pre-salt economics look comfortable with USO above US$127, but the company’s New York shares at US$17.76 are still pricing in domestic political risk and the drag from any global demand scare.
YPF at US$48.90 remains the region’s most direct play on an energy-hungry domestic market and the Vaca Muerta shale expansion. Yet its 0.51% drop on Wednesday shows that even Argentine momentum cannot fully escape the gravitational pull of global inventory data.
Ecopetrol’s smaller 0.29% decline to US$16.96 reflects its lower beta to crude and a balance sheet more tied to Colombian refining margins than pure upstream swings. Guyana’s boom remains a backdrop for the wider region, but no Guyana-exposed proxy moved enough on Wednesday to challenge the broader trend.
05 The names to watch
Petrobras is the bellwether for how foreigners price Brazil’s pre-salt promise against Brasilia’s interference. Its underperformance on Wednesday, a 0.95% fall versus a 0.24% drop in USO, suggests investors are demanding a wider margin of safety even with crude elevated.
YPF offers the clearest torque to any sustained increase in oil prices, since Vaca Muerta’s breakeven costs are well below current levels. But it also carries Argentina-specific capital control and inflation risk that can detach the share price from crude at any moment.
Ecopetrol and Pemex are the region’s two state-controlled giants with very different trajectories. Ecopetrol’s modest decline signals relative stability, while Mexico’s Pemex remains too indebted and operationally challenged for most foreign investors to treat as a pure oil proxy.
06 The outlook
The next move hinges on whether US inventories continue to swell at this pace. Another weekly build above 10 million barrels would test the market’s patience, while any escalation in the Hormuz standoff or the EU-Russia shipping dispute would push USO back toward new highs.
For Latin American equities, the base case remains a range-bound oil price with a geopolitical premium. That favours companies with low debt and high free cash generation, a description that fits YPF better than Pemex and leaves Petrobras somewhere in the middle.
07 What to watch
- Weekly EIA stock report: Another large US crude build would pressure the Hormuz premium and drag Latin American producers lower.
- Strait of Hormuz traffic: Any sign of easing would remove 600,000 bpd of supply risk, but an escalation would spike crude sharply.
- EU-Russia shipping standoff: Putin’s threat to seize European ships could widen the war risk premium for all oil cargoes.
- Petrobras discount to crude: If the New York shares keep falling faster than USO, it signals rising political risk in Brazil.
Frequently Asked Questions
Why did oil barely move despite a huge US inventory build?
The 17.4 million barrel build was offset by the EIA’s warning that 600,000 barrels per day of Middle East supply will stay offline through 2027 because of the Hormuz disruption.
What does USO represent?
USO is an exchange-traded fund that tracks WTI crude futures, used here as a proxy for the US benchmark oil price.
Which Latin American oil share fell most on Wednesday?
Petrobras fell 0.95% to US$17.76, the largest decline among the tracked regional producers, versus a 0.24% drop in USO.
Why is the Strait of Hormuz so important?
It is the world’s most critical oil chokepoint, and its extended closure is keeping a large volume of Middle Eastern crude off the market, supporting prices.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
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